Interview: MediaMath's Erich Wasserman on falling CPMs in online display and raising prices through optimisation
By: Patrick Smith Published: July 11, 2012
The depression in online CPM advertising rates has been a disappointment to so many publishers who were hoping the web would offer a new Nirvana of revenue and profits online.
But the rationalisation and efficiencies brought by supply-side platforms (SSPs) and demand-side platforms (DSPs) and the ongoing real-time-bidding (RTB) revolution are not to blame, according to Erich Wasserman, co-founder of the Mediamath DSP.
Mediamath is one of several so-called programmatic display ad trading companies (that means, they act as a middleman between buyers and publishers and serve ads on an automated basis according to agreed rules, often in real-time) who are fast expanding in the UK, going from no staff 18 months ago to 19 by the end of the year. The company served up a mind-bending 760 billion ad impressions globally in May
I caught up with Wasserman to get his take on the exploding display ad economy, and you can read the rest of the chat below.
TheMediaBriefing: What does success look like for publishers these days? Are we chasing the wrong metrics?
If you enter the world of big data you realise that pretty much every big advertiser in the world has a great deal of data on their audiences. Moreover, they have more choice as to what's going to inform their media buying. Hence the move towards buying audiences rather than buying sites.
So you say, if I can rely on an external or internal data source to only target users who I care about I can target 100 percent of my inventory to males and know that that's going to happen 100 percent of the time.
The way our system is constructed is the CPM is an output, not an input. That means that we want to be able to bid as aggressively as possible on high value users and will bid less on users with no value… That's a powerful thing for a market that's CPM-driven.
So you'd say that low prices for CPMs are in part due to the lack of optimisation, things like data and targeting, from publishers?
When your optimisation is not up to par the only way you can make up for it is tonnage, which means low CPM. So buyers are trained to optimise things, call the publisher and push down their price – it's the only mechanism they have to improve performance.
There's a different kind of reach happening. Big data means advertisers are able to target users in a host of environments on the basis of things they know about this user that the publisher doesn't necessarily know.
But are publishers losing control on price due to automation?
The notion that because you're accessing this in a different way you don't get to tell the market what your media is worth is wrong. This is why private marketplaces have been so popular.
(Wasserman then shows a demonstration of buying inventory on a specific site, in a specific section, targeting specific users, at the rate set by the publisher.)
What's the danger for publishers who don't embrace programmatic?
As a general proposition the world is not getting less digital. The future is not in fax machines. Authoritative sources like Forrester and others have given us a view on how fast this world is moving and it's moving fast.
There will still remain a great deal of value in buying a premium brand's audience. But people should realise that there's a great deal of choice in how you interact with the market.
Is the analogy of the stock market a good one?
Definitely. The concept of having a market where the assets have variable value and varying levels of liquidity, and its available for sale at different prices and can be bought programmatically… certainly.
The Bloomberg terminal for media is an analogy we've used since we've started the company.
The depression in online CPM advertising rates has been a disappointment to so many publishers who were hoping the web would offer a new Nirvana of revenue and profits online. But the rationalisation and efficiencies brought by supply-side platforms (SSPs) and demand-side platforms (DSPs) and the on-going real-time-bidding (RTB) revolution are not to blame, according to Erich Wasserman, co-founder of the Mediamath DSP.
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