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.

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.