The state of programmatic supply in 2020

Hear industry experts discuss: 1. How first-price auctions & in-app bidding adoption is changing media buying 2. How adoption of Supply Path Optimization (SPO) is growing and why it matters 3. How publishers and advertisers can get ready for IDFA changes in iOS 14

Jampp Team

October 7, 2020

App Marketers Unplugged is an event series dedicated to discussing the latest trends and challenges in our industry. This year, we’re introducing curated video podcasts with a new selection of industry experts.

In this episode, Leandro Zeballos, Product Operations Manager at Jampp interviewed industry experts from Fyber, MoPub, and Smaato to hear their take on the latest trends and challenges.

Watch the video to learn...

  • How first-price auctions & in-app bidding adoption is changing media buying
  • How adoption of Supply Path Optimization (SPO) is growing and why it matters
  • How publishers and advertisers can get ready for IDFA changes in iOS 14
  • Why gaming inventory is key for advertisers and brand marketers

Or read the abridged transcript below.

Leandro: Welcome to App Marketers Unplugged, let me introduce the experts of this session:

  • Amy Auranicky has worked in the digital marketing industry for over 10 years, she’s currently Sr Strategic Partnerships Manager at MoPub.
  • Umair Malik is Head of Programmatic Strategy at Smaato, also bringing over 10 years of experience in the ad tech industry.
  • Offer Yehudai is the Co-Founder and President of Inneractive Ltd., which was acquired by Fyber in 2016. He oversees product development, marketing, business strategy, and strategic partnerships for the group.

Leandro: Let’s start with in-app bidding. This has been a hot topic on the Supply side of the industry for some time now, and it’s highly correlated with the advent of first-price auction as the new industry standard. So, how has it changed the monetization game for both SSPs and publishers?

Amy: I think in-app bidding has really simplified the monetization strategies for publishers. By flattening the waterfall, we've created operational efficiencies through having a cleaner ad management set up, removing the cascading ad calls, and moving historical bidders to real-time bidders.

Breaking down that walled garden for publishers has yielded, in some cases, up to 45% in ARPDAU, and MoPub's own internal data has shown that there's been a reduction of about 45% in latency due to more efficiency in the waterfall, and a reduction in the ad calls.

Glu has told us that they've gotten 15hs a week so they can focus on other initiatives, and Game Vessel has been able to save 90% of their Ad Ops time. If you're a publisher out there listening, if you haven't already tested in-app bidding solutions, I highly encourage you to do so.

Leandro: Do you see the industry catching up to this trend?

Amy: Yeah, we've actually seen progress on our advanced bidding product, which is our in-app bidding product's name. I'd say in the last four months, since Jampp interviewed MoPub, publisher adoption increased by 2x and ad revenue by 5x. Over the past 12 months, we've actually seen publishers testing multiple solutions, working out the kinks, and now yielding all of the benefits and continuing to scale.

Offer: I completely agree with Amy about the value for publishers and efficiency. It's funny because there are some ad networks out there that are pitching for bidding, but don't necessarily bid themselves. If two years ago, when Fyber FairBid and MoPub Advanced Bidding started to roll-out, publishers were kind of hesitant to move away from waterfall, now they are much more mature, and they've seen the value. So now it's on the network side to really catch up. By next year, I expect to see all big networks spending more on bidding than on traditional mediated networks and waterfalls.

Umair: Yes, we also launched in-app bidding with our publishers, and we're also seeing the revenue go up 25%-20% on average. Of course, different publishers see different increases and performances. We continue seeing more and more publishers adapting to this new trend as well as first-place auctions. And the majority of our demand partners at this point are also using first-price auction and both sides are seeing better results.

Leandro: Right, that was going to be one of my follow up questions: what do you see on the DSP side regarding in-app bidding?

Amy: I think the value for DSPs is really evident. They’re seeing an increased number of users, increased opportunities to serve an ad, and also that their advertisers have been able to grow their reach and spending power within those publishers. Advertisers now have access to users and impressions that they really wouldn't have had access to due to the complexity of a publisher's waterfall.

Leandro: This relates to our next question, which is around Supply Path Optimization (SPO). As its adoption grows, how do you structure your SPO process, and what concerns, if any, do you see on the side of demand partners?

Offer: It all started when we began adopting app-ads.txt and just making sure that publishers understand what demand is accessing them and vice versa. As a policy, we only work with direct supply and direct demand. It's really important because it reached a point where buyers unknowingly bid against themselves multiple times and it really affected the price and efficiency. Amy talked about efficiency for the publisher; now it's on the other side: how efficient is the media buying for the buyer. In that regard, SPO is very important and we have buyers that have increased their spend between 30-60% once they moved away from different aggregators.

