When RTB Growth Peaks

When it does, the industry will be no different than where we were before RTB. (To clarify, I’m talking about the Real Time Bidding only and not programmatic buying or “Programmatic Direct”.)

RTB is still growing at a fascinating pace, even from the inception of about five to six years ago, which is a lifetime in this space. eMarketer reports that RTB growth is to account for 29% of all display spend by 2017. But when will it really peak? We all know that it will not take nearly 100% of the market, because there are certain ad placements that are too unique to be put in a biddable format. Native ads, rich media and premium guaranteed spots that are sold in blocks are here to stay. And even if they could be a part of RTB, publishers wouldn’t subject these placements to the volatility RTB has.

Where does that leave us? For example, say it reaches even 50% of the market and peaks there. With RTB technology now commonplace, everyone has a bidding platform of their own or has multiple partners with the ability to buy / sell in an RTB format.

For the sell side, a publisher is selling in all three top SSPs (yes this happens), five networks and direct to agencies that they’ve set up in their private exchange. On top of that, their direct sales team has guaranteed buys and native placements plugged into their ad server.

On the buy side, there are agencies with a trade desk buying in five DSPs (yes, this happens), vertical and horizontal ad networks, private exchanges and direct buys with publishers.

I’ve oversimplified the scenarios above. It is way more complicated than that. In the beginning of RTB, the pitch of any DSP or SSP was to manage “everything non-direct” in a clean biddable format. Massive audience reach for the buyers and a funnel of demand for the publishers, one tag to rule them all.

But what we’ve got is hardly that scenario, it isn’t any different from 2006 with 50 networks in the space. Remember the network pitch ten years ago? “Massive audience reach in one buy and for the publishers, a single stream of demand”. The only thing different is the method in which the impression is bought and sold. At the end of the day, the marketer and publisher look at the average CPM. I mean that literally. At the end of 24 hours of RTB, we still look at the average CPM and which provider provides the best yield. We do this because we need context around the pricing or otherwise it is impossible to compare.

So where does that leave us? Is it any more efficient for the buy or sell side? Many argue it is more efficient in the ROI on spending, bringing down CPMs, but this is a can of worms we’ll not focus on here. For operations teams, it is not any more efficient. Maybe in the beginning of the trend, when a pub or buyer would use one RTB partner and funnel everything through it, did they see their operations teams breathe some sigh of relief. But quickly, with the technology being so readily available, an ops team is convinced to make another line item, just to test and presto - we’re in the same situation.

Are we already at this point with the majority of the market? RTB is still growing, but publishers and marketers are using the same amount of partners along with thousands of ad tags. To make their ROI and yield decisions, they are still using excel spreadsheets to collect and analyze the data. This is hardly programmatic, even though the pitch from partners is always that it will be taken care of.

It takes hard work, will and perseverance to manage the above and it always will. When new tools come out to handle it all, take advantage of them quickly to keep up with the industry, so you aren’t left out. Just know that it always continues and the next deal you make that promises consolidation, may very well provide the ROI and yield, it will not be the one to rule them all.

Perpetual Aggregation, Not Consolidation

Many have predicted major consolidation in the ad tech space over the past few years either through positive M&A activity or failures. And recently, there have been voices pushing back on the concept altogether, with smaller companies pounding their chest about climbing revenues, profitability and announcing funding rounds.

Most of the doom and gloom predictions started popping up after the Lumascape logos got so small that a retina iPad couldn’t even make them out. I’m writing this on the heel of two major consolidation events, both Aol’s acquisition of Adap.Tv and Millennial Media's tackle onto JumpTap. These are perfect examples of consolidation and many will scream that the wave is beginning to crest. Hooray for simplicity!

However, I’m going to point out another outcome, which I call perpetual aggregation. Simplicity will never come. Since the dawn of the web, the number of different formats and monetization methods have exploded, like the big bang. In the early days it was text links, pop ups, email newsletters and the jaw dropping page takeovers that would have ad ops people huddled over a CRT monitors watching the Hulk break through the Yahoo homepage.

