Flatten Your Waterfall with Pre-Bid Integrations to Scale Programmatic Revenue

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Looking at publisher setups lately, I’ve got a distinct feeling of déjà vu – complex waterfall setups with indirect monetization partners are everywhere. What is this, 2009?  Fortunately no, but the challenge of publisher waterfalls is still very much alive despite the advancements in RTB, and just as this issue put a cap on publisher revenues with networks all those years ago, a complex waterfall can limit publishers today from scaling their programmatic channel to its maximum potential.

The solution?  Back in 2009 it was to amalgamate all those network relationships into an SSP, but given the fragmentation is now between SSPs, publishers in 2015 should look to migrate their implementations toward pre-bid integrations, also commonly referred to as header-bidding, advance bidding or tagless setups.  This technology has actually been around for years, but hasn’t been widely adopted in the publisher community until the last 12 – 18 months.  From my own personal perspective working with over 50 premium, global publishers at Yieldex, I’ve seen pre-bid as a transformative solution, creating major operational efficiencies as well as increased revenue.

The reasons for walking away from the waterfall approach are many and compelling, but it comes down to ad serving costs on passbacks, inventory loss due to platform-to-platform latency, and most importantly, low-fidelity yield management.  Most ad operations people know what those first two are, but that last one probably needs a bit more explanation. What I mean there is that when publishers implement ad tags for a given programmatic partner today, they typically put in that platform’s average eCPM yield for the last week or month, or some recent period.  This means from the ad server’s perspective (which is doing the yield management don’t forget), the value is only known in aggregate across millions of impressions and not on an impression-by-impression basis.

Since the average rate then controls when the ad server decides to serve that ad tag, though, what any platform will pay for a specific impression has no impact on if it actually wins that supply.  Rather, the platform’s rank in the waterfall is what really decides who wins the impression, irrespective of value. Add in the fact that for publishers on DFP, AdX can bid impression by impression which may lend advantage to AdX that could be hard to beat by other programmatic partners.

How does a pre-bid setup solve all these awful publisher pain points you ask?  Pre-bid provides a solution because it separates the valuation process from the ad serving process with programmatic platforms.  Importantly, it moves the valuation part ahead of the call to the publisher’s ad server, so that a bid value can be injected as a key value parameter.  With that key value in hand, publishers can target lots of line items to very specific bid values.  Specific bid values mean high-fidelity yield monetization, because now the publisher can weigh the true value of an impression not based on an average, but at an impression level.  As a side benefit, the publisher can also know if any given platform can monetize an impression to begin with – either there’s a bid or there isn’t – which eliminates all that fill risk, as well as the inventory loss to system latency, because the waterfall just isn’t necessary any longer.  In other words, pre-bid enables any indirect partner to work just like AdX – yield managing at the impression level, and that’s a big deal.

The other key benefit here is that because getting a valuation doesn’t require redirecting the inventory, a publisher can ask as many platforms as they like to bid on the same impression simultaneously, which drives demand liquidity.  Pre-bid is a total game changer for publisher monetization strategy.

Now pre-bid sounds pretty good, but like anything, not all solutions are created equal, and it’s worth it for ad operations to dig in and review specific partner nuances.  One critical factor is whether or not a programmatic platform is actually running an auction as part of their pre-bid process, or is creating some kind of estimate instead.  Estimates are lousy because they bring back some of the downsides of the waterfall process.  An estimate won’t be 100% reliable, so it’s possible that those systems can’t fill every impression they bid on, and that they won’t fill at the rate they bid.  This is because they only run the auction after they get the inventory, which is an inferior approach.

Another important factor is whether or not a platform can return a true numerical value as a bid, versus something more generic.  I’ve seen platforms that can only pass “high / medium / low”, or even as limited as “yes / no” as pre-bid responses.  That’s an improvement over just using an overall average as the waterfall does, but still lousy because it’s still low-fi yield management.

We also see a big difference in how well pre-bid works in the US vs. the rest of the world.  Companies that don’t have internationally sourced demand partners or datacenters outside the US have major issues with latency (that is, even providing a bid in a reasonable amount of time), or for those that are providing estimates instead of a real bid, show an especially high rate of failure on fill and monetization.   That is, their estimates are especially bad on international inventory.

