Publishers waste video ad impressions thanks to a programmatic flaw

Publishers are feeling growing pains as programmatic video rapidly grows.

Some publishers are wasting up to 20 percent of their programmatic video impressions, even though programmatic video ad spend in the U.S. tripled from $3 billion in 2015 to $9 billion in 2017, according to eMarketer. This is largely being driven by video ad networks that win auctions but then, finding nobody they can resell the ad space to, don’t complete the purchase. The publisher is left without any revenue for the unused space.

Video specs like video player ad-serving interface definition tags let buyers and their vendors install their own code on publisher webpages. The flexibility of these ad tags was originally intended to help buyers better detect ad fraud and track user interactivity with their ads, but it is being abused for arbitrage as more money pours into video. Some vendors use this ability to their advantage by running their own auctions on the publisher’s browser after having won an impression.

“They are just bidding for the sake of bidding and hoping they have something on the back end to win,” said Lee Garfield, director of programmatic sales at Zynga, which publishes games such as FarmVille and Words with Friends.

The prevalence of video ad opt-outs varies each month, but sometimes Zynga loses 15-20 percent of its 10 billion monthly video impressions due to VPAID errors, Garfield said. To reduce its exposure to these problems, Zynga plans to reduce how much inventory it pushes through open exchanges.

Zynga sells about 5 percent of its video inventory direct and the rest programmatically. About 80 percent of its programmatic video inventory is sold through open exchanges. But over the next year, it wants to increase its programmatic direct business so that open exchanges only account for 20 percent of its video inventory, Garfield said.

A publisher tech specialist speaking on the condition of anonymity said his company’s websites regularly waste at least 10 percent of their video impressions due to ad tag errors. Aside from the lost revenue, another aspect of these errors that infuriates publishers is that vendors get publisher audience data without ever paying for it.

While ad tech might be at the crux of this problem, not all vendors win out here. The supply-side platforms that publishers work with also don’t get paid if the buy-side vendor doesn’t dole out any money.

There are legitimate reasons for vendors to opt out after winning an impression. Publishers may misstate the size of their ads’ dimensions, or a publisher’s URL might not be correctly listed in the SSP. But most of the opt-outs come from ad network arbitrage, said Doug Render, svp of product at video ad server SpotX.

Nick Branstator, CTO of video platform Playwire, said this problem has worsened for several of his publisher clients over the past year as video ad spend increases and ad nets dry up, but he declined to speculate on how many impressions they’re losing. A major problem with open video exchanges is that buyers can “walk away from bids with impunity, based on decisions that are opaque to sellers,” he said.

The Interactive Advertising Bureau is beginning to move away from VPAID, but it is unclear if the replacement tags will fix these snafus. Even if they do, it will take time for most buyers and vendors to adopt them.

Moving from open exchanges to private marketplaces and programmatic direct, where publishers have a direct connection to their vendors, is one way for publishers to mitigate these problems. SpotX data shows that the frequency of VPAID opt-outs in PMPs is about half of the open exchange opt-out rate. But setting up these deals with advertisers and properly integrating everything takes more time than flipping on an open exchange, and they are not always easy to scale.

Until the ad supply chain cleans up, the most basic fix a publisher can make is to cut vendors if they’re not bringing in enough revenue to justify their opt-out rates.

“We blacklist really heavy offenders,” Garfield said.

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