For publishers who are listening, I encourage you to understand who is accessing your inventory, and how. Ask your mediation and exchange partners. If you can't get a clear answer, ask yourself why, because it's very important that you understand how you’re making money.

Umair: So I think the SPO practice has been growing over the past years and on the Smaato platform we also work with publishers directly. Buyers should know what type of inventory they're accessing. Each demand partner has their own strategies around it, but our core objective is to give control to our publishers. We are working with the publishers very closely on the app-ads.txt and sellers.json to help them make sure everything is transparent.

Leandro: Do the different strategies you see maybe vary between different DSPs or do you see that everyone is tackling a similar SPO approach?

Amy: I think that we are seeing different SPO strategies and that’s because brand advertisers and performance advertisers have different campaign goals and success metrics. For example, brand advertisers really care about reach and reaching specific audiences, ideally with the lowest CPMs possible. Conversely, performance advertisers look at metrics like ROAS, LTV, and retention rates. So when you think about your supply partners, you need to build your strategies around who's going to be able to provide you with scale and direct access to that inventory while being as transparent as possible. My colleagues mentioned app-ads.txt and sellers.json, which are incredibly important moving forward with transparency for both buyer and seller.

Leandro: Right. Makes sense. Another question you probably have a lot of experience answering is related to how non-gaming advertisers sometimes hesitate when buying programmatic inventory where most publishers are gaming companies. What aspects would you highlight about the composition of the gaming inventory audiences?

Offer: I think nowadays more and more gaming companies include programmatic in their User Acquisition (UA) media mix while maybe before it was just Facebook and a couple of SDK networks. Now programmatic takes a significant piece of the media mix. Gaming is definitely pushing DSPs to explore more and see what their models can do. It's not just about the reach but how much you can get out of those audiences.

Amy: I totally agree and I just want to draw out some stats because I think it's incredibly important to understand that:

  • In 2019, Mobile Marketer reported that there were 1.4 billion gamers worldwide
  • In 2020, Hubspot reported that there were 2.2 billion

We don't know what that exact number is, I'm sure the truth lies somewhere in between, but it’s impressive that nearly 20% of the world's population are gamers! We also know:

  • The average mobile user is on their device more than 3hs a day
  • Out of the 3hs a day, 90% of the time is spent in-app
  • Out of the 90% of the time in-app, 50% of those are gaming apps

So if I'm a media buyer, I want to spend my marketing budget on a channel where I know my audience is spending most of their time. I think gaming apps are important because they provide a brand-safe environment, the ability to diversify your marketing budget outside of just social networks and paid search, and they introduce access to audiences that are highly engaged.

Leandro: Right, it's best to leave data to speak for itself instead of falling under some belief that the right users for you do not play games or use a certain type of app.

Umair: Especially now, we see a huge spike in traffic, especially for gaming inventory. Streaming has gone up a lot too. We’re seeing all those trends, especially in the COVID-19 timeframe. I was also looking into the eMarketer report and they highlight that the hot trend this year will be the brand advertising following gamers.

In Smaato, we are seeing that brands are getting into this gaming environment and they’re exploring these highly engaged and huge audiences, and I think that's the best way to get your messages across different audiences. If you think about social media and other placements, there’s concern about the content…. In gaming, that’s not an issue. The content is a game in which people are really focused and I think it's very good for the brands.

Leandro: Yeah, and it's super interesting to see how the COVID situation seems to have accelerated certain growth trends. Speaking of that, some formats are gaining momentum for mobile gaming like video and playable ads. Have you seen any relevant trends across these formats?

Amy: So I would just like to reiterate what Umair was saying before, gaming publishers and UA marketers have seen the increase in mobile app usage both in time spent in an app and increased unique users.

I think rewarded video has always been a strong performer for advertisers. It's not surprising to me that MoPub has seen about a 15% increase in the number of uniques to this ad format. Another interesting stat is that the uniques to start video has grown 25%. This is really meaningful for advertisers because it indicates that consumers are actually watching your ads or interacting with your ads whether it's a playable or a video.

Offer: I also think it’s really interesting to see how rewarded video and playables start to converge. For example, rewarded video with a playable end card, so you start to see more and more experiences that connect 30-sec non-skippable ads with an end card where you can actually explore the experience of the game. The stats show that it can drive a much higher conversion. However, I would advise buyers who explore those units to be very sensitive to user experience. You can easily lock the user into 30 or even 40 seconds of non-skippable video, then show them a playable where the x button appears only after 10 seconds, and all of a sudden you have a full minute of captured experience which can also push users away. So balance is key and then make sure you measure the user journey within the ad to see where they drop. We found that if you keep the video under 30 seconds and then follow up with an end card which is playable it works well.

Leandro: Right, otherwise you are just stretching the users' patience.

