Curation might sound like a win-win, but there are hidden costs publishers and advertisers need to consider. Raptive’s Ryan Maynard dives into the unspoken downsides of sell-side curation, from inefficiencies in SPO to eroding working media dollars.
I’ve read much industry hype recently on the growth of sell-side curation and the evolution of “Curation Houses.
Sell-side curation has been around for many years—SSPs deploy massive “demand facilitation” (sales) teams to strike deals with large agencies and brands. These teams generate deal IDs that target multiple publishers (often called “multi-pub” deals or “auction packages”).
Over the last few years, we have seen the rise of more specialized Curation Houses, which offer a separate but similar form of sell-side curation. These businesses live inside SSPs and do a very similar thing—they use sales teams to generate multi-pub deals.
As Scott Messer, industry veteran and vocal supporter of Deal Curation as a Service (“DCaaS,” an acronym he coined), told ExchangeWire earlier this year, Curation Houses “feel like ad networks of yore, but are retooled on modern supply technology…”
I fully understand and appreciate the hype. There are pros to sell-side curation on both the buy and sell sides. Here are a few:
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For buyers, curation can bring many operational efficiencies. Working with individual publishers can be time-consuming— especially when managing multiple brands, multiple DSPs, and transacting across half a dozen or more SSPs. Curation allows buyers to consolidate their private market buying into a handful of deal IDs while ensuring they only target ads to desired audience segments within high-quality content environments.
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For publishers, curation generates incremental revenue. SSP demand facilitation teams actively close multi-pub deals and generate deal IDs on the publisher’s behalf. Curation Houses can leverage SSP “marketplaces” to do the same — close deals, increase bid density, and add value. For publishers with small sales teams, this is extremely attractive.
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Curation pushes more programmatic transactions to occur via PMPs instead of Open Market. This helps offset many issues in open market buying, including MFA, fraud, signal loss, and a general lack of control and transparency.
What’s not to like, right?
Alas, curation has downsides that nobody seems to be talking about.
Inefficient Supply Path Optimization
I thought we wanted to reduce the number of intermediaries in the supply chain, not increase them. Curation creates an additional layer, additional fees (see #3 below), and additional hops in the supply path. Curation Houses have cleverly avoided the dreaded “reseller” ads.txt distinction (by operating within SSPs), but let’s be clear—this is definitely reselling.
Curation Houses have no owned/operated supply. Most operate with no direct publisher relationships at all. They work within the SSPs, which grant them access to publisher inventory via “marketplace” functionality. Publishers have limited control over what deals they get included in, what inventory they make available, and what CPM floors they can set.
Lack of Publisher—controlled Benefits
Multi-pub deal IDs generated by SSP and Curation House sales teams don’t get to leverage a publisher’s first-party data or contextual targeting. Publishers are usually left in the dark on reporting and performance—never fully understanding exactly which brands/agencies are buying their inventory via these deals and at what rates.
Finally, despite the presence of a deal ID, these curated deals all typically compete at the same priority as open market demand. Buyers lose the prioritization and inherent quality that comes with bidding via a publisher’s direct-sold PMPs.
Higher Fees (Lower Working Media)
SSPs typically charge publishers higher fees for access to curated marketplace deals and they want to charge more. And let’s not forget about the Curation House’s own margin/markup. By not owning any buy-side or sell-side tech, a Curation House survives by marking up the inventory it resells. We’ve seen this as high as 50% for some (shout out to Magnite for at least being transparent on these additional rev shares).
As for publishers, most don’t mind these extra fees because of the incremental revenue. A curated deal still has to outbid open market demand on a net CPM to win the auction. But buyers should care very much about these fees!
Buyers pay for these fees indirectly by having to bid higher gross CPMs to win the inventory. This increased pricing—a result of compounding take rates (see explanation below)—erodes a buyer’s “working media.” For example, brands pay $10 CPM for inventory that only clears at $6.40 CPM (after SSPs and Curation Houses take their cut). That’s a 56% surcharge. And at Raptive, we’ve seen this go as high as 114%!
Advertisers also don’t have the pricing transparency to know exactly what they are paying for, if they are paying higher CPMs, and if those prices are worth it compared to what they would otherwise be paying. Even if advertisers asked for that level of insight, SSPs might be hesitant to share too much for fear that buyers could calculate rev shares between publishers and SSPs.
Lower working media dollars translate to winning lower-valued inventory in the programmatic auction. The lower the value of the inventory, the lower the engagement/performance it will yield (generally speaking).
Buyers of curated inventory need to understand the trade-off. What an advertiser thinks they may be gaining in operational efficiency is likely offset by lower working media dollars and less efficient SPO.
Publishers should heed Andrew Kraft’s advice: The argument [a lot of Curation Houses use] that the “power” has moved to the sell side is just not true. The money is on the buy side. So lean in.
Curation Houses often lack direct relationships with publishers. SSPs have contractual partnerships in place. Publishers should leverage these partnerships, understand as much as possible about the multi-pub deals these sales teams bring them, and avoid any potential channel conflict/cannibalization.
These strategic partners can definitely offer good deals. Publishers should take advantage while striving to sell their inventory and data directly to agencies and brands whenever possible.
The onus is on publishers to offer compelling reasons why someone should buy directly vs via a curated open market deal. Publishers should focus on offering high-performing ad formats and quality inventory unavailable via the open market, valuable 1st-party data targeting, and competitive CPM floors that still drive scale and efficiency.
Publishers are the best curators and optimizers of their inventory. They shouldn’t depend solely on SSPs and Curation Houses to do this on their behalf.