And finally, while it’s a bit of a technical nuance, finding a partner that uses an asynchronous script is an important step in minimizing the impact pre-bid scripts can have on how fast the rest of your site renders.  One of the potential downsides of pre-bid scripts is the additional latency they can add to the page.  That’s not because you are waiting longer for ads to load – that should actually happen faster because your users won’t move through a long daisy chain of irrelevant partners – but because when JavaScript renders synchronously in a browser, it can prevent the rest of the content from rendering until the JavaScript has completed.  This is just how browsers work, and it’s one reason why many publishers choose to load scripts and tags of any sort in a tag management solution. As anyone in ad ops knows, the easier you can make your life with IT, the better.

There’s no question that more and more dollars are moving to programmatic channels, so if you are a publisher struggling under the weight of an unwieldy waterfall, it’s only going to get worse.  Modernizing your connections through pre-bid not only allows you to scale your partners, it can increase revenue by eliminating wasted inventory, and most importantly, it provides hi-fi, holistic yield management between all sources of demand.

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A Clearer Message and a Bolder Look for AppNexus

When we built our website three years ago, things were a bit different here at AppNexus. For starters, we didn’t have 1,000+ employees working in 23 offices from Sao Paulo to Singapore. In those bygone days of real-time, serving five billion impressions in one day was a landmark feat worth emblazoning on our company wall (in contrast, we served 45 billion impressions on one recent day). Let those numbers speak for themselves.

As we continue our growth-spurt, we also continue to learn at a fast clip. One of the important insights we’ve gained over the years is the constant need to optimize (and customize) the ways that we engage our different audiences. Agencies, publishers, and ad tech companies are empowered by the technology services we provide—but their business needs are as unique as their company mission statements. In order to provide the right technology solutions for each of our audiences more accurately—and to reflect our overall mission of creating a better Internet—we’ve rebuilt our website and company assets in their entirety.

It all begins today. While it will be evolving continuously over the coming months, we couldn’t be more proud to announce the launch of our new AppNexus.com.

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But we haven’t just created a new website. We’ve also evolved our company logo and given it an ultramodern twist. We’ve scaled up the look and feel of all our external touch points—whether it’s a business card you receive at our next event, a white paper you download from our website, or the look of our business presentations at your offices. In sum, we’ve restyled our company’s look to match its position as an industry leader.

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You’ll be hearing (and seeing) more from us soon. In the meantime, you can see for yourself what we’ve done at AppNexus.com.

 

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CEO Platform Update: Inventory Quality and APB

When my colleagues and I first conceived of AppNexus eight years ago, we aspired to build an open platform that would empower innovative companies to build and grow their technology on top of ours (for a fun look back at our initial fundraising deck, see this FRC article).

As our company has grown, and as our platform has evolved, we’ve made a conscious effort to stay true to this founding principle. At our EMEA Summit in London, we announced two major initiatives — Inventory Quality and the AppNexus Programmable Bidder — that tie directly to our vision. I wanted to reach out personally to offer greater detail about both programs.

Inventory Quality

With the incredible growth of programmatic – which, according to most independent forecasts, has passed the $10B mark globally – and the emergence of hundreds of companies operating programmatic businesses of all types, it’s increasingly difficult for buyers to make informed decisions about every single seller. This complication creates opportunities for bad actors to sell low-quality or fraudulent inventory, which in turn makes buyers reluctant to work with new sellers even if they are innovative and valuable marketplace participants.

To be an open platform and sustain innovation, our ecosystem needs buyers to be confident in the quality of the inventory available on our platform. It’s an issue that we’ve pondered extensively, both as a theoretical and a practical matter (If you’d like to know more about our thinking, check out a recent column that I wrote for Forbes.)

To maintain buyers’ confidence in the quality of the inventory they purchase through the AppNexus platform, AppNexus has taken three major steps that will ultimately benefit all of our customers:

AppNexus Spend Protection provides buyers with a refund if they buy inventory that is determined by a participating verification partner (initially, Integral Ad Science or DoubleVerify) to be misrepresented or non-human. This measure will encourage buyers to open up targeting to sellers with whom they have not previously worked. For details on AppNexus Spend Protection, please attend one of our webinars and see the documentation.

