Commentary

RTB Is Anti-Publisher At Its Core

When did it become acceptable for advertisers to allocate a perceived value to a publisher’s inventory? If we’re looking for examples to help us define the concept of onerous terms, look no further than the ecosystem built, and continually propped up by, RTB advocates.

I’d like to say that it's insane.

Imagine walking into a car dealership and then simply telling the salesperson what you will be purchasing a car for. Do you think a dealership would let you walk out with the keys? That’s exactly how RTB exchanges work today.

Publishers, much like the salesmen in the example above, are asked to sit on the sidelines while buyers get to determine the value of their display inventory -- without oversight. Once that’s determined, advertisers embrace the opportunity to purchase inventory at scale.

In an article titled "Header Bidding Killed Programmatic Direct," Jed Nahum (the former head of Microsoft’s global programmatic sales team) makes it quite clear what the priorities of “buyers” are when their needs are prioritized in a transaction (emphasis mine) over publishers and sellers:

“When buyers decide, every buy potentially delivers data to their data management platform (DMP), enriching their knowledge of their audience and making them better marketers. The problem with programmatic direct is that it doesn’t incorporate the DMP in the same way RTB bidding does. And since buyers control the spend, they’re looking for ways to feed the data beast.
I learned this talking to buyers. They told me that the real value of programmatic to them was being able to buy only the stuff they wanted and none of the stuff they didn’t.”

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As the quote above illustrates, the real value of publisher inventory, according to buyers, isn’t the eyeballs on placements or even brand recognition. It’s the data that can be used to “feed the data beast.” That’s usually industry speak for buying and selling first-party user information to other third parties to build better targeting profiles for further advertising campaigns.

The exploitation of this information, and its continued misuse throughout the industry, is exactly how we’ve arrived in the present advertising landscape rife with ad blockers and distrust. Yet we’re doubling down on RTB as a model.

Is it shocking that publishers have become skeptical about the prognostications spouted by RTB companies? To publishers, visitor data is sacred, and any mention or attempt to procure that information should be taken under serious consideration.

The reality, however, is that this sales paradigm exists today because robust, direct sales tools platforms have been less than satisfactory, and expensive to build internally. That’s changed. There are a number of companies determined to restore the sales balance and empower publishers to regain control of their future, restoring the value of their inventory by selling directly to advertisers.

Publishers need to work on restoring the publisher-advertiser relationship, separating themselves from intermediaries who stand to gain from pushing them apart. To date, RTB companies have done nothing more than inject themselves into the middle of the process. Just ask mainstream media outlets and journalists how that monumental paradigm shift has influenced growth throughout the industry over the last decade. The results of those inquiries will tell a harrowing tale worth remembering as we take the next step into advertising technology’s future.

6 comments about "RTB Is Anti-Publisher At Its Core".
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  1. Tri Huynh from Adsorcery, February 23, 2016 at 3:07 p.m.

    RTB is the reason why most website are slow, and sometimes making it hard to trace a malvertising.

  2. Matthew Barrowclough from Apogee Digital Media Partners, February 23, 2016 at 5:33 p.m.

    Todd, I respect the belief that publishers have struggled to keep up in the evolution and it has unfortunately left many with depressed earnings. However, value is only determined by what a particular individual will offer in exchange for a particular good. If a publisher values his/her audience more than the marketer then you have a standoff and no market. 

    In the case of audience buying via RTB markets, marketers today are able to buy the audiences which will convert on their goal. Publishers often misunderstand what a marketer wants: converting audiences. Publishers selling blanket ad placements do nothing to solve the marketer's pain points which is why we see a struggle with programmatic direct/guarantee buys. 

