In 2016 for the first time ever, digital advertising — across desktop and mobile — exceeded television. This year alone digital advertising is expected to exceed traditional avenues by over $10 billion globally. It’s evident why: most of the world owns a smart phone or uses social media, and the internet will soon become ubiquitous thanks to pioneers like Elon Musk. Given the number of eyeballs available in the digital world, ad budgets are starting to be weighted toward desktop, mobile and smart phone apps.

Advertising as a Revenue Driver… and Revenue

Many companies employ advertising as a revenue driver. The formula is seemingly simple: promote your product, app or content across various advertising platforms (like Facebook), in order to drive sales, downloads and clicks. But if you don’t sell a physical product, then how do you make your money? For many digital businesses like publishers (i.e. content publishers and smart phone app developers), it’s advertising. They’ll promote their digital property in order to drive activities like downloads and clicks to their website. Here is a breakdown of the digital media revenue life cycle:

The only issue facing publishers is the mismatch between their income and expenses. Content promotion and PUA platforms requires money up front, but programmatic ad revenue and marketplace revenue (i.e. App Store, Android, Amazon) pays anywhere from 30-90 days. Without being able to immediately receive money from clicks and in-app purchases, publishers are forced to operate under the status quo or find a way to raise capital for promotion. That’s where digital media receivables financing comes into play.

What Are Digital Media Receivables?

Digital media receivables are invoices created from advertising revenue and purchases generated within digital mediums such websites and smart phone apps. Essentially any revenue generated from a digital platform (advertising, affiliate revenue, in-app purchases) payable at a later date (30-90 days), is a digital media receivable.

Digital Media Receivables Financing

OAREX offers digital media receivables financing, by advancing funds against outstanding  leverages outstanding digital ad revenue and marketplace revenue payable to publishers, by advancing funds for them. Each month, as OAREX’s publisher clients generate ad revenue and in-app revenue, OAREX will advance funds against those invoices that are normally payable in 30-90 days.

Advantages of Financing Digital Media Receivables

Digital media invoice financing allows publishers to immediately reinvest the proceeds into hot content promotion and PUA campaigns that have a direct, measurable ROI (i.e. revenue recycling). In turn, this fuels growth because publishers are able to turn over their money into campaigns with a positive ROI more often, thus increasing overall revenues. Additionally, having the ability to shore up outstanding revenues and match income and expenses allows publishers, who often have cyclical revenue cycles, to prepare for both busy and slow season.

Header bidding. Every publisher has heard about it, brags about it or hates it. The one thing that every person will agree on is it’s complexity. As a pub, how many times have you heard “we bring full transparency to your tech stack”, “we offer the highest yielding header bidding solution”, or “we maximize every impression”. It’s tough to verify these bold statements with each header bidding solution being chalked full of punchy marketing slogans but how many people actually understand it? Below we take a look at what’s really going on behind the scenes.

Life Before Header Bidding

Long before header bidding came to be, publishers were forced to live and die by the waterfall. The waterfall is aptly named for it’s step by step descent down the list of demand sources in search of a specific CPM. Whatever doesn’t get “filled” simply defaults with the next demand partners’ ads, trickling down to the last one with the lowest CPM offer. With this downward descent comes an inherent race to the bottom as you bounce downward from one exchange to the next in search of revenue.  If you’ve been anywhere near publishing you can recall the great internal battles felt during waterfall construction and modification.

A Quick Header Bidding History

The true genesis of header bidding is tough to trace but the CEO of Appnexus lays claim as the sole inventor all the way back in 2009. Others will tell you that a small group of publisher side ad-tech platforms were the creators. While we don’t know exactly who is behind the earliest rendition we do know that they were seeking better yield. They knew that if they could make calls to each exchange in the waterfall all at the same time they would ultimately earn the most revenue. They did this by allowing outsiders in to play with Google’s DFP, and fairly at that.

ELI5 (Explain It Like I’m 5)

Imagine yourself sitting at an auction and the auctioneer rattles off the current bid and openly accepts new bids. Each bidder argues back and forth as the seller waits in anticipation.The process takes some time and makes for a long day.

This is exactly how the first version of header bidding worked. The header script made calls out to exchanges one by one, returned bids and compared those bids with all of the others. This process led to a lot of latency, or delay, creating a less than amazing user experience.

Now imagine this, you’re at an auction and the auctioneer accepts all of the bids at the exact same time. The bids are reviewed and the highest bidder wins.

This refined process is called parallel calling. The header script – the code that runs header bidding – collects bids from every exchange at the same time. This drastically cuts down on latency issues and subsequently enhances user experience.

To improve the user experience even further publishers are beginning to move to server-side header bidding. Server-side bidding conducts the auction away from the browser, putting the task of bidding onto the supply-side SSPs.  This further evolution is helping publishers chase away any possible latency and user experience problems.

The Pros and Cons of Header Bidding

Like every single thing ever created, header bidding has a host of pros and cons.