Pre-Bid Policy Enforcement applies multiple detection algorithms to every ad request seen by the AppNexus platform and rejects non-compliant traffic before it is auctioned to the market. As of early August, you will be able to see “filtered impressions” in reporting to assess the impact of this program. We have been steadily rolling out new detection techniques over the past few months, and we believe that we are making significant progress in removing low-quality traffic from the platform.

Seat Termination occurs when an AppNexus client has high levels of policy violations or provides little high-quality traffic. The AppNexus ecosystem will continue to be open to any value-add participant, defined as companies who are (or have direct relationships with) quality publishers and app developers; who are (or who represent) sources of high-quality demand; who offer proprietary content, data, creative, or other assets that increase the value of media; and who share our conviction that advertising should make the Internet a better place for consumers, marketers, and content producers alike.

I think these measures offer a good sense of the focus and energy that AppNexus is applying to Inventory Quality. I would like to thank the many clients and partners who’ve provided us with constructive feedback on how we can enforce our policies while retaining an open platform. I hope you will continue to share your honest thoughts on how we’re doing and where we can improve.

AppNexus Programmable Bidder

For almost a decade, I have been trying to find a way to allow innovative ad tech companies to create powerful algorithmic models that can be efficiently executed in real time. We announced the AppNexus Programmable Bidder in June at AppNexus Optimize, and I’d like to share an update after a month in alpha testing.

We have had 10 alpha clients testing APB for around 5 weeks, and around half have successfully put models into production, with the others actively working on it. There are still some technical issues that we are working through, and we have not yet released APB to all of our production bidders for fear of causing outages across the entire platform.

At the same time we are working with alpha clients to get their initial trees live, we are also actively working on the next major release of APB. This release will include new features for the Bonsai language to get us to parity with log-level data (streaming and batch). We will also support a new “bid modifier” bidding type that uses the output of the custom model to modify the prediction from our built-in optimization. This feature is especially useful for audience-based models and can be used in combination with real-time data providers.

Even in its alpha state, we believe that APB is the most powerful “bidder as a service” available in the market, incorporating complex modeling, real-time trafficking, real-time data feeds both in and out, comprehensive APIs, and full integration with our Console UI. Please contact us if you are interested in joining the alpha program, and please don’t hesitate to refer colleagues that may be able to save a ton of money and effort by using APB instead of building a bidder.

Since our very conception, AppNexus has always believed that open beats closed. Everything that we do is designed to benefit innovative companies like yours that have built their businesses on the AppNexus platform.

I want to thank you for supporting us. I hope you’ll agree that a concerted focus on Inventory Quality is critical to be the largest and best independent advertising ecosystem on the Internet. And I hope that you’re as excited as I am about the potential that we’re opening up for innovation with APB.

Yours,

Brian O’Kelley

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Scaling the Wall: Redefining Success at AppNexus

During the fifth week of my summer internship at AppNexus, the Finance and Business Analytics (FiBA) team went on a rock climbing outing. As an intern with a solid three hours of rock climbing experience in my repertoire, I walked into Chelsea Piers with a sense of self-assurance. I prepared to impress my teammates–most of whom had expressed their lack of confidence–with my agility and fearlessness. You’ve done this once before. You’ve got this, I assured myself.

What happened internally when I actually saw the wall was a bit different. My face flushed as I noted its immense height. Unlike the smaller, more intimate studio that I had expected, the walls here seemed hopelessly large and unpopulated. An internal dialogue doggedly persisted, assuring me of each fatal or near-fatal possibility. I could not shake the anxiety that I had somehow failed; that I had disappointed everyone, and that I had failed to crush my natural fear of heights and embrace the terror of performing imperfectly. And yet, my team cheered me on through three rounds, each of which grew progressively more challenging. Though I only made it half-way–with many awkward hesitations– through the first round, I reached the top with quite a bit more boldness on my second attempt. By the third round, I climbed to the top without hesitating. I was able to do this by listening to the guidance my peers below offered, and by refusing to allow my own hubris to overrule my dedication to the task which I had set for myself. My rock climbing experience is paradigmatic of the first leg of my internship: I came to AppNexus aware of both my achievements as well as my fears, but despite self-awareness and academic preparation, I had to learn how to fail in order to succeed. Continue reading

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When Data Met Marketing

Numbers and I have never gotten along. While I ‘ve never been particularly horrible at math, I’ve just never been able to feel any connection to numbers. This, in part, is one of the reasons why I’ve chased words and stories all of my life, primarily studying English literature and communications during my academic career. In fact, my aversion to data and connection to words is what drew me to the Corporate Marketing internship at AppNexus in the first place – I’d assumed that with this team, my summer would be rid of numbers.

