In this Q&A, Tim Cadogan, CEO, OpenX talks to ExchangeWire about the progress that has made in terms of transparency, the importance of an industry-wide standard to achieve further progress, and the areas of the industry that are seeing the most exciting developments. 

ExchangeWire: Transparency has been under the spotlight over the last months. Has significant progress been made to increase quality and transparency since it hit the headlines?

Tim Cadogan: Yes, there has been material progress in both quality and transparency over the past two years. Investments in quality-focused technology and strict enforcement policies by technology platforms, like The Trade Desk, OpenX, and specialised cyber-security firms (such as White Ops) have made a real difference.

Moreover, and crucially, new industry standards have emerged that allow buyers and sellers to independently verify the impact of these investments. Three of the most notable initiatives are the IAB’s ads.txt, Trustworthy Accountability Group’s (TAG) certification programs, and the IAB UK’s Gold Standard. All three enable buyers and sellers to verify their trust in their technology partners and hold them accountable.

The comments made by Marc Pritchard at P&G a few years ago marked a key turning point for the industry; and since then we’ve seen many brands start to aggressively take control of their programmatic advertising supply chain. Progress notwithstanding, there is still a lot of work to do to ensure brands can fully trust the ecosystem and invest more. For example, we all have our sights set on the opportunity with OTT (and let's not forget that TV is a highly regulated space), yet we are continually defending our space because some players behave in a non-transparent fashion, whether that be through the use of undisclosed buy-side fees, shadow first-price auctions, or, more recently, bid caching. Clearer auction mechanics that fairly represent the interests of both buyers and sellers, more transparent business models, and auditable investments in quality and fraud protections must all be addressed.

How important are standards in achieving transparency?

Standards are incredibly important and they represent a genuine sign that the programmatic space is starting to take an essential step in maturing as an industry. Together, we are beginning to build clear, measurable, and independently verifiable best practices that every reputable player in the advertising supply chain should follow.

Moreover, standards aren’t just about transparency. They also play an important role in eliminating fraud and assuaging brand safety concerns, while also significantly increasing marketer ROAS. If you look at TAG certification, for example, it’s been quantitatively demonstrated that advertisers who only include TAG certified companies in their supply chain can cut fraud rates by more than 80%, down to <2% levels.   

Ultimately, perhaps the most important factor in using standards to drive industry maturation is encouraging the principals – buyers and sellers – to hold their technology partners accountable to the standards they claim to hold themselves to.

How have standards impacted quality and transparency over the past 12 months? Could more be done by industry trade bodies and constituent players collaboratively?

We’ve made a lot of progress in the last two years and trade organisations have played a key role. The IAB is a great example, with the success around ads.txt particularly notable. In less than 12 months, brands have been able to practically eliminate the threat of domain spoofing by choosing to work with ads.txt-compliant exchanges. At OpenX, we are very supportive of these types of industry-led initiatives; and we were actually the first major exchange to block all reseller traffic not authorised on a publisher’s ads.txt file from entering our marketplace.  

The IAB UK Gold Standard, which OpenX also achieved this year, was rolled out recently to increase brand safety across the industry by requiring support of the ads.txt initiative, adherence to the LEAN standards set by the Coalition for Better Advertising, and JICWEBs DTSG certification for brand safety. It is another example of the industry helping to advance adoption of clear rules and procedures for everyone to follow.

We’ve invested USD$100m (£76.76m) in quality initiatives over the past few years, including USD$25m (£19.19m) this year alone; and a major component of this effort has involved aligning around clear standards and efforts from industry trade bodies.

With more standards and greater policing of quality, will innovation be threatened?

Not at all. Quality and innovation are actually symbiotic. When you look at certain types of innovation, such as header bidding, it was rolled out in a way that was clear to all the participants in the ecosystem. Another example was transparent first-price auctions, for which we shared our design specification well in advance with DSPs, modified it based on their feedback, and deployed it with their full advance awareness and involvement. An even more recent example is our work on opt-in video for app, which has been a collaborative effort with buyers since its inception. Indeed, in a two-sided market, collaboration is key, and a robust foundation in quality gives all players the confidence to invest and take product risks together.

As long as there is transparency, and all the players involved fully understand the rules, it’s possible, and in fact necessary, for our industry to constantly rethink and innovate how the programmatic ecosystem works.

Just think about how fast our industry changes. Take us as an example. Five years ago, our business at OpenX didn’t make a single dollar from header bidding. In 2016, it was the majority of our revenue. Three years ago, mobile app advertising was a fraction of our business. Today we are a mobile-first company with the majority of our revenues coming from the mobile ecosystem. Eighteen months ago, video was nascent in our platform. Today, it accounts for more than one out of every ten dollars we transact and is growing at more than 650%. OTT and CTV were future state plans a year ago and today we are rapidly accelerating our share of the market. Innovation is the driving force of this market and we know that our sustained investment in quality has helped accelerate these innovations.

Where are you seeing innovation and what excites you about the direction it can take the industry?

There are three areas I’m really fired up about. First, the future of video is incredibly exciting. Whether it’s mobile video, and new formats like opt-in video, or CTV/OTT, and all the untapped opportunity there, this is an area that is ripe for disruption. Media consumption habits are changing, and consumer attention is more fragmented than ever before. Rather than sitting on a couch and watching linear TV for hours at a time, consumers are shifting between traditional TV, OTT channels, mobile phones, and more. We believe that programmatic technology can play a critical role in terms of solving this fragmented media landscape for brands and helping them navigate it effectively.

Second, re-engaging the consumer. I think most of us know, anecdotally and empirically, that a lot of advertising doesn’t engage consumers. The combination of programmatic technology’s audience data-enabled ability to provide a highly relevant message to a specific person, in a specific instant, with an array of innovation in ad formats, creates enormous potential to improve the consumer experience. This flows directly to advertiser ROAS and seller yields, and it’s a reason why we are so excited about opt-in video’s potential.

Third, I truly am very optimistic about the room we have to create a higher quality transaction system with much clearer market design rules. I experienced the amazing expansion of the search industry as it went through its own maturation cycle and I am confident we can do the same with programmatic.

In sum, the fragmentation of media – and, thus, consumer attention – is something that major brands face every day. I believe programmatic technology is uniquely well-positioned to take the lead and provide new solutions that can solve this challenge for marketers, enabling scaled buying with highly relevant advertising experiences, and balancing innovation with quality and transparency across all connected screens worldwide.