AdExchanger discusses the inefficiencies and complexities within the programmatic advertising ecosystem, focusing on how bid duplication and the structure of the bidstream contribute to a convoluted marketplace
Key Issues Highlighted:
- Bid Duplication: Publishers often initiate multiple auctions for the same ad impression to maximize demand, leading to redundant bid requests. Despite this increase in auction volume, Demand-Side Platforms (DSPs) typically do not process all these bids due to capacity constraints, resulting in inefficiencies.
- DSP Capacity Constraints: DSPs manage their expenses by capping the number of bid requests they handle per second, known as Queries Per Second (QPS). This limitation means that even as publishers increase auction volumes, DSPs may not correspondingly increase their bid processing, leading to potential mismatches in supply and demand dynamics.
- Algorithmic Bias: DSP algorithms often favor publishers with higher impression volumes, under the assumption that larger publishers offer more valuable inventory. This bias incentivizes publishers to inflate their auction volumes artificially, further complicating the bidstream.
Proposed Solutions:
- Reducing Bid Duplication: By minimizing redundant auctions, the ecosystem can decrease unnecessary bid traffic, leading to more efficient operations.
- Adjusting DSP Strategies: DSPs could reallocate their capacity to handle more bids from fewer, more reliable sources. This approach would involve forming stronger partnerships with select Supply-Side Platforms (SSPs), enabling DSPs to manage a higher volume of quality bids without increasing overall capacity.
Implementing these strategies could streamline the programmatic advertising process, reducing chaos and fostering a more sustainable ecosystem for both buyers and sellers.
