Programmatic technology is filled with several nuances that affect both publishers and advertisers. One such example is whitelists and blacklists, also known as blocklists. Understanding the ins and outs of these lists is important for players in the programmatic advertising space who want to optimize revenue.

Whitelists and blacklists have slightly different meanings depending on whether you are an advertiser or a publisher. For advertisers, a blacklist is simply a list that identifies the sites on which an advertiser does not want its advertising to appear, while a whitelist identifies only the sites on which an advertiser wants its advertising to appear. You wouldn’t use both on the same campaign.

For publishers, similar reasoning applies but from the opposite side of the process. Publishers have whitelists designating which advertisers they will accept on their site and blacklists of advertisers that are blocked. The difference between the two is just the execution, block or allow. They achieve the same goal of regulating which advertisers are allowed onto the publisher’s site. The level of blocking can vary, from specific brands or landing page URLs to full advertiser categories.

Advertisers and publishers employ white and blacklists in a variety of ways and for their own distinct purposes. When used properly, white and blacklists can yield positive outcomes, but just as easily, improper use can produce negative results. Let’s take a look from a publisher’s perspective at how white and blacklists can efficiently enforce business rules to maximize revenue:

When utilizing programmatic technology, bid requests are sent out via the exchange to different demand partners, including specific targeting parameters. Demand-side platforms (DSPs) send back bids on behalf of advertisers in an attempt to win the bid and serve their ad. This is where white and blacklists come into play. Supply-side platforms (SSPs) attempt to identify the source of the ad. Being able to identify the source is beneficial in not only applying white or blacklists but also in fostering greater transparency and improving targeting. This type of transparency is crucial to the evolution of the RTB marketplace. If the SSP cannot identify the source and the publisher is running a whitelist, the ad will be blocked by default. If the SSP can identify the source, it checks if the winning bid is from an advertiser on the publisher’s blacklist.

When the auction is over and the impression didn’t sell, some SSPs send the impression back to the publisher via pass back tags to try with a vendor lower in the ad server waterfall. Other SSPs can identify that the advertiser is blocked, and take the next bid as the winning bid. If the exchange provides for a multi-bid environment when an advertiser is blocked, the exchange can still accept another bid from the same DSP. It’s easy to imagine how beneficial multi-bid is to a publisher with a larger blacklist – there are more chances for sale within the same auction. The highest bid above the publisher’s floor that isn’t blocked via blacklists wins and the associated ad is served.

Ease of implementation is often the deciding factor for utilizing white vs. blacklists. If a publisher is very restrictive about which ads can appear on its site, whitelists are likely the better choice. It might be easier to list the advertisers allowed than not allowed. On the other hand, if it doesn’t have many restrictions about acceptable ads, a blacklist may be more appropriate. The blacklist is usually a last line of defense to make sure an unwanted ad doesn’t squeak through. While both types of lists ultimately achieve the same goal, one method may be more efficient than the other.

For publishers, the use of white and blacklists are fueled by two main reasons: brand integrity and preventing sales channel conflict. Maintaining brand integrity is the most common and obvious use. When a publisher restricts ads on its site, it protects the user experience. For example, a children’s website wouldn’t want alcohol, tobacco or firearms ads on its pages, nor would parents want to see soda or candy ads on a website meant for their children. To maintain a positive user experience, publishers may add those brands to that site’s blacklist.

Sales channel conflict is another valid reason to use these lists. The premise is to block advertisers who could potentially be direct sales, partners. A health site, for example, would likely want to target pharmaceutical advertisers, and it may have its own direct sales force. The site could block all pharmaceutical advertisers from programmatic channels, so the site’s own direct sales team could foster relationships with those advertisers and sell directly to them at a more premium level. This tactic prevents advertisers from undercutting direct sales and buying the media more cheaply programmatically.

This tactic, however, isn’t always a clear-cut decision. A publisher can benefit from selling directly to blocked advertisers, but a shift in the marketplace is breaking down this wall. To stabilize demand and price, many publishers no longer use white and blacklists to address sales channel conflict. Instead, they allow direct sales and programmatic to compete head-to-head in the ad server to ultimately help increase sales and average price.

To maximize the benefit of white and blacklists, it’s typical for publishers to find a sensible balance. A children’s site may be overly protective of the brand experience and utilize a whitelist with a limited number of approved advertisers. Likewise, an entertainment site may have few concerns, so it can afford to be more relaxed. Moving too far to either end of the spectrum can potentially cause adverse results. Additional blocking of advertisers inevitably leads to lost revenue.

Which advertisers to block is the other important dimension to this equation, and blocking advertisers in an arbitrary manner has consequences. Some advertisers spend more than others, and significantly. Having a blacklist of 10,000 long tail advertisers may not be as impactful as blocking one major advertiser. Understanding why an individual advertiser is blocked is critical to properly using white/blacklists.

Legitimate reasons exist to take advantage of whitelists and blacklists, particularly because they can have a significant effect on a publisher’s revenue potential. However, they are often overused. Savvy publishers must preemptively understand the effect these lists will have on its business. The ideal state is to block as few advertisers as possible while maintaining brand integrity and leaving room for direct sales. Publishers should make an informed, data-driven choice to find the right mix with a minimal amount of blocked advertisers while still being mindful of user experience.