    To your point, there are a lot of extraneous, no value-add solutions in the market. But we should also consider that the publishers high-CPM payouts prior to programmatic buying was inflated. The publishers and marketers that will succeed in this everchanging market are the ones that begin to understand the counterparties needs better. Happy to talk more with you as we are both invested here. matthew at apogeedigitalmedia com

  3. Todd Garland from BuySellAds replied, February 24, 2016 at 3:49 p.m.

    @Matthew - thank you for reading the article. We'll eventually publish the full article. This is just a short excerpt from a longer editorial we've written. There is definitely more to this, and it's a complicated issue. I've written a couple of other pieces over the last few weeks that also touch on RTB and digital media.


     


    You can read them both here:


     


    https://medium.com/buysellads-restoring-the-balance


     


    For the record, I don't believe that RTB has created an efficient market, and I also remain quite skeptical that it will, considering its abundance of fraud and ad tech's inability to police itself.


     


    I mean, 90% fraud (http://adexchanger.com/ad-exchange-news/6-months-after-fraud-cleanup-appnexus-shares-effect-on-its-exchange/), come on.


     


    Yes, RTB did bring about more sensibility to inventory pricing, but it failed to self-regulate and prevent the situation that we now find ourselves. Prices in RTB today for legitamate impressions are undervalued. As RTB cleans itself up (again, I'm not convinced they will make enough progress before publishers move on and seek alternative solutions) there will be a return to higher CPMs for the legitimate publishers out there.


     


    My message to publishers is: enough is enough, it's time to move on.

  4. Benny Radjasa from Armonix Digital, Inc., February 23, 2016 at 9:35 p.m.

    Todd as someone who has worked for a publisher, I understand the value of the publisher’s argument, they do provide value and want to get paid fairly for their service.  However, the counter point to this is, it’s a free market economy, both buyer and seller has to come to an agreeable term on actionable price when a transaction can occur.  What I can tell you is, in terms of online advertising in 1998 Goto.com/Overture introduced PPC search advertising concept and Google followed suit the following year.  The cat is out of the bag then there is no going back.  PPC search advertising allows buyers to value an inventory at whatever yardstick they choose to measure it with.  As Goto.com/Overture started to syndicate their product in 2001 they became the middle man.  I am not sure if acceptable for seller to dictate absolute pricing and vice versa for advertiser to dictate theirs.  If there is to be a transaction both party needs to agree to what this comprised outcome is.  In some cases, when market crashed, such current oil and commodities market crash, buyer can have overwhelming control on pricing, but I will argue that it is not exploitative pricing.  As the industry gravitates towards automation and every faster determination on what agreeable price is, it will be inevitable that RTB and other form of programmatic trading tool usage will grow in its dominance.  Will everyone participate in this public valuation of a company product, probably not.  Some will continue to sell direct where brand recognition is valued differently.  Just like the stock market, not all companies are public, and there are quite a lot of deals being transacted in the private market. 

  5. Todd Garland from BuySellAds replied, February 24, 2016 at 3:50 p.m.

    Benny, thank you for the comment and reply. I like your analogy to the public stock market and private market. Obviously, this is a nuanced and complex issue, and is more worth considering but a 500-word article has its limitations.

     

    To date, RTB companies have failed to control the rampant fraud they're faced with today. Fraud is also a core reason (there are many) we see such accelerated ad block adoption from users.

     

    The pressure RTB put on pricing isn't my issue. My issue is how RTB entirely removed publishers from the equation. Publisher control evaporated, and, as a result, fraud that has continued to grow.

     

    When publishers sell direct to marketers, they have close communication with them and are very easily able to determine the value an advertiser places on their inventory. While not "real-time", this value is still being established by the market and a publisher can adjust its pricing accordingly. The idea that RTB has created an efficient market for legitimate publishers is not accurate. What RTB has done is create an effective market for the fraudsters.

  6. Tri Huynh from Adsorcery, February 24, 2016 at 5:04 p.m.

    Publishers should always track the quality of the ads putting on their sites through RTB.

    When we implement such program at Adsorcery, the amount of bad ads, frauds and malvertisements are removed quickly before it cause any real damage.

    That's being said, i agree with most of the comments as well: RTB removes the publishers from the driver seat in the process.

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