As the programmatic market continues to mature, a central theme has emerged—the pursuit of efficiency and genuine value creation. There are major changes happening across the industry, from consolidation to platforms attempting to represent both sides of the market to an increased focus on supply path optimization.
Most recently, The Trade Desk announced it will begin sending its top bids to SSPs even if those bids are below the set floor price. While there have been a range of reactions to this initiative, including claims that it will undercut SSPs’ businesses, the simple truth is that it brings more price transparency to the market and truly reflects this new era of driving efficiency and value in programmatic advertising.
Improving price transparency
Historically, a media buyer or DSP would choose not to bid if it perceived the price floor set by the media owner to be too high. This left media owners without any visibility into why a buyer may choose not to bid, whether it be that the inventory isn’t appealing, the asking price is too high, or that the buyer doesn’t currently have budget available.
This asymmetric information flow has long hindered programmatic growth. Media owners have struggled to understand the worth of their inventory to maximize monetization, just as marketers have struggled to understand the true value of purchased media to better optimize their return on ad spend.
By submitting its best bids, even if they are below the floor price, The Trade Desk is fostering more price transparency and efficiency throughout the supply chain—a win for the market. This move enables price discovery, something digital advertising has sorely lacked.
Price discovery helps identify where supply and demand meet to determine the fair price of a given good. It not only enables fair and transparent pricing, but also encourages a more efficient, effective, and trusted market.
Optimizing pricing strategies
Having more feedback and information available can only benefit media owners and is far more beneficial than the absence of such information. No media owner is compelled to accept a bid below their desired price. Rather, they’ll have more visibility into buyers’ bids, and can decide how to use those signals and data to influence their pricing strategy.
With a clearer picture of how buyers perceive the value of their inventory and the overall demand landscape, media owners have an opportunity to make pricing a strategic priority.
At Index, we firmly believe that bringing more transparency into programmatic auctions helps solve the challenge of asymmetric pricing and is critical to future growth of the industry. It allows media owners to set prices that reflect the true market value of their inventory and provide accurate pricing guidance to buyers, which is key to creating predictable and efficient outcomes for all parties.
We’ll continue to provide fully transparent insights and reporting to help our customers gain clarity into pricing and ensure accountability in the supply chain.
Driving efficiency and value
A mature, efficient programmatic market relies on accurate price discovery and transparency. Everyone will benefit from greater ROI as marketers can better optimize their campaigns and media owners can maximize their revenue.
Our industry is in the midst of a fundamental shift toward prioritizing and rewarding efficiency and value. It’s introducing new competition, but it’s not a cause for concern. It’s instead a healthy market dynamic that requires players across the industry to adapt and prove the value they provide—or get left behind.
Learn more about our approach to exchange efficiency.
