MediaMath will stop buying from supply partners that play auction games, preferring to create an economic incentive for fair, transparent programmatic auctions and put an end to auction manipulation.

The DSP sent an open letter Wednesday morning to its 50 directly integrated suppliers. The full letter is reproduced at the end of this article.

“Auction manipulation has always been against our code of conduct, but we are sick of having these conversations over and over again,” said Anna Hewitt, director of supply products at MediaMath.

The letter asks the exchanges to sign a document with a 13-point checklist of behavior they pledge to avoid. The checklist prohibits behavior such as bid caching and misuse of the wrapper, sending duplicate bid requests, masking domains or adding data to the bidstream.

It also prohibits multiple types of floors: DSP-specific floors and soft floors that non-transparently increase clearing prices in second-price auctions.

Recognizing that it can’t anticipate all possible ways suppliers can game auctions, the letter also asks them to affirm that they “will not attempt in any way to mislead, deceive, or otherwise engage in practices that are inconsistent with these principles.”

If exchanges get caught manipulating the auction, MediaMath will kick them out for a set period, which will vary depending on the crime. To re-enter, the exchange will have to be vetted extensively.

MediaMath wants the penalty for auction games to outweigh the short-term benefits. Plus, by punishing bad actors, good exchanges can flourish. MediaMath expects a few exchanges will be able to sign without making any changes to their current practices.

“You can’t make the fine for parking illegally less than the cost of parking in a garage for the day. Otherwise they are going to manipulate the auction,” said Lewis Rothkopf, general manager of media and growth channels at MediaMath.

Repeat offenders won’t be able to earn their way back in. MediaMath will give suppliers a single shot at redemption, but no third chance.

“It’s no mere ‘slap on the wrist.’ That’s given them the idea that it’s OK to play games and they have an advantage until they are caught,” Hewitt said.

MediaMath has become stricter toward suppliers. In the past year, it permanently stopped buying from a handful of exchanges for practices that hurt its marketers.

For example, MediaMath stopped buying from exchanges that didn’t abide by its “two hops” policy. Implemented a year ago, it discourages reselling by prohibiting exchanges from offering impressions that have passed through more than one intermediary (the second "hop").

MediaMath also permanently kicked out a supply partner that sold video inventory on sites that didn’t have any video and then violated a different rule after MediaMath turned it back on again.

In contrast, many DSPs have traditionally policed auction games by asking an exchange to stop a practice once it’s been found out, or briefly pausing spend with an exchange.

But as the auction games continue to flourish – and get more complex – MediaMath has had enough.

“Bid caching was an example of finding the tiniest needle in a big haystack,” Hewitt said. MediaMath doesn’t want another exchange to dream up the idea of the next bid caching, but to focus on driving outcomes for its marketer clients.

“This has to stop, she added. “This mindset of myopically focusing on taking away market share from competitors, versus orienting yourself toward the marketer and the consumer, has to stop.”

The open letter to MediaMath’s clients is reprinted here:

Recipients: All directly integrated SSPs of MediaMath

Subject line: An Open Letter to SSPs About the Way We Conduct Business

It's been a challenging time for our industry, and for digital media more broadly: Congress continues to probe the activities of social media giants, again putting tech companies in the hot seat. The role of the “platform company” was spotlighted yet again as part of the seismic shift taking place in the marketing world. You can see aftershocks of this throughout ad tech: although not social platforms, our respective companies happen to be platforms as well, and we each have a critical role in maintaining the integrity of our own market. At risk is the ongoing sustainability of our industry. We can’t wait for government intervention to bring about true transparency and accountability.

Fighting over market share has diminishing returns when the pie starts shrinking due to an erosion of trust. Look elsewhere for an analogy: who “trusts” the cryptocurrency markets right now? We are facing a choice: clean up our act as an industry or hand the keys over to the Walled Gardens, who can apparently afford to apologize and move on when they experience lapses.

Marketers are tired of games, and don’t want to hear yet another explanation about something obscure in the auction that has inadvertently subtracted value from their marketing efforts. In response, MediaMath is rolling out policies and procedures to make even more clear our current prohibitions against auction manipulation, and any supply side tactics that solely exist to unduly disadvantage other SSPs. We believe that SSPs can add the most value when they put their energy towards improving marketer outcomes, instead of myopically focusing on killing each other at any cost.

We understand that there is tough competition on the supply side. That’s good! Finding new ways to make marketing work better, and the innovation it spurs is what makes all of our jobs exciting. Our industry is stronger when we align towards common goals. Novel developments that update auction mechanics or OpenRTB that allow marketers to better deliver their message to consumers in a clean, non-intrusive, low-load environment are unquestionably a good thing. Through our industry associations, let’s come together to make it happen via a transparent standard.

Where there is money and limited consequences, there will exist the risk of abuse. As it relates to our platform, we are making those consequences far more clear and unambiguous. Establishing a Code of Conduct starts with open participation, but if any member violates these polices, or even the spirit of this letter, that platform is out of the club. There will be a defined penalty of cessation of spend for an extended period of time, without early release, and reentrance is only accepted after extensive vetting. There are no third chances. Protecting our customers, end consumers and the industry itself necessitates taking this strong stance.

Furthermore, if you see something, say something. If you run a clean shop, but others engage in old, questionable practices, tell us. Let the buyside level the playing field. If you are honest about a tactic your platform employs, or are unsure about a practice, also say something. Just as you do at the border, when in doubt, declare.

To continue your eligibility for MediaMath’s Open Auction, please confirm your adherence to the principles outlined on this linked form.