Industry Reaction: Yahoo! Requiring RMX Seats For DSP Advertisers

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right media industry reactionLast week, several demand-side platform (DSP) companies were informed that their advertiser clients could no longer buy Yahoo! remnant, display ad inventory through their DSP seat on the Right Media Exchange (RMX). Instead, those advertisers will need to get their own seats on RMX if they want to buy Yahoo! remnant display ads. Read more.

AdExchanger.com reached out to a selection of companies in the ad ecosystem which use DSP technology. They were asked the following question:

"What's your reaction to Yahoo! requiring seats for advertisers on Right Media Exchange versus buying through DSPs, ad networks, etc.?"

Click below or scroll down for the responses:

Joe Zawadzki, CEO, MediaMath

"Well, there’s a lot conflated into that question.

Remember first, Yahoo is making a distinction between DSP-as-technology, which they continue to support, and DSP-as-buyer purchasing Yahoo inventory on their own seat. It's only the latter that's impacted. Stopping DSP-as-technology would be like Google disallowing search bid management tools, or publishers deciding third-party ad serving is no longer allowed. Advertisers and agencies simply need centralized buy-side technology and analytics to succeed going forward.

What Yahoo is doing is requiring seats from advertisers and agencies on Right Media in order to understand who is ultimately buying their inventory, and to be able to influence their spend on Yahoo!. We are very supportive of that (and have quite a few clients doing this already). Yahoo! deserves this, and it should boost both their direct sales and their success through programmatic channels.

My only concern would be the lead-time. Five business days to get a seat established on Right Media is fairly ambitious even for a motivated and well-informed client. Their hope may be that dollars simply migrate to Yahoo! network+ management without impact to performance, but that’s a big risk to ask Fortune 1000 brands to shoulder during a critical time of year. As a Yahoo! shareholder and the DSP who bleeds the most purple, I'd propose a more reasoned timetable during this holiday season on behalf of clients everywhere."

Rob Leathern, CEO, XA.net

"My answer to this is two parts: 1) the handling of it, and 2) the business strategy/larger picture. As to 1) keep in mind that they told us this at 6.30pm EST on the Tuesday before Thanskgiving to be effective as of December 2nd. This doesn't give us a lot of time to make a transition for our clients to their own seats. Regardless of the business reasons for the decision, doing this now, in Q4 before a holiday weekend for firms who have spent millions of dollars on their platform is a big middle finger move by Yahoo.

I personally believe it's a completely wrongheaded approach to partnership, in stark contrast to the relationships we have with companies who have ad platforms like Google, Facebook and LinkedIn and is a sign of a former Internet giant with great assets flailing around for a workable strategy. If they had an easy-to-use self-service model for advertisers to buy from them directly that would be one thing, but they don't - and *in fact* they told us not more than 6 months ago that the Yahoo! sales team valued DSPs and companies like ours who helped them better service both large customers with complex needs AS WELL AS customers who spend less than $25k per IO since in their words at the time 'it costs them $10,000 to create and manage an insertion order [IO] through their internal process'. I can't think that's improved in the last 6 months."

Mike Baker, CEO, DataXu

"First, why is Yahoo making it harder for advertisers to buy its inventory?

Perhaps Yahoo! is trying to create a benefit to preserve and substantiate Class 1 pricing (you can't access its Class 2 inventory unless you sign up for a seat). The cost of buying Yahoo! inventory is likely to go up but the big question looms, will there be a discernible benefit for the buyer? We license our platform – DX3 – to agency trading desks, agencies and advertisers, large and small. Yahoo's decision will impose additional hard and soft costs on each of these segments, fees that we have traditionally absorbed on our clients’ behalf as part of our commitment to making digital marketing easier and more effective. DX3 aggregates over 20 mega-suppliers of inventory, including Yahoo!, and makes intelligent investment decisions across the more than 10 billion impressions we see each day (and that’s not even counting Facebook), to allocate spend to the highest performing segments. It’s incredibly efficient for buyers, and it’s fully transparent because anyone can license and use DX3 directly. Even large advertisers and agencies have shown little interest in signing individual agreements with exchanges because there are real costs (trading fees, reconciliation costs, cash flow, labor in managing multiple relationships) and no real benefits.