Offer: I have four kids and one of them is 6 years old, and by now he knows that I "put ads in games". And when I look at how he plays those games, his interaction with those ads is terrible. He tries to close the ad and the x moves around, or just disappears… Aside from the anecdote, I think it's a great reference for us as professionals to look at other people playing those games, and how they experience those ads. I encourage everyone to remember that there is a user on the other end, it's not just about the CTR. Think of the experience as well.

Leandro: I totally agree that that user experience is super important, and if the ad experience is bad, it's actually going to push away the user, right?

Umair: Yes, and if I look at the feedback that we get from advertisers, they’re definitely trying different formats. They’re buying rewarded videos, but there are also different requests coming in like 6-second videos or 15-second videos. The shorter videos have a much better user experience compared to 30-second videos. Especially if it's happening multiple times in a session. There is some feedback on that, but we are seeing that advertisers are now willing to test these different formats because they’re full screen, and the audience is fully engaged.

Leandro: Jumping to our last topic: iOS 14. Apple has kicked the date forward so that's been a relief for everyone, but most companies expect a substantial decrease in effective CPMs with the advent of iOS 14. How do you expect publishers to adapt their waterfalls, and what are your recommendations regarding this?

Amy: There are two major things that publishers can do to get ready: one is setting up and testing their user consent mechanism. We know that Apple will allow publishers to gate the user’s consent behind their own internal messaging system, so don’t over-test, but definitely test multiple treatments.

The other thing is setting up differentiated waterfalls: a waterfall where you have device ID available and one where you don't. That will allow publishers to optimize based on what they're seeing with their ARPDAU when the release happens.

Umair: I think iOS 14 is a necessary change. We have experience in GDPR, CCPA... I think privacy is important. We expect that there will be some drop from the publisher point of view and the CPM will definitely be affected, performance definitely affected, given the less attribution data that will be available. My recommendation for publishers is A/B testing. Some publishers are ahead of the curve, and they're already A/B testing simulations without IDFA, working with an SKAdNetwork and how you receive the data in a small scale and doing some testing around that. Testing helps a lot.

Leandro: One thing that I'm really happy to have the opportunity of seeing is how the exchanges, yours included, really got together and cooperated quickly to find a standard and a way for everyone to work in the same environment.

Offer: Yes, Fyber, along with MoPub and Unity are the co-authors for the IAB SKAdNetwork solution, and I recommend DSPs and publishers to understand what it means. Umair, you mentioned testing, now we got some more time... use it for testing! That's the first point.

Secondly, some partners have already released iOS 14-ready SDKs that support new contextual targeting and parameters that are privacy friendly. I would definitely encourage publishers to start testing those SDKs.

Lastly, start experimenting with buying LAT (Limit Ad Tracking) traffic today. The more marketers that master buying LAT traffic, the more prepared that we, as an industry, will be for iOS 14. Yes, CPMs will drop and they will come back up because it will normalize the entire ecosystem, but we have to be prepared. Within the last 45 days or so, we were looking at LAT traffic, it's like 25% in the US. And you can see how fill rate on LAT traffic almost doubled in the last 45 days and win bids and clear price went up about 66%.

If you are a publisher and you are not doing ad monetization, go to your UA colleague and ask them how are you doing with your LAT buying because that's what will help publishers make more money once iOS 14 rolls out for everyone.

Leandro: Right, and when having multiple waterfall line items, how do you measure that value and LTV with SKAdNetwork?

Offer: We'll have to change the way we measure and run campaigns, so:

  1. Move to bidding because then you don't have those line items; and if not, you know, I would definitely recommend having less line items.
  2. Optimize more towards CTR because before the click we do have much more information than post-click. We talked about creatives, we can see CTR by creative, we can get some SKAdNetwork data per creative, so that's going to be very important.

I'm guessing we'll see less granular line items with the 15 cent increments and I also believe we'll see the CPMs go down at the beginning, so the waterfall will have more activity on the bottom side. It's going to be a two-quarter process.

Leandro: You all mentioned something around this, but testing and specially leveraging data around LAT traffic is super important to get ready.

Offer: Let's remember that with GDPR, as an industry we spent a long time trying to understand: what is consent? Is it binary? String? That alone took us a long time. Now Apple says "it's very easy". So I don't foresee the same lengthy pause as GDPR. I really am positive and optimistic that we'll see some kind of a drop, but then it will come back up again.

Leandro: I like the optimistic closure for the session.

Offer: You can’t be in AdTech for 10 years without being optimistic.

Leandro: I totally agree. Thanks a lot for participating, and stay tuned for the next episode of App Marketers Unplugged.

Wrapping up

Thank you for joining us on this session of App Marketers Unplugged 2020. If you enjoyed this episode, check our event series agenda for more information on upcoming sessions:

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