Taking the Pulse of Programmatic: First Price Auction Offers Transparency for All Sides
What happens when you create an open industry forum on a hot topic like the first price auction? The result is that both sell and buy-side start dispelling some of the myths around the trend. Reporting off the back of his break out session at Improve Digital’s recent participant-driven <UN/NO> Conference in Venice, Andrew Buckman, Managing Director EMEA at Sublime Skinz, sees the first price auction as a positive step in the long-run. Although still in growing pains, the transparency and marketplace stability that the first price auction offers will positively impact revenue for both sell and buy-side in new, more sustainable ways. And transform the industry for the better.
Talking about the need for a healthy change
Keeping a pulse on programmatic means you’re always learning. So, when there’s a chance to pick up the industry beat on a major issue, like how header bidding is changing auction dynamics towards a first price model, it’s an inspiring opportunity. With publisher and demand-side sitting down together in Venice, the consensus was that the addition of first-price is a logical next step in a header bidding ecosystem. Despite the growing pains – concerns of rising CPMs and a lack of the sell-side not signaling the auction type – there’s a recognition of a need for a change. When the win price is the clearing price, it creates more business confidence. A first-price model solves the problem of down-stream auctions and a lack of transparency in terms of the value of trading for both sides.
Move from focus on CPMs to total yield and true value
In a mature marketplace, the outcome of trading is more sustainable for everyone in the ecosystem. This is the key change that the move to first-price can bring about. For the demand-side, first price provides the opportunity to win a large amount of impressions at predictable cost and be able to optimize campaigns based on the right acquisition price. With header bidding already giving buyers access to more inventory than the waterfall, that is good news for handling bigger budgets. For the publisher side, there’s greater opportunity to gain higher prices, also from remnant inventory. Most importantly for the sell-side however, first price more readily reflects the true value of publisher inventory. This means a publisher is no longer flying blind as to what its audience is worth. For both sides, it’s a move away from focusing on the short-term CPMs for an impression, to a focus on total yield for inventory.
New, transparent opportunities for big budgets
That shift from short-term revenue-boost-thinking to sustainable total-yield-thinking is ultimately what is needed to create a more stable programmatic ecosystem. In a world where advertising is becoming synonymous with programmatic, trading in a transparent environment is what is needed to create a stable industry that can handle big advertiser budgets with the efficiency of smart automation. But no one side can do it alone. We are moving in that direction, but the kind of open communication we saw in Venice is exactly what the industry needs to move the needle in a more transparent direction as digital advertising matures.