I was wrong.

Tackling My Project

You can imagine my shock when my manager, Michelle, told me that I’d be working with numbers all summer. She explained to me that I’d mainly be partaking in “post-event email analysis”, or rather, scouring for statistics and tackling trends to fuel key email marketing insights. She told me that I’d be analyzing all of the email data from the past few years revolving around event-based email practices, ultimately coming up with general rules and processes that will optimize the future successes of email campaigns. She also threw around words like “excel,” “regressions,” and “pivot tables,” all of which gave me minor heart palpitations. Continue reading

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Advocacy and Allyship: A Reflection on Pride at AppNexus

Last Friday, the United States Supreme Court ruled 5-4 that same-sex marriage is a constitutional right. AppNexus is proud to be one of 379 companies that filed an amicus brief with that same court to set a business case for marriage equality.  Filing this brief was just a piece of the work we do to support the LGBTQ* community. At AppNexus, we have Affinity Groups, empowered clubs around identity who discuss and advise our leadership on diversity issues, host social events, and pave the way for other AppNexians to learn and become allies.

OutNexus, our LGBTQ* Affinity Group, wanted to celebrate Pride while fulfilling those goals of fostering allyship and providing education. This is how we do it:

 

  1. Send weekly educational materials

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How can you know where you’re going when you don’t know where you come from? Each week, OutNexus’s Community Chair Yanyi Luo dropped a new, footnote-laden bit of LGBTQ* knowledge in the collective AppNexus inbox. Here are the topics that landed: The History of Pride, The Status Q*: A Lay of the Land in LGBTQ* Issues in 2015, Allyship is an Action, Not An Identity.

 

  1. Pie your execs

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There are two things that really stand out about AppNexus culture: a healthy relationship to competition and a dedication to doing good outside the office. This month, our executive team volunteered to get pied in the face to raise money for the Ali Forney Center for LGBTQ* homeless youth.

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Operating Ad-Hoc: Finance in the Startup World

AppNexus prides itself on cultivating a fast-paced environment in which AppNexians must maintain flexibility in order to succeed. I began my time here slightly unprepared for this operating pace. Prior to interning at AppNexus, I worked for companies who operated at slower speeds, valuing rigid schedules over flexibility and the possibility of working on something new. On one hand, a rigid schedule allows for you to plan months in advance and pin down exactly what needs to be accomplished and when. On the other hand, getting involved in projects that you had no idea your department even handled provides a unique experience that would not be possible at other firms.

This summer, I’m interning on the Financial Planning & Analysis team as a financial planner. Even though my team does a great deal of financial planning, we also get pulled into projects to leverage our skillset in data analytics and executive communication. At the beginning of the summer my manager and I laid out my goals for the internship. While most were run-of-the-mill for finance, there was a conspicuous line halfway down the page that read: “Ad-Hoc Projects, Timeline: Flexible” Continue reading

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Seeking ROI – MBAs in Tech

Business schools across the world have long been the breeding ground for investment bankers and business consultants. This is little surprise – the traditional MBA curriculum focuses on financial models and structured analysis, while students seek significant returns on their tuition investment. In recent years however, the legends of Zuckerberg, Bezos, Musk, etc. (compounded by the financial crisis) have given rise to an unprecedented interest in the technology field by MBA students. Apple, Amazon, and Google now employ large numbers of business school graduates. As a former consultant with project management experience entering business school, I was confident in securing a product management internship at a tech company.

My recruiting experience became a healthy reality check. Despite the eagerness of many fellow MBA students to enter the tech field, very few of us had technical backgrounds. As I read more about entrepreneurial stories within tech, most founders were serial entrepreneurs with deep technical backgrounds. Furthermore, I realized that the MBA degree even carried certain connotations in tech: status quo, entitled, out of touch with reality, etc. In order to transition into the tech field, I realized I had to focus on what I could offer and not what I wanted to offer. My year-long exploration yielded this takeaway:

MBA students should recognize that their role in a technology company is not to build the technology but to build a company in which technologists can thrive.