The pros of header bidding:

• Flatten your waterfall – managing the order in which partners gain access to inventory is no longer necessary because each demand partner declares how they value the impression up front
• Better yield management – tag based integrations create inefficiency because they force an average rate to compete with the impression level bids of AdX (if the publisher is on DFP). This setup leaves money on the table with both the SSP and AdX. Consider this: if the SSP is bidding anywhere between $0.50 and $5, but averaging $2, then AdX will win every impression over $2.00, even if the SSP would have paid far more, because there’s no way to know what the SSP would have paid. Similarly, any impression where AdX would pay less than $2 but the SSP would not fill at all, or would fill far below their average is lost revenue as well. Header bidding solves this inefficiency.
• Reduce discrepancies – discrepancies arise through latency, and multi-partner waterfalls are inherently latent.

The cons:

• Operational setup – Header tag integrations require a much more involved set-up process. It can sometimes be technical too, and require you to hire someone with greater technical skills. However the benefit is that once setup, publishers likely won’t need to touch those line items in the future like they do to manage the waterfall with a tag setup.
• Longer page load – publishers need to watch their page load times like a hawk because even fractional improvements in page load result in better user engagement. Header tag integrations therefore require some partnership with IT resources to both implement and manage.
• Yield risk  (compression of profits) – the biggest risk we see for publishers is that it could decrease bids from buyers (yes, believe it). That flattening the waterfall results in greater bid density and demand liquidity, leading to greater revenue and ultimate nirvana? Yes, the risk is that buyers identify which pre-bid partner allows them to buy for the lowest price and move their demand there. In other words, buyers optimize to the platforms of lowest bid density. Remember, header tag integrations don’t allow the publisher to run their own second price auction across all platforms; they just let the publisher pick the best result out of many second price auctions.

Are you using header bidding? Are you waiting to get paid? Find out if you qualify for accelerated ad revenue payments.

Last week, AppNexus, LiveRamp and MediaMath (Acxiom) launched a tech consortium to make programmatic advertising targeting people more widely available. The goal of the AppNexus tech consortium is to create a standard framework for demand side ad targeting, that will enable advertisers to access aggregate demographic data contributed by members of the consortium. Other initial members include Index Exchange, LiveIntent, OpenX and the predictive marketing company Rocket Fuel.

Why A Tech Consortium?

According to AppNexus CEO Brian O’Kelley, 48% of all digital advertising dollars go to either Facebook’s ad platform or Google Adwords. This has lead to a duopoly between Google and Facebook, allowing them to easily control what ads are approved/banned and to set price floors per click. This has also caused a strain on the sharing of media, journalism, film and music across the internet. With the aggregate data contributed by the consortium, and a new uniform language and platform to target people through, Facebook and Google may lose their stronghold on the industry.

As nice as it would be to launch a consortium against a duopoly for simple competitive, free-market purposes, this consortium seeks to eliminate the following:

• With Facebook and Google only, there is a lack of a common omnichannel, people-based identifier for targeting.
• There is a major inability to coordinate campaigns across platforms, creating hurdles to economies of scale in advertising.
• There is a lack of inoperability within the mobile web, and
• A siloing of advertising across channels (i.e. you pick where you want to advertise and run all your campaigns through that platform).

The consortium will solve these problems by enabling people-based advertising across devices, formats and platforms to both buyers and sellers of programmatic advertising. This will include mobile, TV, the Internet of Things (IoT), e-mail, and new emerging channels of programmatic advertising (i.e. hotel TVs, Snapchat). Publishers can increase their monetization by increasing the relevance and ability to address their target audiences, in an allegedly “cookieless” environment.

Benefits of the AppNexus Tech Consortium

The goal is to provide a new avenue for demand side advertisers to effectively target people with advertising in a privacy-conscious manner. So what does this mean for the industry? Some of the expected benefits to major stakeholders of this new change:

• Publishers can monetize better by driving high-quality cheaper traffic to their sites, increasing the spread between their CPC on the demand side and CPC on the supply side. Overall, pubs can expect a higher RPM, and increased gross margins.
• Marketers can promote products and services for clients in a more economically efficient manner, increasing sales across the retail and services industries.
• Internet Users across the internet are hit with more engaging, relevant content.

Other broad-sweeping benefits include:

• With the aggregation of data from members of the AppNexus tech consortium, demand side advertisers (i.e. publishers and marketers), can expected improved reach through higher precision targeting.
• This includes being able to link targeting to offline activities such as purchases in stores.

OAREX: A Mountain in a Hurricane

We are anxious to see how this consortium ultimately launches its platform. We’re hoping that it will lead to greater efficiency for pubs and more transparency for advertisers. Greater efficiency for pubs means users get hit with more engaging, relevant content, and transparency for advertisers will increase confidence that their ad dollars are not going to waste.

The industry is rapidly changing, but like a mountain in a hurricane, we stand firm in our mission to bridge the gap between media creators and those who browse the internet. No matter what.

Are you a publisher that needs funding for your digital media campaigns? Find out if you qualify here.