The RTB Truth, Well Told

The ad industry has never had more people counting it than it does today, but for me, the most definitive source continues to be Interpublic’s Magna Global unit. And it’s not just because of its longevity, though that is clearly part of it. The unit, and its predecessor McCann-Erickson Director of Forecasting Bob Coen, have been counting advertising about as long as there’s been advertising to count. Seriously, the agency actually has stats on ad spending tallies going back hundreds of years.

But the main reason Magna is my definitive benchmark is the objective and scientific way with which is calculates the ad business -- something that grew out of McCann’s motto, “Truth Well Told.” That’s why I get especially excited when Magna updates its annual outlook on the programmatic marketplace. There are so many areas I can dive into in its latest installment, but the one I’d like to focus on for today, is its tallies for programmatic ad spending, and especially how it breaks down and forecasts the percentage and growth of RTB vs. “non-RTB” spending.

As Real-Time Daily reports today, Magna notes that RTB is still the vast majority of programmatic-media buying and accounts for 84% of the $18.6 billion advertisers will spend on programmatic media this year. The reason that is important is because many in the ad industry -- both supply- and demand-siders -- would just as soon it go away. Some of those sources have waged a war against open RTB trading, asserting it is a vile, corrupt, fraudulent marketplace comprised of robots, crooks or spreaders of malevolent code that might be conspiring to do something even worse than stealing advertisers’ money.

While it is true that players like that exist in the open RTB marketplace, I can tell you they exist almost everywhere else in the media business too. I also know the real reason why some big players have cast dispersions on open RTB is that they would just as soon it go away for another reason: because it deleverages their marketplace clout. It makes absolute sense to me why big media buyers representing big advertisers would tell that story, but it doesn’t make it true.

The well-told truth, according to Magna, is that RTB dominates and will continue to dominate RTB trading for some very simple reasons: 1) There is more supply of digital media than publishers can sell directly; 2) Smart advertisers and agencies don’t distinguish between methods of buying or selling a medium so long as it delivers the audience they want to reach in the environment they want to reach them in; 3) A lot of those smart advertisers and agencies are not inside the kind of big ad agencies that are trying to ignore those things, but are part of a rapidly expanding long-tail marketplace that is fueling RTB’s growth; and 4) There is actually more transparency in the RTB marketplace than outside of it. It’s a different kind of transparency than people normally talk about in the ad business, the kind that people on Wall Street call “visibility.”

“We think one of the most important efficiencies of programmatic is real-time price discovery,” explains Luke Stillman, vice president-digital intelligence at Magna, and one of the authors of its annual programmatic update.

“We also believe that this results in efficiencies not just for buyers, but also for sellers (unless of course their sales team / today’s inaccurate measurement has built an aura of value that is greater than the reality),” he continues, adding, “Even in the current environment with fears around viewability, fraud, brand safety, etc. we have seen continued strong growth of programmatic and RTB.”

Stillman acknowledges that many of Interpublic’s peers have been championing private exchange deals, “even when price is auction-based and there are multiple bidders” and put it into a “‘programmatic direct’ bucket.

Magna, however, defines many of those transactions as a form of RTB if there’s an auction taking place, and that the private market restrictions put on those deals are just “part of a transition period” for brands and publishers that are afraid of giving up too much control too fast.

“Over time, we expect that to fade and even in private exchanges, those restrictions will lessen,” he predicts.
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