TL;DR: The advertising ecosystem is rapidly evolving and brands are looking for partners who can offer sustainability, innovative ad formats, and accurate attention metrics. Brands are also negotiating beyond the confines of standard auction-based inventory and are reaching out to publishers who have strong audiences in the right context, writes Kyle Green, VP of Revenue Operations, Kargo.
The New Priorities Driving Brand Partnerships In Programmatic
The buck stops with brands, and what they want often dictates the way the digital advertising market moves. For a long time, brands were focused on maximizing audience reach while driving down the cost of impressions. This led to the first wave of “supply path optimization” (aka SPO) where brands cut out middlemen, gaining more transparency and control over their bidding process.
Now that brands have gotten used to the transparency and control they went looking for to attain reach and cost goals, they’ve set their sights on new elements of digital advertising including sustainability and differentiation, and these elements will shape the way programmatic advertising evolves in the near future.
Sustainable Advertising in Focus
Consumers care about sustainability more than ever, with 51% saying that environmental sustainability is more important to them in 2022 than a year ago. And where consumers go, brands will follow. Marketers want to make a positive impact, but so often, sustainability initiatives sit elsewhere in their organization. One area where marketers can actively minimize their company’s carbon footprint is to ensure that their digital advertising is as sustainable as possible.
There are a few major ways that digital advertising creates pollution — through data waste, data storage and data transfer. Brands are looking for partners that use renewable energy to power their data centers, actively minimize the data load that it takes to bid on and show ads, and reduce the complexity of the process to stop data waste. For example, tech companies can make their bidding process smarter by not bidding unless it’s likely that the impression will be won. They can streamline the data that they send in the programmatic ecosystem, and they can partner with more green providers.
The more brands press their partners to make these kinds of smart choices, the higher the stakes are raised for tech companies to prove their green credibility — no greenwashing allowed.
Differentiation Makes the Difference
Flush with VC cash in the early 2000s, a huge number of tech companies in our industry are all fighting for ad dollars. As a result, there are multiple paths for brands to choose from in order to get to the same impression. In one example, simply altering revshare by five percentage points dramatically shifted the ranking of one supply partner for a major publisher — showing how little there is that actually differentiates different supply partners from one another. In other words, programmatic inventory is often undifferentiated, and brands know it.
Brands are looking for anything that can help them reach their audience more effectively, and are open to innovation. As a result, differentiation can come in a variety of forms. New forms of measurement like attention are becoming popular to dig deeper than standard viewability and impression data. Unique ad placements across screens that break out of the normal IAB banners are in high demand. New interactive features — such as commerce-driven ads on CTV and augmented reality — are also enticing brands to strike deals with partners.
In many cases, differentiated advertising opportunities require closer relationships — and brands are starting to make the effort to get closer to the sell-side in order to make that happen. There might be a need for specially designed creative assets, a technical integration, or first-party data sharing. Brands want to make sure the partnership is worth it because it’s that much harder to get out of a deal that’s got customization built into it.
From Lowest Price to Highest Price
After years of ad-tech companies bemoaning the media buyer’s obsession with low CPMs, the tables are finally turning. Brands have gotten smart about the value of paying higher prices for the right impression. They will pay when they know it’s worth it. From PMP deals to “first look” agreements that give them preference on specific inventory, brands are negotiating beyond the confines of standard auction-based inventory.
Brands are also looking at a broader scope of metrics to get to that “right price.” Brands want high win rates to reduce waste and reach their key audience where they want to be. They want their campaigns to work on a number of levels — measuring both brand and performance metrics on a single campaign. This makes particularly good sense as consumers start to “collapse the purchase funnel” and click to buy a new product from a brand they’ve never heard of right from an ad in an Instagram feed, for example.
Brands are getting smarter about audiences as they build their own first-party data strategies, and they care about connecting to great publishers to reach those audiences in the right context. When these stars align, they’ll pay.
Being Smart About SPO Helps All of Us
We’re at a time in digital advertising that many of us thought we’d never get to. Brands are spending their dollars wisely. Tech companies are forced to offer something unique. And we are all under pressure to become truly sustainable.
If we take these demands seriously, our industry will become something we can all be proud of.
VP of Revenue Operations, Kargo
Kargo creates memorable digital advertising and content experiences. With a suite of impactful, exclusive advertising solutions, brands choose Kargo to make customer connections that count. Kargo is the leader for unique ad placements, with creative options that make the most of mobile, video and social media. For publishers, Kargo delivers technology that dramatically improves viewer experience, as well as inventory and page performance. Headquartered in NYC, Kargo is 350 employees strong with offices across the globe.