Programmatic Supply Ahead of Q2 2020
As Q1 comes to an end, we wanted to take stock of the current state of programmatic supply in the UK as well as how to prepare for Q2. The market is currently going through incredible flux, so check out our analysis and thoughts below.
What supply changes have we experienced this quarter?
Q1 kicked off with Google’s plans to phase out third party cookies on Chrome within 2 years, which is significant as it holds just shy of 50% UK market share. Despite the gravitas on these changes, our research into the current state of available inventory showed little to no change compared to 2019. Changes of course will not happen overnight, but we expected to see marginal increases within in-app and connected TV inventory as the buy side searches for alternative measures. In-app due to it having less measurement challenges at present, and connected TV as programmatic supply is continually enabled.
How should buyers/sellers consider supply path optimisation?
When looking at top domains in terms of available impressions, we found:
- The top 20 domains were, on average, connected to 16 exchanges
- The top 100 domains, accounting for 60% of the available inventory, were connected to an average of 14 exchanges
Discussions around buyers consolidating their buying, utilising a handful of selected SSP’s, is increasing. The question is whether this will impact the amount of exchanges publishers are willing to connect to? Commonly publisher practice is connecting to multiple exchanges to enhance yield and survive any exchange culling optimisations. However, given the recent news on the ads.txt 404bot defrauding the industry of +$15 million, we’re likely to see change. Publishers may begin to hold fewer but closer relationships with their exchanges, keeping a closer eye on the selling and reselling process.
It’s common practice for an ads.txt file to contain multiple authorised supply paths, these directly integrated publishers often additionally request the ability to solicit DSP bids via authorised resellers. Resellers can add value as they may be required to create and maintain the DSP connections that the original partner cannot. However, more regularly there is an extensive list of resellers involved for yield purposes. Sometimes, the resellers can even be authorised to solicit bid requests to further resellers, complicating the route to supply further.
Not only do publishers need to take stock of this activity for their own audits, but also to appease sophisticated buyers. Buyers are increasingly navigating these routes to supply manually and algorithmically, taking budget away from value extracting resellers and pushing it towards value adding paths. This month we saw Group M build a direct relationship with Index Exchange which was stated as a way for them to manage this path complexity, negotiate better rates and to provide an identity solution to their clients. We always recommend brands to dig as deep as possible on the relationship’s agencies have with suppliers to ensure they’re truly adding value to campaign objectives.
How has advertising been impacted by the introduction of a global pandemic?
As we enter a Covid-19 pandemic, we’re already seeing some impact on supply. “Coronavirus” became the 2nd most block-listed word across news publisher in February – up from 8th in January.
As block rates increase, CPM’s are weakened by lower demand. However, as interest grows around the topic, publishers are launching extra content around the disease, including newsletters and live blog coverage which is increasing supply. According to Adomik’s data, what news outlets are losing in CPM’s, they are gaining in impressions – particularly across video and remain somewhat steady.
Adomik’s data compares distribution of spend across the first 2 (full) weeks of Feb against the first 2 weeks of March, highlighting how each sector is behaving with regards to their media investments. Looking at the month on month percentage change (Mar MoM %), it’s clear that the largest increase is coming from eCommerce closely followed by politics as this is US data. Unsurprisingly, Entertainment, Restaurants and Travel are amongst the sectors with the largest spend reductions.
It’s unclear how long Covid-19 will continue to be at the centre of news content, but it’s clear that revenues will continue to fluctuate with demand until a new equilibrium is established.
Considerations for a chaotic Q2
With much uncertainty on the horizon, there are a few topics to be keeping an eye on as we enter Q2. Industry trends are pushing towards the growth of in-app and connected TV availability as well as cleaning up the path to supply – savvy buyers and sellers will see considerable competitive advantage by getting these right, early. Meanwhile, environmental triggers beyond our control will be impacting demand and therefore pricing within the immediate future – expect to see some wavering results and media pricing.
- TPA research based on UK Inventory Availability reporting from a market leading DSP over a 30-day period