• Curated auctions are becoming popular.
• SSPs organize closed auctions using data from publishers.
• Participants in the sales chain are finding new roles.

The upcoming abandonment of third-party cookies (someday!) is already changing approaches to working with the audience throughout the sales chain.

Curated auctions are becoming an increasingly prominent trend in the cookieless era. This type of auction involves matching the advertiser's proprietary user data with the publisher's first-party data.

Of course, private auctions are not new; they have existed for a long time. However, now the audience data matching occurs not only on the DSP side, where technologies based on third-party cookies are usually used. It seems that with curated auctions, SSPs are becoming managers of the publisher's first-party data.

This approach changes the roles of DSPs, SSPs, and DMPs in ensuring audience targeting. In the new scheme, DSPs have less control over how advertisers interact with the audience, which can cause some tension among the participants.

Supply Chain

Curation is becoming more relevant due to the loss of targeting signals, forcing advertisers to use previously unconventional methods of audience targeting.

«The industry is moving to curated auctions in SSPs in response to the cookie deprecation.» — notes Miles Pritchard, a partner at OMD, responsible for data operations.

Previously, advertisers could create their unique audience set by sending a brief to a data provider who interacted with the DSP through cookie IDs. Then, about 36 hours later, the DSP would have the ability to work with this audience, explains Pritchard. However, with the onset of third-party cookie deprecation in browsers, data providers found it harder to pass such audience sets to DSPs in the same way.

Now SSPs offer a similar service using both the publisher's first-party data and data obtained from other sources.

«This is perhaps one of the few mechanisms that can survive the cookie deprecation and continue to enable large-scale audience data work from any sources.» — said Pritchard.

Advertisers are following the trend of optimizing their supply chains by turning directly to partners they already work with to organize auctions. In a context where first-party data increasingly dominates auctions, these partners become sellers.

Data Marketplaces

The focus of data work is shifting from DSPs to SSPs, as SSPs partner with third-party data providers like Experian and TransUnion to improve data matching between buyers and sellers.

Thus, SSPs create their data marketplaces where buyers can purchase additional audience data layers for their targeting. Previously, such data marketplaces were mainly available through DSPs.

These partnerships with third-party data providers allow SSPs to stand out and potentially compete with DSPs. Buyers optimize their supply chains, leaving the minimum number of partners possible. For example, last year, Microsoft's Xandr, PubMatic, and Magnite partnered with Experian.

SSPs see this transition as an opportunity to differentiate their data usage approach, offering quality solutions and transparency, said Scott Ensign, Chief Strategy Officer at Butler/Till.

«SSPs, which have always been at the end of the sales chain, can now participate in negotiations with advertisers, using their features (such as owning the publisher's first-party data) to emphasize their advantage over other SSPs.» — said Ensign.

The trend of curated auctions in SSPs encourages DMPs to rethink their role as an essential element of these auctions. Audigent and Lotame — two companies that have moved away from using the term DMP and now offer services for curated auctions, have also integrated with Experian.

Advertisers use Experian audience segments through their own integrations, said Kimberly Gilberti, Chief Product Officer of Experian Marketing Services. However, each platform applies its unique set of Experian data for auction organization, helping SSPs and DMPs to differentiate.

DMPs not only match data sets between SSPs and DSPs but also work with lookalike modeling to extend campaign reach. SSPs package the obtained audience into PMPs and assign this PMP a deal ID. This deal ID can then be sent to the DSP, allowing the brand's agency to purchase impressions associated with this PMP using programmatic.

For example, Butler/Till purchases local media advertising inventory for 19,000 individual agents of the insurance company State Farm, as Ensign reported. About 80% of these agents buy advertising through programmatic.

Butler/Till, in collaboration with Audigent, conducts curated programmatic auctions, focusing on various consumer life stages. Using the audience data set collected by Experian, they identify matches for these life stages, identifying users who have recently become parents or purchased a new car or home.

By targeting this audience, the campaign can be optimized more efficiently than if Butler/Till bought inventory through the entire local media network SSP. The PMPs created by Butler/Till and Audigent have 5% lower acquisition costs and 10% lower CPMs, said Matthew Coleman, Director of Marketing Programs at State Farm Insurance Agency.

Incredible Transparency

Since the SSP manages such an auction, it can match advertiser data with external and publisher data in real-time. This eliminates synchronization delays, making unique audience sets immediately available in the DSP.

Real-time operation allows partners to share data faster, ensuring quick adjustments to current campaigns for optimal results.

When an auction is conducted at the DSP level, the DMP must «wait from 30 to 90 days to get a report and find out who bought our data» — said Drew Stein, Founder and CEO of Audigent. However, when an SSP conducts a curated auction, the DMP can immediately see who is using their data, he added.

This incredible transparency between partners is one of the reasons why DMPs are so optimistic about the trend of curated auctions. It helps them stay in the supply chain despite advertisers' desire to cut out intermediaries.

Audience data providers are trying to become the link that synchronizes user data from various sources, said Pritchard.

Limiting Alternative Identifiers

Additionally, since SSPs can pass deal identifiers to multiple DSPs, advertisers are no longer tied to a specific DSP. This differs from the previous approach, where it was necessary to set up the audience for each DSP separately, added Pritchard.

Curated auctions provide advertisers with greater flexibility in using alternative identifiers without being limited to identifiers supported by a particular DSP.

This is important because DSPs often limit the set of identifiers that can be used on their platforms, said Eli Heath, Head of Identification, Global Partnerships and Products at Lotame. Curated auctions help avoid these DSP limitations.

«Now we transact using a deal ID that any DSP can work with since they don't need to look at the identifier in the bid request» — said Heath. «All audience matching for the DMP segment was pre-verified at the SSP level.»

For example, Lotame uses its Panorama ID to work with the audience in browsers that do not support third-party cookies, such as Safari and Firefox, to integrate with SSPs, Heath said. However, The Trade Desk prefers to use its own alternative UID2 identifier and does not support Panorama ID. Meanwhile, Google DV360 does not support third-party identifiers without cookies at all, except for publisher-provided encrypted identifiers.

However, as Heath said, thanks to the new approach to curated auctions, Lotame can send its audience segments to SSPs like PubMatic or Magnite and find matches with Panorama ID identifiers on publisher sites. The SSP then packages this audience into a target deal ID and sends it to the DSP, bypassing the need for the DSP to know which alternative identifier was used for audience matching.

DSP Response

DSPs are starting to express dissatisfaction with the lack of transparency and loss of control over auctions.

They express concerns about the lack of transparency, claiming that they cannot trust certain cross-platform probabilistic audience matching because they do not know which identifier solutions were used to form these segments.

These issues will worsen after the deprecation of third-party cookies in Google Chrome. This is because cookieless targeting solutions will rely on first-party data and closer integrations with publishers.

But it is unlikely that SSPs will give up their new advantages. They quickly realized that curated auctions are a «tool for moving up the food chain,» as Pritchard said.

«Now they are waging a higher-level war around consulting and how well they can take a brief and turn it into the required audiences through their partner integrations,» he said. «It's like an arms race.»

For Publishers

Using curated auctions allows more effectively targeting ad campaigns to the right audiences, relying on publisher data. Your data is important! The ability to collect, process, and provide it in the right format can become a very important area of monetization work.

Forecast

With the deprecation of third-party cookies, curated auctions will become the main mechanism for interacting with the audience in programmatic advertising. SSPs and DMPs will continue to develop, offering new tools and solutions to improve targeting quality. DSPs will need to offer something new and interesting.

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• Advertisers waste too much money on alternative audience identifiers
• Advanced Matching: how to adapt to cookieless