Open Internet vs Walled Gardens: Breaking Myths about Supply-side Platforms with PubMatic

In the seventh episode of AdTech | AlikeAudience, the APAC Director of Data and Audience at PubMatic, Brandon Lee, Co-founder of AlikeAudience, Bosco Lam, and the Director of The Brand Creatives, Jessica Lam, share their thoughts on the open internet versus the walled garden, and the latest partnership between AlikeAudience and PubMatic to bring audience segments to the supply side. 

Tune in to find insights on: 

• What supply-side platforms are and how they drive ROI for marketers
• The differences between SSPs on the open internet and on walled gardens
• How marketers should allocate their ad spend between open internet and walled gardens
• The differences between free audiences and paid audiences 
• Strategies to implement when choosing a supply-side platform

Brandon Lee

linkedin.com/in/bsclee

• Director, Data and Audience APAC at PubMatic
• Specializes in data and identity partnerships, building marketplaces, stakeholder management, commercializing business assets, and pre and post-sales support for programmatic advertising
• Passionate about new technologies and trends 

Bosco Lam

linkedin.com/in/lam-bosco

• Co-founder of AlikeAudience
• Addressability Working Member of iAB Tech Lab
• Expertise in behavioral economics and consumer data
• Passionate about empowering marketers to reach their target customers through connecting data and media, and developing privacy-safe audience targeting solutions

Jessica Lam Hill Young
linkedin.com/in/hillyoung

• Brand Strategist for AlikeAudience
• Director of the brand creatives, a full-service micro-agency offering strategic brand design, brand messaging, and SEO content marketing services for growing companies in technology 
• Consultant for tech companies for branding, content, and marketing with a specialized portfolio in AdTech, SaaS, data, and blockchain   

Interested in learning more? Follow AlikeAudience for more on the AdTech industry

• https://www.linkedin.com/company/alikeaudience
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• https://twitter.com/alikeaudience

Transcript

SPEAKERS

Jessica Lam Hill Young
Brandon Lee 
Bosco Lam

Bosco Lam 00:00

When we work backwards from setting your goals, designing optimization strategy, and transparency, all these added up together, you will need an open internet with having knowing what is underneath the hood, what is inside the black box, so that you could make fair and objective decisions, right. So this is why open Internet is here to create value for marketers.

Brandon Lee 00:31

Open Internet is actually really pivotal to a democratic society, that everyone should have the same level of access to both contents and also services. The Open Internet is not free. I mean, there's this common myth that you know, because everything goes on and you don't pay for it, so everything's there should be free. There is a whole ecosystem of players that are actually kept active, that need funding. And this is where I guess SSPs come in is that we actually provide that funding of this ecosystem.

Jessica Lam Hill Young  01:12

Welcome to the seventh episode of AlikeAudience AdTech podcast, where we discuss the latest AdTech trends and industry insights in a series of interviews with industry leaders. I'm Jessica, the director of The Brand Creatives, a boutique agency creating thought leadership content tech companies and I'm hosting the podcast today. We've invited Brandan Lee, the Data Director of PubMatic for APAC audiences, and Bosco Lam, the co-founder of AlikeAudience, to share their thoughts on the open internet versus the walled garden, and the latest partnership between AlikeAudience and PubMatic to bring audience segments to the supply side. So let's begin with Brandon. Let's talk about SSPs. So you mentioned a lot of marketers might not even know what SSPs are. Could you define what they are and the role they play in driving revenues for marketers?

Brandon Lee 02:03

Sure, firstly, thanks for having me. So an SSP essentially is an acronym for the supply-side platform. So we are 100% sales-side technology. Our primary customers are publishers and media owners. So what we do is essentially very simple, we maximize any revenue and new opportunities for them. That's the key proposition.

Jessica Lam Hill Young  02:29

Why is it a very important part of a campaign for marketers? How should they utilize it in their marketing strategy?

Brandon Lee 02:40

I think SSPs increasingly, as the application of privacy-compliant data is shifting to the supply side due to the deprecation of cookies and identifiers. SSPs could be buyers, but I think we're going to play an even more pivotal role in actually being the supply chain of the future for marketers because essentially, we are passing very relevant and insightful data points back to the marketers for better optimization and performance. And then obviously, consequently, resulting in better ROI for them. 

SSPs have also been sort of, in the last few years, being the primary facilitator for I'm sorry, not an acronym, which is the supply path optimization. That is actually led and initiated by buyers and agencies themselves. Essentially, SPO is marketers wanting direct access to a curated group of publishers to work with them in a transparent and unbiased approach. So that's all about streamlining the whole supply chain process, but also wanting essential data points that they need, actually, for their campaign performance.

