The Other Side Of RTB: Programmatic Selling

Every Monday, we send out a digest of digital advertising “must reads” chosen from the week before. Our “Mashup” team gets together in a conference room the preceding Friday, and each member brings an article he or she thinks belongs in the final product. The group vets these together.

A few weeks ago when the articles were sorted, one was left on the chopping block. Its title: “How Real-Time Bidding Works.” A real debate stirred up in the room. “This is far too basic for our audience,” argued one member of the team. “No, I think it’s a good one,” replied he who had submitted it. The final verdict was to leave it in and see if anybody cared.

When we took a close look, not only did the RTB article prove its worthiness, it received the most attention out of all the articles. The Mashup team was stunned. It was hard for them to fathom a simple piece explaining RTB would be more intriguing than all the major news of the previous week. For us, it was a key learning, a chance to see firsthand just how mystifying RTB can be.

With the launch of MediaPost’s RTB Insider, I must say it’s about damn time. The digital advertising industry is obviously trying to grasp this new space and there’s still much to figure out. In my opinion, the best way to get to the bottom of something is through Socratic debate, and I applaud the editors at Mediapost for laying the foundation for that to happen.

As RTB attempts to grow beyond the 18% of digital ad space that makes up the remnant market, it will be important to give publishers a voice on how it evolves. To date, RTB remains a buyer-friendly system. It is referred to as programmatic “buying,” after all. But, for this system to work long-term, it has to give publishers a compelling reason to list their premium inventory on it as opposed to selling it directly. Right now, the system is skimming so much off the top that it’s not even close.

To that end, I’ve decided to add my voice to the roster of contributors for RTB Insider. The perspective you’ll hear from me will be publisher-focused, as my company’s work is done where the real money is, the 82% of digital ad spend that goes into premium, direct inventory. As publishers make their way into the 18% percent, they’ll need to know it’s a safe and profitable place for them to go. So far, many are not convinced.

Let me tell you what publishers really think about this space. We asked over 20 of them to answer a few questions and learned some interesting things.

Almost across the board, publishers told us that RTB was a place to park inferior inventory. “On sites with strong brands and great content, context trumps audience,” one VP told us. “On crap sites,” he continued, “What else do you have but audience to try and raise CPM?” Ian Wallin, SVP of Ad Sales at TV Guide, echoed this point.

“An algorithm cannot represent the context, brand equity and environment of our site,” another said. “So we sell everything we possibly can direct and then outside a pretty extensive block list, we use a supply-side platform to manage RTB and ad network demand.”

Publishers also told us they think they’re only getting only a fraction of the price their inventory is sold at. A common estimate we heard was that RTB vendors were paying $4 to $5 dollars while publishers were only getting 60 to 80 cents.

The truth is, this can sometimes go up to 80%, an outrageous number given that in any other industry, 15% would be considered high. Certainly, giving away even 25% is not something that makes publishers excited about RTB.

Finally, publishers often used words like “necessary evil” when describing RTB. “This sales channel is too big to ignore for us,” said Wallin. “It’s a place we have to be to show buyers we get it,” said another. Nobody told us they were excited about it, though, to be fair, some did express appreciation for its ability to “fill” unsold inventory.

For publishers, RTB is understood to be useful but, as a whole, it’s not currently seen as an effective way to sell inventory. If you’re betting on the future of RTB, that’s a very bad sign for the ecosystem’s future. Frankly, the current manifestation of RTB does not work for all parties involved, and it will not continue to grow unless that changes. The process begins by giving publishers a voice.

Publishers, let me know what you really think about RTB and how it can do a better job for you. Comment below, and let the conversation begin.

 

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3 comments about "The Other Side Of RTB: Programmatic Selling".
  1. Ted Mcconnell from Ted McConnell Consulting , October 11, 2012 at 12:36 p.m.
    Good read but slight disagreement with one of the quoted comments: "An algorithm cannot represent the context, brand equity and environment of our site". This does get at a fundamental issue of course, but to assume an algorithm cannot represent a context's suitability for advertising broadly is just wrong. Wrong because many of the things than make contexts unsuitable are detectable. Wrong because topical fit is detectable. Wrong because many telltales of publisher quality are available as measurements. And, especially wrong because if context quality were biddable (even as blind to the buyer), the good guys would win, and bid prices for good context woud inevitably float up, rewarding that quality.
  2. Forrads Gump from Stupid Questions Nobody Dares to Ask , October 11, 2012 at 7:12 p.m.
    So the VP says "On crap sites, what else do you have but audience (...)?" ... Well, why are there "crap sites" in the first place? ... May be if they're "crap", they could be retired, or improved? ... Users don't need "crap sites"; when I land on a "crap site", I exit straight away, no matter how high an advertiser bid to show me their ad.
  3. Howie Schwartz from Human Demand , October 12, 2012 at 7:25 a.m.
    We are not seeing / hearing anything like the below for mobile RTB: "A common estimate we heard was that RTB vendors were paying $4 to $5 dollars while publishers were only getting 60 to 80 cents." On mobile there are much fewer players / so maybe less middleman taking 'taxes' out of the system in each step ?