Oath's adtech chief on why the number of ad marketplaces is dwindling

The former AOL president is keen to dub Oath as a “values-based company” – his own being "open not closed" – citing the three-word mantra each of its 12,000-strong workforce is encouraged to both construct and enact when it comes to implementing its ambitions of altering the status quo of the digital market.

In particular, he points to his own company’s efforts to implement the ads.txt protocol – an initiative led by the IAB Tech Lab to minimize the impact of domain spoofing, ergo fraud, on the adtech sector.

“For us, it’s a really great example of what’s got to happen to really open up the door of allowing both advertisers, plus publishers and developers to have a communication-flow of pure transparency, and be open,” he says.

The “black box of programmatic” has been a label that has dogged the adtech sector since its earliest days with allegations of exorbitant arbitrage, fraudulent inventory, and high-profile brand safety scares.

While headlines by such ills in the marketplace may over-represent the scale of the incidents, many would argue they have (ironically) led media buyers to seek solace (and the attainment of their personal KPIs) in the ‘walled gardens’ of Facebook and Google – albeit neither of them can lay claim total innocence in this regard.

Mahlman explains: “Ads.txt came at such a great time for us [as we were launching Oath at the same time] and interesting to us was that despite the hype behind it, come September time, there was only 5%b adoption across the top ComScore properties, but since then and into the quarter, we’re seeing a major uptick in a lot of the publishers ads.txt logs.”

This was in-part cause by difficulties in ad olds teams rolling out such new technologies, as well as instances of human error, a situation Oath was prompted to help resolve by the creation of an ads.txt-generator tool that has helped spur this uptick.

“Ads.txt will be the first of many such initiatives we’ll see on the horizon,” he predicts. “RTB 3.0 is something that we helped co-write with the IAB Tech Lab and it's only going to keep accelerating.” This is due to increased awareness among advertisers who themselves are requesting that they only run on ads.text inventory, according to Mahlman.

“So that's a forcing mechanism in its own right to ensure that, you know, the developers and publishers are putting up those tags and making sure that they are acknowledging who has representation of that inventory.”

The great adtech contraction

Transparency initiatives such as ads.txt and its successor ads.cert, have generally coincided with the occurrence of ‘supply path optimization,’ where each tier of the market becomes more selective of which partners they operate with, in search of increased efficiencies during the past 18 months.

Mahlman explains: “From the demand-side, if you are the technology that an advertiser has licensed to simplify their media spend across multiple marketplaces, only to find out that you're actually bidding into marketplaces where that same inventory is actually residing, that's inefficient.

“You should know that when you’re bidding into a marketplace [or ad exchange] its inventory only live in that marketplace, and that it’s not going to be spread across about multiple. That helps them be smarter about how they're going to deliver the marketing dollars for an advertiser.”

Combine this with upcoming preparations for the EU’s General Data Protection Regulations (GDPR), where publishers in particular will have to vet their adtech supply chains, and a notable contraction of the number of brands present in market is widely predicted.

This is a trend that will be reflected by Oath’s demand-side platform (DSP) offering, according to Mahlman, who adds that ads.txt will likewise see it reduce the number of supply-side platforms (SSP) it works with.

“So with our consolidation with the adtech stacks, which started the day the deal closed, we have been smart about where we want to place our bets and what technologies that we need to build in the future,” he adds.

This desire is also reflected among premium publishers that Oath work with. Mahlman goes on to explain: “I mean, there were some situations where they were turning off the ad server, but yet there were still ad calls being masqueraded and other SSPs, and that's a scary situation.”

Asked for his prediction on what this will mean for the wider market, he goes on to state: “I think the independents [adtech players] that don't get the publisher to agree to allow them to be their representative will quickly be moved out of the conversation.”

Mahlman adds: “With the acceleration of ads.txt you're going to start to see the consolidation only some really key, large marketplaces are really going to be where you're going to find the inventory that you want.”

Oath’s own adtech consolidation

As reported earlier by The Drum, Oath too will look to simplifying its offering to the market, given that the merger of AOL’s and Yahoo’s respective offerings bright with it a lot of overlap, this includes the potential sunsetting of some of the adtech sector’s most known brands.

However, this is a process that Mahlman remains relatively purse-lipped over when probed for further details. “The first few months it was definitely a heads down integration of one technology into another, which then allows engineers to no longer work on multiple products, but now just moving on one,” he says of the process.

“We've made some massive inroads on the demand side and the supply side, so you know, what we're looking at is we're still on pace to be with an individual demand-side platform later this year and roughly around two supply-side platforms later this year as well.”

Mahlman is unable to offer much further insight beyond the fact that its dual SSP offering will consist of one dedicated to desktop inventory, and another for mobile app buys, with the identity of the offering yet to be decided by its own marketing team.