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Publishers entering ‘tough’ negotiations with advertisers on value of viewability-based trading, but it could ‘cleanse’ the ‘soiled’ display market, says Forbes CRO Mark Howard

Viewability-based ad trading has sparked a “tough” negotiation process between publishers and advertisers but once a fully established metric could “cleanse” what has become a “soiled” and oversupplied online display market, according to Forbes chief revenue officer Mark Howard.

Speaking to The Drum at Mobile World Congress in Barcelona, Howard hailed viewability-based trading, in which clients only pay for ad inventory deemed ‘in view’ to an audience, as the future dominant digital ad trading currency, and a better overall brand metric.

However, before it reaches that point, publishers will face a “disruptive” period of transition, in which they must push back against advertisers unwilling to pay a premium for the guarantee that their ads have been in-view.

“Advertisers are pretty dug in right now, saying they won’t pay a premium for it. We are saying it’s not a premium, it’s paying the right price because we can prove that if only paying for those viewable impressions the performance is going to go up significantly,” he said.

Publishers will have to over-deliver to meet the viewable impressions targets set by advertisers, even if they - like Forbes - have a 70 per cent average viewability rate which is considered high.

“Let’s say an advertiser buys one million impressions and 70 per cent of those impressions are in view, that would mean 700,000 of the those would be deemed in view, and the advertiser wants to pay for and buy a million in-view impressions. I don’t owe them 300,000 impressions to make them whole, I owe them 420,000 impressions, because those 420,000 impressions will also have a 70 per cent in-view rate and be actualised back down to the 300,000 that I owe them. So I owe them 42 per cent over-delivery on that one million.

“So given our website averages 70 per cent, if they buy one million, I now owe them 1.42 million in order to charge them in full for the million. And they are saying they don’t want to pay an increased price for that. We are not suggesting that they pay 40 per cent higher price, we are willing to figure out what that price may be, but there needs to be some give both ways and it’s a justified discussion and negotiation because of the uptake in the performance that they receive, just in the nature of the inventory they receive,” he explained.

However, despite the challenge of establishing new pricing models to accommodate these new demands from advertisers, once established properly across the market viewability-based trading will become the core trading metric and will help “weed out” a lot of bad inventory currently flooding the ad exchanges, according to Howard.

“Because of this emphasis on viewable impressions, there will be a significant reduction in supply available in the digital [display] ad market because a lot of the bad actors out there, that represent much of the mid and long tail, are flooding the market with a lot of non-viewable impressions, that primarily hit the exchanges.”

“Advertisers are pretty dug in right now, saying they won’t pay a premium for it. We are saying it’s not a premium."

Viewabilty is often the industry term people draw on to describe both bot-generated traffic and the positioning of ads within publisher’s content ecosystems, and both kinds will likely be reduced as a result of the drive towards viewable-based ad trading, according to Howard.

“As the market is able to weed out both of those there will be a significant reduction in the supply, and as that goes down the quality of the inventory that brands are buying from publishers goes up because they are only paying for viewable impressions, so as the supply goes down and the performance goes up, the price will have to adjust accordingly, but right now as we are working in a marketplace of infinite supply it’s all hard for that ‘right sizing’ to happen.

“So hopefully the positive outcome, in addition to advertisers buying higher quality inventory from publishers which is great and should help continue to support the flow of more brand dollars into digital display, you also get a cleansing of a very soiled marketplace,” he added.

This shift towards viewability-based trading could also help steer the reputation of programmatic ad trading being an effective method used for “remnant”, high volume inventory, according to Howard.

“Hopefully the positive outcome, in addition to advertisers buying higher quality inventory from publishers which is great and should help continue to support the flow of more brand dollars into digital display, you also get a cleansing of a very soiled marketplace.”

Forbes has been operating a tool called dynamic allocation, which means all its non-sponsored inventory geos into the auction to be bid on, even if it has direct interest from a buyer.

“By doing this we have found that our CPMs, through the open exchange, are within a few dollars of what we get from a direct-sell deal, and sometimes are on a par with them, because we list all our inventory transparently, have no blacklists and encourage all bidding. We have been running that for a year and have seen our programmatic CPMs triple. So I think these kinds of dynamic yield optimisation systems will become a big part of publishers’ businesses,” he added.

This January Forbes receievd 30 million global unique visitors according to Comscore, while 40 per cent of its overall traffic is via mobile devices.

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