The Curation Spark in the Programmatic Forest

Key Themes:

• Power Dynamic Shift in Ad Tech: The central theme is the ongoing struggle for power and control over media decisioning within the programmatic advertising ecosystem, moving away from DSPs towards the sell side (SSPs and "curation houses").
• The Evolution of Programmatic: The source traces the history of programmatic advertising from simple DSP/SSP integrations and waterfall ad tags to the introduction of header bidding, its subsequent instability, and the emergence of "curation" as a response.
• What is Curation?: Curation is defined as SSPs modularizing DSP functions (targeting, optimization, data) and moving them into their own systems. It is a strategy for SSPs to remain valuable in the face of disintermediation attempts.
• The Rise of "Curation Houses": The concept of "curation houses" is introduced – companies that package media based on criteria, using data and platforms (often SSPs) to create deal IDs for buyers. Anyone can be a curation house.
• Horizontal vs. Vertical Stacks: The future of ad tech is presented as a landscape of competing horizontal and vertical stacks. Vertical stacks are single companies controlling the entire supply chain (like The Trade Desk's Open Path), while horizontal stacks are combinations of modular companies (DSPs, SSPs, data vendors, curation houses) working together.
• The Agency Holding Company's Role: Agency holding companies are significant players due to their control over budget and their reliance on rebates, which influence where media is bought and sold.
• Publishers' Opportunity and Challenges: Publishers are currently at the bottom of the power dynamic but have an opportunity to regain control and value by becoming "data companies," acting as signal generators, or even potentially curation houses. However, lack of transparency and control within curation models pose challenges.
• The Role of Data and Optimization: The effectiveness of data, particularly third-party audience data, is questioned. Curation is seen as emerging partly because selling raw data alone wasn't consistently driving performance, highlighting the importance of optimization.

Most Important Ideas and Facts:

• Media Decisioning Power Dynamic: The authors introduce this framework, illustrating the shift in control from the buy side (DSPs) to the sell side (SSPs and publishers) and the importance of audiences and identifiers in this dynamic.
• Quote: "it's really about who's curating the media. On the left side, it's the sell side. On the right side, it's the buy side."
• Quote: "When you're further onto one side or the other of this, that's where we see the power dynamic and the struggle sort of begin to occur."
• Header Bidding's Unstable Configuration: Header bidding, while improving efficiency, created a redundancy with two yield auctions (SSP and Prebid), making the SSP's value proposition less clear and paving the way for disintermediation.
• Quote: "you now have two categories in the value chain, SSPs and pre-bid that are performing the same function, and that is an inherently unstable configuration of the universe."
• Open Path as a Disintermediation Catalyst: The Trade Desk's Open Path, by submitting bids directly to Prebid, bypassed the traditional SSP role and made the possibility of disintermediation a reality for SSPs.
• Quote: "This was the transition to like, wait, the disintermediation that we've been discussing as being possible. Isn't just possible. It actually happened with one of the three biggest buyers in the industry."
• Curation as SSPs Striking Back: Curation is explicitly framed as the SSPs' defensive strategy against disintermediation, where they integrate DSP functions to maintain their value and create dependence.
• Quote: "SSPs kind of went well, if pre-bid can do that to us, we can do that to DSPs."
• Quote: "Curation is the SSPs modularizing DSP functions and moving some of them into the SSP."
• Curation House Model: The concept of a curation house, a company focused on selling campaigns by packaging media through an SSP platform, is a significant development enabling new players to control budget.
• Quote: "The curation house is the company doing curation. They have a sales team and they're focused on campaigns."
• Quote: "anyone can be a curator and anyone can sell a campaign, which means that it's not just the media planning team who gets this or the DSP that decides where it goes."
• The Dislodging of Budget: Curation dislodges budget from traditional DSP and agency planning routes, allowing new entities (curation houses) to control spending.
• Quote: "This begins to dislodge the budget... Somebody else who has no interest and no stake in the transaction showed up and now controls part of the budget, and that's where where we're heading."
• Future Stacks: Horizontal vs. Vertical: The authors predict a future dominated by these two competing stack models, with horizontal stacks offering flexibility and vertical stacks offering streamlined control.
• Quote: "We're gonna see a bunch of new companies pop up that operate in one of these roles."
• Agency Holding Companies and Rebates: Agency holding companies' motivation to preserve their profit centers (often through rebates) explains why vertical stacks (like Open Path) haven't completely dominated the market, as they bypass traditional rebate structures.
• Quote: "this vertical stack on the far right, accidentally deleted an agency hold company, profit center."
• Quote: "The like, we sure we know that another path might perform better, quote unquote, however. That is not necessarily the interest of our client."
• Curation's Pros and Cons: A detailed analysis of the benefits (flexibility, scrappy ad ops, faster testing, distributed data) and drawbacks (non-transparent fees, black box targeting, no upside for publishers, perpetuating kickbacks) of horizontal (curation) stacks is provided.
• Vertical Stack Cons: While seen as a potential future, vertical stacks have drawbacks, including reduced opportunities for publishers to "play games" (like bid jamming) and the potential for bid shading to depress CPMs.
• Curation's Impact on SSPs and Publishers: Curation is expected to lead to consolidation among SSPs, pressure on curation margins, and require publishers to focus on demonstrating outcomes to increase their leverage.
• Recommendations for Publishers: Publishers should push for more control within curation platforms, including managing markups, allow lists, and revenue sharing. They should also focus on making their inventory more valuable by supporting marketer outcomes.
• Quote: "Publishers have less leverage to increase the CPM rates of their inventory because it's still ID based. It's vanity metrics. It's not really outcomes."
• Quote: "if you want to take this opportunity to reclaim some of your power to have a seat at the table, we need to force the conversation and get the tools built that we need."
• The Secret Behind Curation: Curation's emergence is linked to the difficulty in making audience data consistently perform for advertisers, leading to a focus on ad ops and site-level optimization disguised as data-driven targeting.
• Quote: "A dirty secret about curation is that it was born out of the fact that data doesn't work."

Overall Takeaway:

The programmatic ad tech landscape is in a state of flux, driven by power struggles and the pursuit of margin. Curation, while not entirely new in concept, represents a significant shift where SSPs are leveraging their position to take on roles traditionally held by DSPs and agencies. This creates new opportunities and challenges for all players, particularly publishers, who need to adapt to the changing dynamics and advocate for greater transparency and control over how their inventory and data are used. The future will likely see a mix of competing horizontal and vertical integrated solutions, with agency holding companies continuing to influence the flow of budget. Ultimately, despite the technological advancements, effective ad operations and sales remain crucial in driving performance and capturing value.