Does Yahoo! still matter to advertisers of RTB and audience buying?

Today it’s all about finding the consumer no matter where they go, and Facebook is dominating as of late. Every buying decision now involves price/performance analysis to maximize ROI, and ad inventory has been shown to be highly fungible so no publisher is indispensable on a plan. Google – with its aggressive entry and expansion into the exchange space – seems to have embraced this new reality, and the percentage of spend from our customers has increased with those that provide value and steadily declined with those who don't."

Zach Coelius, CEO, Triggit

"Over the last three years we have seen tremendous innovation in the advertising technology space as Demand Side Platforms (DSPs) have come to provide significant new value to advertisers. The billions of dollars that have shifted to DSPs are a testament to the value advertisers find in the new efficiency, targeting and scale. Throughout this innovation cycle Yahoo has chosen to play defense. They now find themselves in a situation where many of their customers have migrated to DSPs and Yahoo is faced with disintermediation. Without their own DSP to compete directly in this market against Google’s Invite Media and independent players, Yahoo is in a tough position. With this new rule Yahoo has chosen to do that only thing they can to attempt to maintain account control for the short term. Their hope is that by requiring advertisers to have accounts that they will be able to staunch the bleeding and keep their direct customer relationships. Unfortunately for Yahoo this defensive move is as unlikely to work as their earlier refusal to adopt RTB until years after the rest of the market. They must innovate, and start playing offense, or they will continue to get left behind by the rest of the market."

By John Ebbert

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16 Responses to “Industry Reaction: Yahoo! Requiring RMX Seats For DSP Advertisers”


  1. I completely agree with Rob and Zach. Yahoo is just making things harder. By imposing restrictions on buyers, its only reducing liquidity and demand which will result in a negative impact on yield. Instead, they should focus on how to make things easier for buyers to ensure as many as possible participate.

  2. Alex Andreyev says:

    I think this brings Yahoo back to the discussion table with advertisers and gives them the ability to come up with creative solutions around their inventory, which in turn creates an upward pressure on CPMs. Good for advertisers, good for Yahoo. The timing might be questionable though, not much turnaround time.

  3. Mike A says:

    I would argue that advertisers do not need "universal buy side technology" instead they need universal attribution modeling/technology. Some of the most sophisticated buy side technology does not fit inside the confines of a DSP, and a marketer loses if they work with a DSP as a universal buy side platform. A DSP should be one of the efforts, not THE effort.

  4. Larry T says:

    A smart move by Yahoo. Getting the advertisers to engage with them directly will allow them to foster those relationships. If the other vendors can offer a value ad to the transaction they'll need to prove that directly with the advertisers rather than just take a percentage of a transaction acting as a broker.

    Too many middle men have created a confused and convoluted market. There are only so many advertisers after all so it makes perfect sense that the middleware brokers are mad at this move. They just lost access to the pantry that they've been raiding for the last few years.

    Yahoo is correct in doing this its just crazy they took so long to finally act.

  5. Rob Leathern says:

    I don't buy it. Yahoo already has all the tools needed to solve this problem in this system without creating this additional friction during the business ad time of the year.

    Yahoo approves every single ad we submit from every one of our clients. Yahoo gets a report sent to them every day from the Right Media system (which they own), from our account that shows how much every account has spent, how many clicks etc. it has. They have visibility into every single creative, and every single advertiser that is running.

    All that is changing is that perhaps they'd have to look in a different report in Right Media to see who's buying this inventory - the Right Media team at Yahoo! would still be the one having the primary direct relationship with the advertiser.

    The biggest difference probably is that now these advertisers have to fulfill Right Media's minimums and be subject to (non-bulk probably) pricing from them.