Jessica Lam Hill Young  03:54

It's interesting. So, you know, with all the discussion recently about walled gardens and the open internet, how are SSPs different in the open internet and in the walled gardens?

Brandon Lee 04:10

I guess one keyword will be independence. Again, PubMatic is probably one of the rare few left in the industry that is truly independent. And by independence, I mean that we don't actually own any media. So we're a tech company. The idea is that we work with publishers, who own the content. And that's kind of where the relationship ends. We don't actually own a lot of the content, unlike some of the walled gardens, where they essentially offer technology services, but in addition, they actually also are media owners themselves, so they actually own properties. And when you put them together, it's really difficult, I guess, for them to offer a truly transparent and unbiased kind of proposition back to the publishers.

Jessica Lam Hill Young  04:59

So I'd like to bounce a question to you as well, Bosco, as someone in the AdTech industry and working in audience segmentation. How do you feel the open internet is valuable and benefits the whole ecosystem? Versus with the walled gardens?

Bosco Lam 05:16

Yeah, sure. So maybe I'll take one step back to look at what are the goals for marketers, right. So you know, you either want to drive brand awareness or you want to drive performance, so you have different sets of goals for your campaign. And after that, you will have to have an optimization strategy. So you would compare all the options in the market, which would give you a few of the best approaches to achieve your goals. And in order for you to optimize, you need to gather different kinds of information like the measurement metrics, what are the value add, that each of your dollars goes to, and it requires actually quite a lot of transparency so that you can get a good enough information to justify your optimization strategy. 

So when we work backwards from setting your goals, designing your optimization strategy, transparency, all these added up together, you will need an open internet with knowing what is underneath the hood, what is inside the black box, so that you could make a fair and objective decision, right. So this is why open internet is here to create value for marketers.

Jessica Lam Hill Young  06:37

So both your opinions when it comes to weighing the benefits of the pros and cons of an open internet versus walled gardens, which ones should marketers choose? From maybe both the SSPs perspective and from the audience segmentation perspective? Brandon, would you like to start first?

Brandon Lee 06:56

Sure. So I don't want to sound like a cop-out there. My personal belief is that open Internet is actually really pivotal to a democratic society. Essentially, what it means is that everyone should have the same level of access to both content and also services. It's not just always about content. The Open Internet is not free. I mean, there's kind of a myth that, you know, because everything goes on and you don't pay for it, so everything's there should be free. 

There is a whole ecosystem of players that actually keeps it active, that need funding. And this is where I guess SSPs come in, is that we actually provide that funding of this ecosystem, which is really important. And regards to the walled garden, I think marketers should also probably appreciate the fact that there's about 70% of their current budget or digital budget in general, actually is allocated to these walled gardens. And instead of, you know, the open Internet. And this threatens, I guess, you know, the survival of the open Internet. 

So they should be conscious that they actually are very important when they make those budget allocation decisions. And also achieving one of the key ROI metrics that we hear often is reach, because marketers want to reach maximum reach with the lowest cost efficiency, which I can appreciate. But it's not always the end-all and nor should it be the only metric that they should focus on.

Jessica Lam Hill Young  08:33

With the ad spending between open internet and walled gardens. What's your perspective on that, Bosco? How should marketers allocate their spending in different channels and different areas?

Bosco Lam 08:47

Thank you, Jessica, for this question. I always have been telling to clients, do not put all eggs in one basket, to be fair. So we always want to compare different options in the market that drive your goats. Say, for example, if you go for brand awareness, you may look for scale. The average CPM is lower. More than that is what are effective ad views. Or like filter rates so that you make sure there are no bots, there's no fraudulence, to make sure that that is a human eye that you catch the attention of. And if you're driving performance, you may want to look into a specific type of inventory. 

Say, for example, retail media. You may want to look at e-commerce, you may want to look at some other product recommendation inventories. So this might be a good time to look at premium publishers, look at domain-specific publishers. These could be good metrics for you say, for example, how many leads drive to your site? How many site visits would eventually be converted? And that comes with an assumption that you have sophisticated tracking to be implemented. Otherwise, it will be kind of a waste of effort. And you can derive no conclusion if that is effective or not.

Jessica Lam Hill Young  10:23

And what about your thoughts on the differences between free audiences on the open internet and paid audience? Could you speak a little more about that?

Bosco Lam 10:34

Yeah, I would like to give this analogy, like if you go to a restaurant you would have a set dinner, or you can order ala carte, right. So set dinner comes with like a dessert, it sounds like free, but actually, it is priced on the whole menu versus ala carte, you can choose what you like, and there's more flexibility. So I would compare like free audiences is free for everyone, like everyone is having the same set dinner. But for paid audience, it is something that you choose for yourself that you like, and you can maximize your return and objectives to achieve your goals. 