Where are those companies today? Some mediums weren’t large enough to hold a separate set of companies before their model was copied easily, but a few are around that have evolved, consolidated others or have been consolidated. Every new opportunity brings more companies that specialize in each niche. Whether it’s a format like mobile, social, video or trends like audience data and RTB, each of these innovations have spawned many new companies. I don’t believe it is going to stop either. What about ads on wearable computers, or DSPs for digital billboards, taxicab video ads and streaming mobile audio? As long as there is niche and a slight hurdle to entry, there will be a new company to jump on the opportunity.

These new companies will continue to pop up as others are consolidated, or aggregated into larger entities that want to be able to offer the full stack. They need to be able to “check the box” on these with their customers, so they acquire as opposed to building. And as long as the larger players can take them in, the smaller ones will continue to be founded upon new innovations. Many entrepreneurs in our industry are even multiple repeats, seeing a trend in their previous company that they bring to a new one. Their consolidated company spawns a new one.

This has caused an endless trend of aggregation as well, in an effort to simplify and scale. A new format comes out and if it’s successful, immediately there is a race to the top level of aggregation. A network, then exchange, then SSP/DSP. (Yes, even data went this route.)

The recently consolidation wins are great for the entire industry, not only because it relieves some pressure, but it motivates more innovation. Don’t get me wrong, there will there be saturation points in every area that pops up and there will be failures. But when we see breakthroughs and game changers emerge, it’s exciting and we wouldn’t have any of these breakthroughs without the cycle above.

The Wave Of Publishers To Offer Programmatic Buying

Everyone has been talking recently about Facebook's warm hug with a few select Demand Side Platforms. This is not a surprise move by Facebook and neither are the restrictions they are placing on buyers. For example, only allowing buyers to bring their own data. Targeting data from Facebook will not be available, yet, but this is their way of maintaining control when launching their programmatic offering.


Since January, I've been seeing a wave of big publishers exploring the methods of how to put their own offerings into programmatic buying platforms. Companies spanning from big content players, portals and even major commerce sites that hold a gold mine of purchase intent data. Just this week alone, three major players have confirmed these strategies publicly. 

• Michael Barrett made it clear that this is a goal and a reason to move to Yahoo as their CRO. "(At AdMeld) I saw directly how the whole biddable media, programmatic buying, platform buying was impacting (premium publisher's) business. I always thought there was a way to tie both biddable media and direct, premium, branded sales team together."

• Microsoft's VP of advertiser and publisher solutions, Rik Van Der Kooi said, "We are looking at programmatic both as real-time bidded but also programmatically available, even if it's not RTB – just making it seamless to access. We're looking at what other offerings are we going to put on the exchange from today's inventory."

With Facebook making their inventory available programmatically, other publishers competing for market share should feel continuing pressure to follow suit with transparent offerings of their own. RTB is exploding and audience buying is being adopted by the largest of brands and CPG advertisers.

Every publisher faces fear and asks the same questions when considering making their tier one, cream of the crop inventory available in buying platforms:

1) Will offering inventory in a programmatic manner bring a downward trend of my CPMs?    2) Will advertisers be able to take my audience?    
3) Will it cheapen my brand and create conflict with my sales people on the street?

My answer to these questions are: You don't lose control here if you set restrictions and manage it, just like Facebook does. Here are some ways to do this:

1) Hard CPM floors - The common misconception with buying platforms is that all of the inventory available in platforms are in a bidded format only. Having a hard floor that is visible will prevent your overall CPMs from being driven down even in direct sales. It will be clear to the programmatic planner that they pay the same as the traditional planner, it is just seamless for them to access your media. 

2) Advertiser Approvals - Restrict advertisers from placing pixels in their creatives to run on your media and your audience data is safe. Right Media has been able to restrict this for years, you can demand it and control it as well. This will allow you to control channel conflict with your direct sales team.