    We can easily configure our system to manage multiple API keys or account credentials from Yahoo, but it just seems silly to suddenly do this without much warning.

    Facebook's approach is informative by comparison - our optim.al system manages the advertiser's ads account, there's an account for every advertiser which is directly authenticated to our "app" (which can be revoked at any time of course) and everything is transparent to all three parties. And if vendors run things on a CPA, if the advertiser requests it of Facebook, the vendor is REQUIRED TO DISCLOSE ACTUAL MEDIA COSTS to the advertiser. We are 100% behind that level of transparency and flexibility in management.

  6. Tom V says:

    There are far too many businesses out there who simply provide retargeting, and nothing else. Yahoo makes a lot of bad moves, but this is a good move. Retargeting is a tool, not a business, and Yahoo is smart to cut out those middlemen.

  7. Katelyn says:

    I agree with Zach too, and as a brand advertiser want to take my business elsewhere. I don't think Yahoo is such a big powerhouse that I can't, either.

  8. Its great if yahoo can cut out the middle men. All for it - only creates efficiency in the system. But why force it? If advertisers believe there is no value add from the middle men and find it every so easy and efficient to just get a seat on RMX and start buying, they will do so automatically. Yahoo only needs to make things easy and provide the option - not enforce it.

  9. Chris J says:

    As have always said, Yahoo always finds a way to conflict with itself and resist change. All ad dollars currently flowing through RMX for Yahoo remnant inventory is Yahoo money. The reason why it exists in the first place is because their direct sales channels couldn't sell it. In an era where technology is only growing and programmatic buying is only increasing and where unemployment is high, having bloated sales departments and resultant employee costs would seem like one of the dumbest business decisions in recent times. If Yahoo were so worried about CPM pricing declinging or being blind then do what the SSPs do with some inventory in having price floors and making it blind to which part of Yahoo things are running on.

  10. Josh Dreller says:

    Feels like a classic move from someone high up that doesn't get the landscape. "What? We're letting people buy our inventory from 3rd party tools? No, no, no, no, no. That has to stop NOW."

    Get Kawaja on the phone...this guys needs a Lumascape ASAP!!!

    That beings aid, I can definitely can understand why Yahoo would want the first party connection and it's probably the right choice in the long run. So it's actually probably a good move...

    But [especially based on the reactions and comments] it seems like they might be going about it the wrong way. Why a six day turnaround? Seems pretty ridiculous. Makes me think there's something else going on that we're not all privvy too. A big merger? A buyout?

  11. Ohad Gliksman says:

    I think the real story here is a bit different.
    While DSP technology has been bringing more and more demand to Yahoo, they have also started direct competition with Yahoo direct sales over larger accounts. The way I see it, this move by Yahoo is only intended to keep DSPs from reselling Yahoo inventory to customers which would have bought directly otherwise from Yahoo. Long term, I think it will be up to the different DSP players to show their true benefit to customers but I am not sure on the short term, there is reason to buy premium inventory through an intermediary.

  12. Zach Coelius says:

    Ohad, the problem with that argument is that if buying Yahoo directly actually worked customers would do that. It is that value that DSPs add that we can turn remnant leftovers into results for our clients where Yahoo and others can't.

  13. Alex Andreyev says:

    @Zach to those who have managed a relationship (or a seat) with Yahoo prior to them cutting everyone else off, they win (at least for 6 months).

    @Katelyn I think you're underestimating the amount of data Yahoo has. Also, they perform quite well.

  14. @Zach, You are right when thinking of customers looking for performance or measurable campaign results but I think some DSPs have been reselling of plain Yahoo inventory and not bringing any value to the food chain. I know a lot of smart people in the DSP business and I am sure they can do great things for their customers that a single publisher no matter how large cannot which is what I think a DSP is all about. Reselling premium publisher inventory with little or no targeting is not contributing any real value to their customers or their partners.

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