So I think it comes to your strategy, again, how you want to select these two, and always look into the breakdown of the costs of the overall budget spent. You can see three audiences here. But it may be priced in your, you know, the DSP transaction fees, or it may be priced somewhere else. So always look into what is underneath the bills. Always check what is coming together with your cost. So ask this question, and be sure that there is enough transparency to get to know what you have been paying for. What are the values they add?

Jessica Lam Hill Young  11:50

Thank you. That's helpful. So back to Brandon again, when we know that there is value to working with supply-side platforms, what are the challenges that marketers face when they decide who to work with? And what are some strategies that they can implement when deciding on a supply-side platform?

Brandon Lee 12:13

Yeah. So I personally think that one of the key challenges right now is just the lack of understanding of what an SSP actually does and offers as part of the supply chain. And then obviously, the value that we can actually bring to them. This is exactly why it’s such a great thing that AlikeAudience is doing this podcast as part of the educational process for marketers and buyers. The other recommendation, I would say, apart from learning more about the proposition of an SSP is to look beyond just reviewing the scale and the quality of the supply marketplace. Like I said, not all SSPs are the same. 

Every marketplace is different.  So that's something that the marketers should probably take note of. And also, they should try to really maybe go deeper and understand what each SSP does in terms of their technology capabilities, but also the level of transparency of data that you know, the SSP can provide back to them. And again, as I said, no SSPs are equal. 

So it's important for the marketers to understand that. And then last but not least, I guess, you know, the ability to provide privacy-compliant data points, which is becoming even more important these days. Because it's decreasing and declining due to all the different privacy regulations that the marketers actually do need, as you know, measuring their campaign performances going forward.

Jessica Lam Hill Young  13:39

Thank you. That's a very detailed answer, very helpful for marketers. So back to both AlikeAudience and for PubMatic. As I know recently, AlikeAudience is the first to partner with an SSP like PubMatic. Can you both talk a little bit about how the partnership came about and how it can bring value to media buyers?

Bosco Lam 14:07

Sure. So it’s a pleasure to work with PubMatic here. It's a long journey, and we have been testing how our data and inventory can be combined to offer products out there in the market. So after this long testing, we see significant good results. And I want to address particular from a data privacy standpoint, you know, publishers are always the first who contact that end-users for user consent. 

So in order to have this kind of verification, working closer to the supply side is always the first step to ensure that the consent is legit, and to minimize the chance of data leakage. And as we all know, IAB Tech Lab has been proposing new standardization on how the transparency consent framework can be passed along the value chain. So I think this is a good step for the industry to collaborate and embrace that data privacy.

Jessica Lam Hill Young  15:14

That's wonderful. What about you, Brandon?

Brandon Lee 15:17

So I contacted Bosco after I heard about AlikeAudience through the grapevine, and we just hit it off. But that's on a personal level. I think that really, the legacy setup of the programmatic industry has always been that the buyers are the ones that are implementing kind of data on their end, rather than on the sell-side. So as I said that, you know, due to the kind of deprecation of the cookies and identifiers, it’s almost like great timing for our industry to do a reset. And so it's actually a really exciting time for the sell side, I guess, to start actually implementing more data points on our side. 

And really kind of makes sense to me, because most of the data points that the marketers needs, in terms of insights and measurement actually come from the sell side, historically. So now it's just it's a great time for them to actually act upon that. So working with AlikeAudience, through our publishers, you know, leveraging your data segments, is a perfect marriage really. And also, I think, Bosco and I were saying that as part of the onboarding testing, we're starting to see some, you know, kind of higher match rates, as well in comparison to being on the buy side, or the DSP. So that would just mean ultimately result in better performance and ROI for the marketers.

Jessica Lam Hill Young  16:45

Wonderful. So as a final wrap-up question, how do you think the AdTech industry will be affected in the next few years, especially with all these changes that are coming, and what kind of data identity solutions will be needed from your perspective?

Brandon Lee 17:04

Well, I'm gonna say from an SSP’s perspective, as I said, it's actually positive. It allows us to reset and have a rethink about where data should be, and how data can be acquired in a privacy-compliant way. But it is also how it can be applied to advertising, for marketers. So you know, as consumers that's becoming more aware of how their data is actually being used on the internet, and the privacy regulation that is increasingly stringent across the globe, the kind of legacy methods of identifying the consumers, which is ultimately what the marketers are trying to do, is going to have an impact. 