3) Push Your Brand - Be transparent with your offering, don't hide it through an SSP or a network. Maybe even make it exclusive to certain DSPs and trade desks, like Facebook did (and they have repeated it since day one). If you have a brand, leverage it. The DSPs are all clamoring to differentiate, pick a few that have access to the advertisers and agencies you work with today. They'll flip to get your inventory and your brand in their platform, even if you charge rate card, with no bidding.

In summary, publishers can absolutely play in the programmatic world without losing control. As more planners turn to platforms to fill their budgets (often at the last minute), your brand will be there waiting. Sales people armed with white papers don't justify your high prices. Your brand, content, performing inventory and ripe audience is why you are getting bought. 


Is your offering better than what Facebook just dumped into the market? Was it better when MySpace was unloading their inventory for pennies? Don't be afraid, just keep the control you deserve.

The Next Step For Aggregation In Display: Integrations

We all would love to see some shake up of the display landscape, more so in a favorable direction with some mergers or acquisitions rather than have a few companies drop off the map. But the reality is that consolidation isn’t going to happen this way.

What is changing right now in the industry is that everyone is just able to integrate with each other more easily. So the days of a late night drink between C-levels discussing major juggernaut mergers that send ripples through the industry are becoming few and far between, at least in technology. Now it’s more like “Hey, what if we just integrated our inventory together and split revenue by x?” “Wow, yea we can just use your API!” So, instead of marrying companies together in some grand royal wedding, now you can just “date” as many as you want and not have to make a major financial commitment to just one.

What happens when everyone just starts integrating with each other? The quality of the major merger or buyout is not as impactful as it once was. It doesn’t send a wave through the industry because it’s not that hard for anyone to pull of. For example, Advertising.com / AOL took their cash reserves and went on a buying spree in the later half of the last decade, picking up a video network, a text ad network, a behavioral network, a social media company and an ad server to link them altogether. Today, this would never happen because if AOL needed, it would just call up a smaller video company and ask them for access their API to plug their inventory into the AOL network. The video company would just flip the switch in a second for a simple rev share and wait for the huge influx of revenue.

Does that mean acquisitions and big mergers are done? No, there is still inherent value to these major commitments sometimes. For example, Mediabank's purchase of AdBuyer.com. Owning the company you are integrating locks others from integrating with them and it may allow you to do more with the company than an integration allows. But if you don't need to make a huge commitment, and it's easy to just “plug in” to each other then why go through the hassle?

In my example above, if it was easier for AOL to just buy or merge the video company outright, they would. But today, integration avoids having to deal with all of the things that go along with an acquisition or merger. Things like equity distribution, job restructuring, process hiccups, outstanding deals between the companies and much more.

So now what? If I’m an advertiser or publisher on either end of the landscape spectrum and I need technology, I’m going to want a solution that meets ALL of my needs. Whoever meets all of my needs will get my business. But what if I could just tap the best technologies from the best companies in the landscape with one click, sort of like adding software to my PC? As an advertiser I’d have all the technology I need to run my business.

In this scenario, who gets the grand spot of being the operating system? History tells us it’s whoever has the most compatible software. So the race is on for integrations. Place your bets.

“Pixel-less” integrations are the unicorn of data management

In a marketplace where data management companies add new features to the pitch every day, it can be difficult, even confusing, for a publisher to keep track of the new bells and whistles in the DMP space.

Understanding that this marketplace is already tough to navigate, I find this new messaging I’m hearing confusing. I’m referring to a magic trick called “pixel-less” or “pixel-free” data management. I’ll be blunt here — full-blown, pixel-free data management is not possible. When you hear this from a data company, ask them, “What’s the first step after signing up?” The answer will be that they need to pixel your site.

Why is pixel-less data management not possible?

For data to transfer from one domain (the publisher’s) to another domain (the advertiser’s server or media outlet), it needs a pixel for the receiving server to identify the user. Even with server-to-server data transfer on a user’s profile information, there still needs to be at least one pixel fired from the receiving server to identify the user and drop a cookie. There needs to be at least one pixel per transfer.

