Skift Take

The word “transparency” is one of those buzzwords that ad networks love to throw around –– but most traditional networks still operate in a black box that makes smart media buying difficult for travel brands. MediaAlpha wants to fix this.

This sponsored content was created in collaboration with a Skift partner.

Transparency is all the buzz in digital advertising, yet travel comparison advertising on metasearch, online travel agencies (OTAs), and other travel websites remains dominated by old-school networks that leave both advertisers and publishers in the dark.

The traditional ad networks that serve as brokers and aggregators of travel comparison ads hold their cards close, MediaAlpha CEO Steve Yi tells SkiftX. That means travel advertisers don’t have the transparency or access to granular data that could help them make smarter media buying decisions, and high-quality publishers can’t distinguish themselves from others and are systematically underpaid.

MediaAlpha offers a programmatic, real-time bidding platform that eliminates the middleman and allows travel advertisers and publishers to transact through a transparent marketplace. With over 300 partners in the broader comparison search space, foremost in the insurance segment, the company is now bringing its model of openness and transparency to travel comparison search. We sat down with Yi to learn more about how it works.

SkiftX: What is the status quo in travel comparison media?

Steve Yi: The travel comparison space is still largely dominated by traditional ad networks that rely on a media arbitrage model to create a marketplace of this inventory. The basic idea is to aggregate as much of this media for the lowest price possible from publishers and extract the highest price for the full media bundle from advertisers. This model leads these ad networks to keep everything in a black box and keep the bidding controls at a rudimentary level to maximize the volume of media they can sell and, more importantly, their own margins.

SkiftX: What makes MediaAlpha different?

Yi: We have a platform-based model where we create marketplaces between buyers and sellers of travel comparison media in a fully transparent and programmatic way. Advertisers who use our platform to bid on travel comparison media in our ecosystem have full visibility into each publisher and the exact placement where their ads are running. They can also use any and all targeting data and automated algorithms to refine their bids for each travel shopper based on expected return on ad spend.

SkiftX: How does that transparency and granularity benefit travel advertisers and publishers?

Yi: There’s a dramatic economic gain that advertisers can capture by simply de-averaging what they pay for media from different publishers. Bidding programmatically to pay the right price across granular consumer segments adds another level of efficiency. What gets overlooked is that open, programmatic ecosystems bring operational benefits. For example, the ability to use one platform to bid programmatically for travel comparison media across all publishers, networks, and exchanges instead of what exists today –– a hodgepodge of insertion orders, contracts, spreadsheets, and network-specific bidding systems –– would be tremendously beneficial to travel advertisers.

For travel publishers, they have to rely on a deal they cut with one ad network or another. These deals are typically highly negotiated and involve a lock in of one or more years. Instead of letting the market set the fair value for their inventory, publishers must rely on whether they can negotiate a good price for their ad space every one or two years. But, because of the lack of transparency, publishers are in the dark as to what their inventory is really worth to advertisers, and ad networks take full advantage of this information asymmetry to maximize their margins. What’s needed is a unified auction where every direct advertiser, ad network, and exchange is transparently bidding for a publisher’s inventory in real-time.

SkiftX: What’s MediaAlpha’s solution to this?

Yi: We have a product that supports this called Open Bidding, and our experience in other sectors has been that this results in a 20 to 30 percent yield improvement to publishers who adopt it, which is in line with what display publishers saw when header bidding was first introduced into the CPM-based media space.

SkiftX: What are the repercussions of a closed system on innovation in the travel space?

Yi: The broad industry consensus is that data science is the engine that will drive the next wave of innovation in online advertising. But, in a closed network, advertisers can’t use their data or programmatic technologies to buy travel comparison media more intelligently. This is because the ad networks know full well that allowing for transparent, programmatic bidding would severely undercut their margins.

For publishers, if advertisers aren’t allowed to value what they’re buying from every publisher in as granular a way as possible, then it means that publishers can’t gain detailed, actionable insights into the true value of their media. This leads publishers to make customer acquisition, user experience, and ad serving decisions too bluntly and in a suboptimal way.

SkiftX: Can you offer an example of a partner who reaped benefits from using this approach?

Yi: Kayak was one of the first to grasp the concept because their in-house team was using programmatic technologies to buy media in their other channels like display and social. [They said], “We want to use our first party data and the consumer data that’s collected during travel search to create highly-granular campaigns and then transparently measure the return of those campaigns across every single publisher that we’re bidding on through your platform.” When they did that, they extracted a step-level improvement in their media buying efficiencies and discovered a way to buy travel comparison media directly from publishers and ad networks who didn’t offer their own programmatic bidding solutions.

SkiftX: You did a study recently that found that 30 percent of marketers were unaware that they could purchase performance marketing programmatically. Why is there still limited knowledge around this option?

Yi: There’s limited knowledge in this space because performance marketing segments like travel comparison advertising has long been dominated by ad networks who have a vested interest maintaining the status quo. The arbitrage model does not beget transparency, granularity, and openness. This model was probably the best we could do before programmatic technologies came along, but now it’s badly outdated since advertisers can achieve scale through platforms like ours instead of relying on third party aggregators. But, because it’s been that way for such a long time, I think that marketers came to assume that performance-based marketing had to be bought this way.

This content was created collaboratively by MediaAlpha and Skift’s branded content studio, SkiftX.

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Tags: digital advertising, Travel Advertising

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