So the ecosystem is now moving towards a focus and increased focus on privacy-compliant identity solutions, to continue to deliver the advertising to reach the target audience of the marketers. So yeah, I think SSPs are going to start really going to play an even more important role in this cookieless world.

Jessica Lam Hill Young  18:07

Yes, I agree with you. And so, Bosco, I know AlikeAudience, it really values privacy compliance solutions. Can you also share your thoughts about what's AlikeAudience is planning in the next few years, and how it fits into the cookieless world in terms of data identity solutions?

Bosco Lam 18:29

So I think we'll put this identity thing in a short-term and long-term view. I think, in the short term, we will see a view of leading identity solutions already out there. And we've been testing with like, the UID2, RampID, a few of them that are already solution-ready. Yet, we have to see the adoption from the market, especially from the supply side, how emails are being hash and collected with consent. In the region, like APAC, where mobile is always the dominant platform, people have been talking about phone numbers instead of emails as well. How we are putting all this together, I would say there's still a long way to go. 

So I think in the long term, the industry begins to be receptive to a probabilistic model than matching ID in a one-to-one method, because first of all, the privacy not to be intrusive. Second is because of the technology we've seen, like data cleanrooms, how we can extract high-level insights so that we can apply the insights in programmatic advertising rather than to track individuals on a one-to-one basis. 

So that would definitely have an impact in like measurements tracking. But I think the whole industry has to reset the metrics that we use to justify that performance. That would no longer be like unique downloads. But overall, what is the impact of the percentage changes compared to the past? So I couldn't say there's one metric that is the winner for this moment. As I said, it is a long-term development. So I think it requires a lot more collaboration to keep testing out what could be the balance of privacy-friendly, but to drive the performance of the overall marketing industry.

Brandon Lee 20:30

Yeah, I echo that. I think the other trend that is probably going to happen kind of aligns with this idea of openness. And it will be the flexibility and the mobility of datasets and how they're actually being used across, you know, different usage and across different owners, rather than it being in a kind of walled kind of system where, you know, it's a black box, and nobody really knows what's going on in there. But having said that, the openness is obviously treated, as Bosco shared, in a very stringent privacy-compliant fashion as well, where it's no longer about identifying a unique single individual, or at least it will be anonymized.

Bosco Lam 21:10

That is a good point. And just to add on that. So imagine that an ID to be used in public goods, right? Everyone in the industry should have access to it. And as a public good, it will be transparent, right? People will know what is the combination on it, and there's no one dominant party who could influence that and impose changes overnight. In contrast, if any of these IDs remain to be a private good, any parties that rely on them should be prepared, that there's some influence or change that could happen overnight, and be ready for another backup or any other alternatives. So yeah, we are keen to see how a new public good could arise on the open Internet. And we may all leverage on this standard, and that will trade a value for both buy-side and the sell-side.

Jessica Lam Hill Young  22:11

Thank you for those insights. So a kind of side question as well, knowing that both our guests are quite well known in APAC and dealing with APAC audiences. Do you have any specific insights for marketers in the APAC region? And what they should be aware of in terms of strategies compared to other regions?

Bosco Lam 22:36

Well, I think the first one is to follow the AlikeAudience podcasts in AdTech. We always welcome thought leaders like Brandon, to join us here. Well, I think to be frank, in APAC it is quite fragmented across countries market by market. We will always encourage the local intelligence, like what are the challenges here to adopt, just like I mentioned, in the States, we begin with, like hash emails, but in APAC, a lot of phone numbers come into the registration. So this is actually a strong example that we embrace this local intelligence and how this could be incorporated into the international standard.

Brandon Lee 23:15

I agree. I think one of the key differences that stands APAC apart from the other parts of the continent would be also mobile. We are a very mobile-centric region. And that itself, when it comes to actual login data, or first-party data, the way that is captured, you know, email versus mobile numbers are going to be the differences. The other thing I would also add is obviously, as Bosco mentioned, our region is particularly fragmented, in a lot of large markets. 

And that is what then sets a different kind of, I guess, privacy regulation of each of the country. So far, you know, the discussions that we had with these ID providers is that they're actually following closely to what the government of their countries is dictating in terms of privacy regulations because that would definitely have an impact on how the data is collected and then how it's being used by the marketers.

Jessica Lam Hill Young  24:14

Thank you for that. So let's conclude here and thank you for listening in. If you enjoy the podcast, we would love for you to leave us a review and tag us on social. You can also subscribe to get more podcast episodes from AlikeAudience. Visit us at www.alikeaudience.com to get transcripts and find out more about our audience segment offerings. And thank you again very much, Brandon and Bosco, for your insights.