The Canadian Programmatic Audience Exchange (CPAX) has selected Eyereturn Marketing as its first independent demand-side partner after it met its series of stringent new pricing and transparency rules.
The announcement reveals CPAX’s new and unusually strong rules for third-party buyers, which require them to fully disclose all markups to clients.
The current market position is… ‘What we charge is our business.’ Some of those conversations were really not comfortable
Andrew casale, CPAX
CPAX sells digital media programmatically for 11 of Canada’s largest publishers, including Rogers Media, Shaw Media, and CBC. In June, it relaunched under the management of Toronto-based exchange provider Casale Media with a new mandate to sell premium-quality digital media in a private environment.
The new exchange requires all buyers that do not directly represent brands or media agencies be reviewed and approved before receiving access.
“We’ve been saying since the beginning that CPAX was a reset. It’s an opportunity not just to reset [CPAX’s] strategy, but programmatic in Canada,” said Casale Media’s VP of Strategy Andrew Casale, who acts as spokesperson for the organization.
“If you look at who is represented, it’s a significant chunk of Canada’s media companies… I think this is an opportunity to reset the status quo.”
The approval process is intended to promote transparency, an issue that the programmatic marketplace has been struggling with. Many independent and agency-owned programmatic buying companies do not disclose their pay structures, which has led many marketers to become concerned that more of their media dollars are being spent on intermediary fees than working media.
The problem is compounded by the long and obscure supply chain between marketers and publishers, with multiple third-parties charging a percentage for their services. Publishers may see as little as 25 cents of each media dollar.
Agency trading desks (ATDs) in particular are facing increasing scrutiny about their opaque pricing models, and in some cases agency holding companies have been accused of marking up trading desk fees to make up for revenue shortfalls elsewhere.
By forcing intermediaries to disclose their fees in order to participate, the exchange hopes to screen out unsavoury actors with black-box business models based on arbitrage or artificially inflated CPMs. The end goal is to see more of buyers’ dollars go to real media, which benefits both marketers and publishers.
The Big Reset
CPAX is the first exchange to enforce transparent markups in Canada, and it may be the first to have done so globally. There’s a reason for that: the reset effectively booted out most of the traders using CPAX and forced them to re-apply for access. That meant the publishers had to say goodbye to a significant chunk of digital revenue, Casale said.
But the publishers felt it was necessary to sacrifice short-term revenues to promote a transparent, safe marketplace for buyers, and create more value in digital media over the long run. (Several CPAX publishers declined to be interviewed for this story, and directed inquiries to Casale Media.)
Over the past two months, Casale Media and CPAX publishers have been reviewing a number of companies that want access to the exchange. So far, only Eyereturn and a handful of undisclosed ATD have been approved.
Rather than a strict set of criteria for approval, the process involved a comprehensive review by publishers. Applicants were not approved for a variety of reasons – for instance some did not disclose pricing, or markups were considered unreasonably high.
Casale said that a lot of applicants weren’t happy to be asked about their rates. “It’s just simply not the norm in programmatic. The current market position is, ‘We, as a managed provider, are adding value – you should be judging us by that value alone, and what we charge is our business.’ Some of those conversations were really not comfortable, and they weren’t comfortable for the publishers either.”
He said Eyereturn was a significant exception, and were very upfront. Renee Hill, CEO and founder of Eyereturn (which is owned by Torstar), said the company has always disclosed its markups to clients through a standard rate card. CPAX’s rules did not require it to change any of its practices.
Marketers and media agencies that work with ATDs or technology partners that haven’t been approved for CPAX trading can still buy media on CPAX, but they have to buy directly, without another organization representing them. In practice, this means using a self-serve bidding platform, where the marketer or agency pays a technology licensing fee and controls the buy directly. In that case, the trading seat on CPAX is registered directly to the buyer, rather than an intermediary.
But not many marketers are buying media that way. According to a recent study by the World Federation of Advertisers, only 2% of marketers buy media directly using a self-serve platform. Around 30% outsource their buys to independent technology companies like Eyereturn, while the majority go through ATDs like WPP’s Xaxis and Publicis’ VivaKi.
Casale made it clear that agency desks had to meet all the same standards as independent companies to trade on the exchange, and that ATDs were not admitted by default because of their relationships with media agencies.
Casale said he and the CPAX publishers hope that such requirements become the norm for programmatic trading. He said that CPAX’s efforts are in line with efforts by the IAB and other industry leaders to promote transparency, which may include further regulations on marketplace sellers and intermediaries. While individual private marketplaces can make their own rules of membership, it will be up to the IAB to decide whether markup disclosures are required across the board, for all exchanges and intermediaries.