Unless the publisher’s site, their data management platform and ALL of the media is served under the same domain, pixel free data management is impossible. This is actually a good thing, as it creates real scarcity in the data market. If pixels weren’t needed, then data inventory would never have a bottom. Publishers limit the amount of pixels fired on their site like they do ad space, and we currently have a real bottom to the market.

But why are data companies saying this?

Every data company is integrating “server-to-server” data transfer with DSPs, SSPs and other media outlets to reduce the number of pixels being fired, but they cannot eliminate it completely to honestly call it “pixel-less.” Reducing number of pixels fired is accomplished by transferring user profile data from the data company into the media outlet’s server. However, the receiving media outlet must be able to drop a cookie on those specific users in order to know who they are. This is done by firing a pixel. Something needs to be served at some point. Even content or a banner serves a pixel that can be used to transfer data.

When would pixel free be a reality?

If Google was a total monopoly, it could possibly tie in Google Analytics tags to fire the script for keyword targeting into DART ad tags. But it’s not a monopoly. What if a DART publisher is selling ad space into Yahoo’s network or a DSP? The data won’t be there for an advertiser to target unless it is moved there via a pixel fire at some point.

Another way it would be possible is by matching the user through personally identifiable information. So if a data management company says they are doing pixel free integration, ask them if this is how they are matching the data to the user.

Why A Microsft Acquisition of AOL May Make Sense This Time Around

Around two years ago during the reported talks of a Microsoft + Yahoo marriage, another relationship came to surface: that of Microsoft acquiring AOL. Well, history repeats itself, as the acquisition chatter is aflutter again over the same MAOL opportunity.

On the surface, everyone can see a purchase of AOL comes with a boost in search share and a tremendous lift in impressions, both of which would likely put any suitor to the top of the comScore property list. But underneath, there is more that AOL can provide that goes unnoticed. Yahoo sees this additional value through their recent purchase of Associated Content.

Currently, the largest value in content generation lies within natural search result monetization. It is clear from this observer that ownership of the natural search monetization channel is the value that Tim Armstrong sees and is building at AOL. Associated Content (remember, also backed by Armstrong) was probably pitched to Yahoo in the same way that AOL is rumored to being pitched to Microsoft. AOL’s Seed.com will only generate content that will show up on search results that command high CPC bids. Content on mesothelioma, auto insurance, student loan consolidation and other top CPC driving search terms will be created on-demand, not just more manicured thought pieces on politics, news and entertainment (for more in this “impatience media” movement, read the following in yesterday’s New York Times).

Tim can see that Google only owned a small portion of the revenue that was generated from a search, while thousands of other companies made billions from Google’s free results. Vantage Media is but one company that reaped the benefits of this with content generation made specifically for boosting their ad portals into natural search results. They built an entire business model around one keyword pair: online education. Why not expand this model into every vertical? And who better to crack this than a former Googler that knows the natural search results game?

In fact, you’d think that Google would be after AOL as well considering they already own a stake and it’s already being run in the direction they want it to go by their own people. It’s a no brainer, and it seems to give off an eerie scent of an inside job (in as much as Google acquiring Publicis might be considered an inside job too!). The only thing that would throw a wrench in a Google purchase under this premise is the idea that Google would become the fox guarding the “relevant results” henhouse. But what’s the difference? It’s already happening now, Google just doesn’t own it yet.

The value in owning the impressions off of natural search results only increases when true liquid access to advertising on this content combines with real time bidding, exchanges and DSPs; add to this the tremendous behavioral targeting data opportunities with retargeting, and Microsoft or Google can squeeze a lot of blood from this stone. As such, the benefits likely outweigh the monetary cost of what AOL may command, but any buyer must also know the indirect costs (re: some of AOL’s well-publicized problems) and how to handle them. A buyer must know exactly what to do with each portion of AOL before they buy it so that we don’t see history repeat itself yet again with another failed AOL ‘synergy’ merger.