Seeing Orange – Finding My Sweet Spot

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The Two Things You Must Know About Working At AppNexus

Technology@AppNexus from AppNexus on Vimeo.

If you’ve found your way here, odds are you want to make a difference. Maybe you’re obsessed with the internet: You’re one of those people who sleeps with your phone next to you and has a waterproof case for the shower. Maybe you’re drawn to being a part of the future of advertising or as someone who loves tech you’re drawn to a company with “the biggest reach on the open web after Google.”

Well, you’re in the right place. But, here are two more things you should know about working at AppNexus.

1. It’s Collaborative

Has an interviewer ever asked you whether you prefer to “work independently or as part of team?” To me, that’s like asking if you’d rather have breakfast or dinner. Putting the pancakes for dinner and pizza for breakfast arguments aside, day in and day out, I’d like the option to have each one at the time it makes sense.

Along those lines, working at AppNexus is collaborative in the best way. You have the freedom to suggest innovations and work on your own projects (see the tech blog), but engineers aren’t relegated to a closet where they execute what the C-Suite orders.

As VP of Engineering Ersin Yilmaz says, “We believe that writing software is a people skill.” The flow of information goes in all directions, with team members at all levels encouraged to participate and make a difference. Engineers are open and willing to take time out of their day to help. Daily “Learn & Teach” sessions allow for junior employees to develop their skills and take part in new opportunities. Additionally, AppNexus relies heavily on open source. Everyone in the company is encouraged to contribute back.

This collaboration is reinforced in a warm, fun company culture. People of all backgrounds and experience levels are welcome and encouraged to contribute their unique talents and perspectives.

2. It’s Impactful

Joining a team of people who are committed to supporting each other as they achieve a common goal is only the beginning. Because that goal is to create a better internet.

At AppNexus, impact is multi-dimensional. First, there is personal impact: Individuals have the chance to innovate, and to grow AppNexus’ technology. Engineers at all experience levels are given the freedom disrupt the entire space.

Second, there is systemic, technological impact. Engineers have the opportunity to work on some of the most complex and wide-reaching technology platforms on the internet today. Consider the scale: In a short time AppNexus has grown to “serv[ing] almost six ads for every person in the world.”

The impact on the industry isn’t measured by the vast progress to date alone. Engineers have the opportunity to make an impact on the long-term future and monetization of the internet. Advertising is here to stay, and AppNexus is poised to be an independent, neutral force for good, creating a fair exchange. AppNexus code is running on almost every computer in the world, so changes you make as part of the AppNexus team can dramatically change the user experience.

Whether you’re interested in tech, advertising, the internet, or all of the above, AppNexus is a place where you can join a team with vision and a plan to make a difference. Learn more here.

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A Latte and a Lesson in Productivity

It was my third weekend in NYC that I finally mastered the subway.  To celebrate, I stopped at a little French café on the way to work that Monday morning to purchase a very fancy iced latte.  This is how it came to be that an expertly brewed latte led me to have a very important realization about working at AppNexus.

Since I started the interview process back in January, I have consistently been struck by the company’s remarkable success and rapid growth.  Yet, it is more surprising to me that such a fast-moving company has such a happy and relaxed atmosphere.  My first few weeks, it was my manager who told me to go home if I was at the office any more than eight hours a day. Considerably more senior AppNexians asked me to take coffee breaks in the afternoon, or go on walks in Madison Square Park. I would tentatively leave my computer, a project half-finished, and force myself to relax.

As a college student I am far more accustomed to pushing myself to the absolute limit, camping out in the library for as long as is required to complete whatever project needs to be done.  It surprised me how difficult it was to let go of this unhealthy model of productivity.  I realized I didn’t know how to be productive in a way that was kind to myself and sustainable for a long-term project in the professional sphere.

This all came to a head when I was asked to put together a high-level project proposal for the in-house Hackathon I am planning for my summer project.  After extensively researching Hackathons, all I had to do was put together the goals for our event and some insights into how the event should look.  In theory, it seemed simple.  In practice, it was ridiculously hard.

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