Flash Post - I Was Wrong About Curation
But not for the reasons you think
Disclosure – this is a fleshing out of some of my comments in Rob Beeler’s epic slack channel. He’s built an awesome community engaging in substantive discussions. https://beeler.tech/community/
No, this is not a retraction. I wasn’t fully wrong about curation.
As a technologist, curation still doesn’t make sense to me. If we’re looking for optimal outcomes for advertisers on the open web, all of my prior criticisms still apply.
I was wrong about the focus of my criticism – and about the reason for curation existing.
My prior assumption was that curation existed because of fragmentation of data. That isn’t actually what it is, though that is the guise it hides under.
Now that I’ve seen the guts of curation, curation exists because DSPs are dropping the ball on performance. And enterprising SSPs, being wiley as they are, have discovered a way to take advantage of this.
I am reimagining curation. It is not a data play. It is not a technology play in any way.
It is a pure business model play, and that business model is that of the affiliate network.
Exchanges have built their own agency sales/adops affiliate networks.
For those of you unfamiliar with the affiliate model, it’s a pure play performance model wherein the affiliate gets compensated when they cause an outcome to occur – and they’re often compensated a % of the revenue generated by the outcome. In this scenario, the outcome is getting an Agency to buy against a PMP, and it’s an affiliate platform on steroids, because the affiliates get to construct their own custom offers (custom PMPs) based on a menu of things provided by the ad exchange. This is genius. In the curation affiliate model, the curator then gets to set their own terms – often up to 30% of total spend! An unimaginable amount of compensation to an adops lead who creates tremendous results for their brand or agency – but not for a curator!
But, like I said in my prior article, these crazy numbers are not meant to be a condemnation of the affiliates (the “curators”) or the exchanges. They’re executing a business model that is inarguably adding value for someone, because their fees are deducted in-flow, and the bids through their dealIds are still higher than all of the other bids in the auctions (assuming they win), at least in header bidding unified auction environments.
The question that we need to be asking ourselves is…why is this possible? Why is it possible for a sales person, often with zero proprietary technology, to bundle up some inventory and sell it directly to agencies and those bundles outperform other strategies in the DSP?
There is a potential explanation. Many industry old-heads repeat the refrain that the only system in ad tech that ever worked for performance was Right Media. The theory that I’ve heard put forward there is that unlike OpenRTB, which allows broad-pipe integrations between demand and supply, Right Media had a very “manual” linking process for what were essentially mini-exchanges within Right Media. This meant that the optimization algorithms got a new bite-size chunk of inventory to optimize to with each new link, but none of those chunks were ever anything near the size of the modern ad exchange (especially in the world of header bidding). The optimization algorithms, therefore, were able to build more accurate predictive models for performance, because they weren’t constantly trying to “boil the ocean” with every new campaign.
There’s a nonzero chance that Curation is simply narrowing down the pool of inventory that DSPs optimize to, and by virtue of that fact (limiting the number of places that the optimization algorithm has to consider), improving performance by enough to justify a 20-30% fee. Also, if you’re a pro-trader on a DSP, and you’re not reading this article and thinking about starting a curation business, I don’t know what you’re doing. Because it seems to me that you could be making 20-30% of the budgets you manage :D.
Now this could be BS, and my goodness, Right Media is 20 years old. I can only imagine that data science has come a long way since then.
Other explanations also exist. For example, many DSPs are relatively religious about not pooling client performance data — Pepsi would probably be pretty unhappy with you if you looked at their top performing campaign and then shot a note to Coke “Hey guys, check this out, it works AWESOME!” Curation, on the other hand, revels in the performance data from one agency or brand enhancing performance for another, and operates nice and neutrally as a vendor on the “sell-side.”
But the point remains – people are doing this and it’s making campaigns work better. I was wrong because I painted curation as a data play, it’s actually much less sophisticated than that. It’s an affiliate sales play. And algorithms worth hundreds of millions of dollars are getting upstaged by sales/adops people.
This all being said, DSPs could of course build their own version of curation – allow members within your platforms to sell targeting and optimization templates to one another for a % of spend going to the person selling the template. I bet it would work even better! I also bet all of the current curation companies would get in on the game.
But like, isn’t this kind of the job of a DSP? To help individual DSP users run campaigns super well? Hopefully curation just ushers in a new era of focus on outcome-based optimization, but people need to come to terms with the value it’s actually providing first.