A number of publishers in the US looked at their ad accounts in disbelief this Friday after they had seemingly racked up tens of millions of dollars — the amount a medium-sized outlet would usually expect to make in an entire year — in the space of minutes.
Delving deeper, ad experts discovered that some advertisers were bidding at rates as high as $1 billion CPMs, the cost to reach a thousand impressions, in the automated ad auctions that decide which ads are served to each user when they open a webpage.
To put that into context, average CPMs tend to fall between $2.50 for a desktop display ad and $11.10 for mobile video ads, according to the martech company Semrush.
After a rough couple of years for many publishers, Friday’s unexpected spike in spending would have been a welcome windfall. Of course, it was too good to be true.
Business Insider confirmed that the cause of the error was a brief “server anomaly” at PubMatic, an adtech company. PubMatic offers what’s known as a supply-side platform that publishers use to automate the selling of their advertising inventory, connecting their ads to multiple prospective buyers at once. Publishers including CNN, AMC Networks, Fox, The New York Times, and Business Insider are PubMatic customers.
A PubMatic spokesperson said the anomaly, at one of its US data centers, caused “abnormally high CPMs being passed to the publisher ad server on a limited number of impressions.” It lasted for 40 seconds on March 15 and has now been resolved, the spokesperson said.
Still, the sky-high CPM bids caused at least tens of millions and perhaps as much as $100 million in erroneous advertising bidding, according to an estimate from Nicolas Schueller, the CEO of Adomik, a data analytics company. Advertisers Adomik identified as bidding at abnormally high CPMs on March 15 included large brands like Delta Airlines and Comcast as well as smaller buyers like local banks and hospitals that usually spend no more than a few dollars each day on an individual publisher.
The fact that a 40-second server malfunction at just one vendor could cause such a large ripple effect underscores the incredible complexity of the adtech ecosystem. Just one kink in that chain can have a cascading effect on the hundreds of businesses — ad agencies, demand-side platforms, ad networks, SSPs, data providers, ad verification services, and so on — that sit between an advertiser deciding to run a campaign and a publisher serving their ad.
Also caught up in Friday’s snafu were fellow SSPs like Nexxen and Kargo, which PubMatic uses to extend the reach of its inventory to provide advertisers with a bigger audience for their campaigns — a tactic known in the industry as “audience extension.” Both Nexxen and Kargo caught the PubMatic error on Friday and informed customers, representatives for the companies confirmed.
Fortunately for the advertisers, all the extra dollars in the Friday bonanza weren’t actually “spent,” and publishers aren’t suddenly having millions of dollars removed from their bank accounts.
The DSP and SSP connect the highest-bidding ad buyer with the available ad inventory; the SSP sends this information to the publisher ad server, which delivers the ad to the webpage and tracks how much the advertiser spent and the ad’s performance. The PubMatic error occurred in the communication that happened between the SSP and PubMatic’s ad server, according to the company.
In the PubMatic spokesperson’s words: “This was not an overspend, as these bids did not reflect the actual bid from the DSPs, and our logging of actual bid prices in our SSP and DSP reporting was not impacted.”
In other words, it was just a reporting issue, not a billing one. PubMatic says it’ll pay publishers based on the actual bids advertisers made and that it’s having “active conversations with our customers to resolve the issue.”
The actual financial impact for individual publishers and adtech companies is likely to be minimal. Execs at the creative technology company Origin said that while it initially looked like they were up $15 million in ad revenue on Friday, that probably only translates to about $600 at the correct CPMs because the mega-high bids caused by the PubMatic error only touched a limited number of ad impressions.
Still, many of the adtech executives Business Insider spoke to for this article said reconciliation of the issue presented an unwanted reporting headache for publisher ad operations specialists and adtech vendors, especially on a Friday.
Scott Messer, an independent adtech consultant, said that while this particular episode was contained, it should “set off a larger discussion about how to handle something like this on a broader scale,” which could include better regulation of the adtech industry.
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