Tales From Copenhagen
Last month we successfully hosted our pop-up office in Denmark’s capital Copenhagen. It’s always a pleasure to visit Copenhagen. We’ve been working with clients in Denmark since 2013 and have built strong relationships with both the sell- and the buy-side. Like the Dutch, the Danish market is a relatively small market where everybody knows each other. Danes are also open, innovative and adoptive to new technologies and are able to decide quickly, so it doesn’t surprise me that Denmark has one of the fastest-growing markets in programmatic advertising.
In a market developing rapidly, publishers have to make decisions on what they think is the best solution for managing their inventory. This is a difficult process, especially with the many available exchanges, platforms, demand partners and SSPs offering “the best solution” for the publisher. I believe this is the reason why most publishers operate a waterfall solution in Denmark currently. A typical waterfall setup looks like the following model.
This model gives a publisher the feeling of pricing control, but unfortunately has disadvantages which can be harmful for the publisher’s revenue and the user experience.
The waterfall is not the ultimate setup for optimising yield, and disadvantages can include latency, discrepancies and multiple access points for demand.
To send the traffic from one SSP to another SSP or exchange, passbacks are needed. When sending inventory over the passbacks the publisher will lose impressions and normally between 5-10% of the traffic gets lost. Sending traffic from platform to platform takes time, causing latency – one of the biggest frustrations for users.
With the above waterfall model, demand partners have three separate access points to the publishers inventory. If buyers have the possibilty to get the same inventory for the lowest price through SSP3, they will. Most SSPs or exchanges have the same demand partners connected to their ecosystem.
When we spoke with Danish publishers, we explained that although using different floors in the waterfall gives pricing control, it’s not the best way of monetising inventory.
By giving one partner priority over others, many high-value partners could be shut out from a publisher’s prime inventory in this model.
The same thing applies to the 2nd highest bid principle – the Vickrey auction model – used in programmatic advertising. The highest bid wins the auction, but pays the 2nd highest bid price plus one cent. Excluding specific buyers by using the waterfall will therefore have a negative impact on your yield too. Liquidity in the auction will drive your CPMs.
In today’s programmatic market, it’s well understood that most SSPs and exchanges have access to roughly the same pools of demand. What sets each apart – what drives the real value – is the decision-making and optimisation performed by their proprietary algorithms; the strength of the team they have assembled; and their approach to client support and revenue enablement. When it comes to programmatic partners, sometimes less is more.
For most media owners, a single system for all of their programmatic needs is what leads to the highest revenue, greatest efficiency, and least risk of ‘unhealthy competition’ between traditional and automated sales.
Innovative as the Danes are, I believe that soon most media owners in Denmark will consider using one single platform, adopting an independent holistic solution for optimising and monetising their inventory in the best possible way.
Already looking forward to my next visit to Copenhagen, not just for the Smørrebrød 🙂