Interactive Advertising Bureau
20 February 2024

Programmatic Perspectives Monthly Blog with David Bauckmann on Supply Chain Complexities

Introducing the debut of IAB Europe’s Programmatic Trading Committee's monthly blog series! Every edition will feature a guest contribution from one of the committee members, offering unique insights into the most crucial issues facing the industry. Get a firsthand perspective from industry insiders—each opinion is individual and might not necessarily align with IAB Europe's views. Nevertheless, fostering dialogue on programmatic topics is vital for advancing standards and excellence in programmatic advertising collectively. 

We are delighted to hand over this month’s debut edition to David Bauckmann, CTO of Impression Media. David has been working in online advertising for over 20 years, the last 10 years as a programmatic advertising specialist. Prior to that, he worked in SEO and originally in website coding. He has a degree in geographic information systems. 

Supply Chain Complexities 

Increasingly, I find myself struggling in the complexity of the supply chain and the associated challenges of extensive records in ads.txt in my practice. I believe this challenge is now on the table for most publishers, and I welcome your comments. 

I consider the entire issue of the supply chain to be so complex that I have written about it in my latest book, "Programmatic Supply Chain in Context – A Practical Textbook" (available for free download to IAB members or for purchase at production cost on Amazon). 

The current challenges faced by most publishers can be summarised in two points:

  1. The increasing pressure to reduce CO2 emissions in the advertising industry forces us to clean up our programmatic ad stack and limit the number of partners we use.
  2. The programmatic ecosystem has expanded to an extreme level in recent years, with many unnecessary resellers who add no value – but how do we identify them? 

Is Header bidding to blame?

The nature of programmatic buying technology allows relatively easy entry for new players into the system. Entry barriers are low, and the potential to acquire clients is high. With the advent of header bidding, this has become even simpler, and the number of companies operating in this area has skyrocketed. 

You might not find the term "simplicity" appropriate, and I am well aware that the number of people with sufficient know-how and experience is absolutely inadequate. But on the other hand, compare it with the field of ad servers – how many companies do you know that successfully offer ad server technology, and how many offer SSP or header bidding? 

Thanks to header bidding, the number of partners each publisher uses has multiplied. It looks tempting, involving a new SSP is relatively simple, costs are minimal, and it all contributes to a "healthy competitive environment," so why not involve as many potential buyers as possible in your auction. 

But in just a few years, there are really too many of them. There isn't a week when a new company doesn't try to convince me of the benefits of header bidding and the advantages of engaging their solution. And in 99.9% of cases, they are wrong – they are not beneficial for our solution and would only consume our resources and time. 

The mistake is not in the technology

To set the record straight, the mistake is not in header bidding, but in how we use it. Every tool can be a good servant but a bad master when used incorrectly. 

Unfortunately, most of us didn't realise this in time. 

For example, directly from my practice:

  • We use 15-20 direct integrations of partners, which then involve hundreds more.
  • More than 50% of bids come to us through more than two resellers.
  • The number of entries in our ads.txt is more than 100.
  • Our carbon footprint is higher than necessary. 

We have already tried with colleagues that involving any new partner does not bring us any higher revenue. On the contrary, it is time-consuming and technologically just consumes a lot of energy. 

We have directly integrated all significant SSP players in our region. The only chance to convince me to try a new SSP now is to prove that they have unique and significant demand in our region that we are not already getting. In the last two years, only one has succeeded. 

The question no longer is, "Why not try a new source of demand when it can't hurt?" It has long been hurting us, but we haven't noticed it yet.. 

It's time to clean up 

Until recently, we didn't realise how much electricity our technology consumes and how much CO2 it generates. Now we at least partially know more. It's almost impossible to measure the exact flow of one bid, but at least some answer is given by startups like SCOPE3. 

This year is the time to clean up. Until now, it didn't make much sense to add new partners. But this year, we will start eliminating even those involved. We have already notified our significant partners to clean up their act and let us know which entries from ads.txt we can delete. 

I don't expect that we will be getting rid of direct large SSPs, but we will definitely limit resellers and carefully discuss with each, what partners they use. 

And what about you, when was the last time you added a new partner or entry to ads.txt and were sure it would bring you something positive?

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