Live From Gridley & Co. Conference: RTB And Premnant Inventory

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In a morning panel at the Gridley & Co. Conference in New York City moderated by Gridley's Pratik Patel, panelists from the data-driven ecosystem paused just long enough amidst the swirl of funding announcements to provide a few nuggets on the momentum for real-time bidded inventory.

Setting the stage for the discussion, real-time ad platform AppNexus' CTO Mike Nolet said his company's technology saw 8 billion RTB'd impressions for sale in one day towards the end of December. He said this was a huge difference compared to January 2010.

Yahoo!'s Right Media Exchange head Ramsey McGrory reiterated that his company has been in the RTB space the past 18 months, but that real-time bidding (RTB)  in its current form across the ecosystem is “lopsided” adding;

“Publishers are engaged it in a way that they don't necessarily know what it does to the market or what trade-offs there are. There's not enough evidence to confirm that the higher CPMs that publishers are generating are simply remarketing impressions and advertisers didn't want to pay more for it, or whether the buyers are buying not only the media, but the data that comes with it.”

Michael Barrett, CEO of AdMeld, predictably countered given his company's sell-side bet in the RTB space:

“For the sophisticated publishers that are doing [RTB] now and have big ad operations and sales teams, it's definitely a quid pro quo. They know the URL is being supposed by and large, because if you're going to go blind in RTB don't bother. There's enough blind inventory in the world - it's just not going to get bought or it will get bought for 40 cents.”

Demand-side platform X+1's CEO John Nardone was adamant about his buy-side view about the publisher segment that may benefit most:

“There are segments of publishers that are really turning RTB to their advantage. If you're a small, niche publisher with a valuable audience, RTB is an opportunity to print money.”

Addressing some of the concerns outlined by Yahoo!'s McGrory, AppNexus' Nolet shed light on what he says publishers get in an RTB-enabled auction -and that they won't see elsewhere for their biddable display:

“The value that comes from RTB for the publisher is that there's data the advertiser has that the publisher has no insight into. RTB lets advertisers buy with their data. So it's that 10 or 20% of the (publisher's) inventory - that's inventory that would not have been premium, but it can now become 'premnant' -or whatever that new category is.  You can actually get high CPMs for it…”

With RTB rapidly enabling the bidding of display impressions, it is apparent the buy-side is increasingly - and unsurprisingly - loving the transparency. Even though, some publishers may still call this cherry picking, which seems valid to a degree, they're going to have to get their arms around this new world - if it's just to take advantage of the “premium-remnant” or “premnant” layer.

Looking at the bigger picture, RTB isn't just about that “premnant” segment or “slideshow” remnant or whatever segment, of course. In the future, it would seem sophisticated, real-time buying at the impression level comes to the guaranteed side. It may be a new world of fulfillment as buyers don't get the guaranteed fill.  Perhaps that's the buy-side quid pro quo.  Publishers will likely need to create new, more sophisticated contractual arrangements with buyers.

The shift to transparency is “on.” Publisher goals (increasing yield) will be a critical part of it -as will the need to include a compelling integrated/custom offering. Interestingly, media companies like Aol (a tech co., too?) have taken first steps to automation on the custom offering side as it carves out an automated path to the premium segment with acquisitions such as Pictela.

Ultimately, the need for publishers to have a valuable audience will never dissipate in digital unless there's a privacy meltdown.

By John Ebbert

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15 Responses to “Live From Gridley & Co. Conference: RTB And Premnant Inventory”


  1. Jeff Hirsch says:

    What I am reading here is that for publishers to make RTB work, they must be willing to be transparent to the buyer. It will be interesting to watch what happens when the information regarding rates and access conflict with direct sales efforts. This is not a new problem, of course, as it has been a problem between networks and publishers forever, and it is new technology that highlighting the magnified channel management issues.

    • Anonymous says:

      @Jeff - RTB will work without transparency, but yield is lower. As a buyer, both audience and context are important, when publishers try to mask context in a marketplace, yield drops.

  2. Anonymous says:

    I like McGrory's comment, but without multiple advertisers putting a premium value on the audience, the CPM won't rise significantly. RTB has this potential, but I don't expect to see a lot of this potential realized until significantly more marketers are using RTBs and applying their own proprietary data. This time will come, but we aren't there yet today.

    • Zach Coelius says:

      On the RTB exchanges average CPMs have gone from .20 cents a year and half ago to almost $2.00 now. What have Right Media's CPMs done in that time?
      RTB CPMs will cross will cross $3.00 this year and keep going up.

      • Skeptic says:

        We see the opposite trend on the RTB exchanges. In the last 12 months the CPMs we are buying have been under $1 and trending downward. This is my concern - what top tier publisher will come out publicly and echo Zach's sentiments?

      • Zach Coelius says:

        Really? Is that why you don't use your real name when you comment? Not a single DSP that I talk to has seen prices do anything but rise. Unless you are willing to back up who you are and where your data comes from your statement is pretty much worthless.

      • I'm with Zach on this one -- the trend for RTB clearing prices has been up & to the right and $2 sounds about right. Those of us who can afford to pay (thanks to real data, models and technology) are quickly wiping out the teeth-whitening and leadgen spray-and-pray ads that used to rule the exchanges.

  3. Skeptic says:

    We keep hearing the SSPs, the Exchanges and even the DSPs talk about how CPMs are going up thanks to RTB. Still waiting for that first premium publisher to come out and say "I believe in RTB and my CPMs are rising because of it!" Until then, I'll continue to view RTB as a means of accessing cheap, lower tier inventory.

  4. Tyler Fitch says:

    RTB still doesn't scale..... Buying data segments in a transparent exchange environment is not a new thing... it has been going on for years before RTB (Cc; Jeff and Audience Science). RTB just allows Marketers to buy in a much more efficient way, which means less advertising dollars spent on your site. Yes, Zach and Co. do have a point about the increase in CPM's, but a $2.00 CPM doesn't do much to move the needle if they buy less than 10% of your inventory.

    • Zach Coelius says:

      Tyler, it takes time to transition. Saying it doesn't scale is incorrect, we have scaled exponentially, its just that we haven't reached full scale- yet. DSPs and RTB went from virtually zero a year ago to well over half a billion dollars in 2010. As more advertisers realize the value they get from RTB they will shift their money out of the old ways of buying and to DSPs and we soon will be able to buy 100% of your inventory. Or you can think about it this way, last year available ad inventory on RTB exchanges grew by more then 10x with millions of publishers deciding that they make more money selling through RTB. Do you really think that many publishers would sell through RTB if they weren't seeing the return?

      • Tyler Fitch says:

        Zach, you really need to think of this from a publisher stand point, not an Exec who’s company’s whole selling point is RTB. As long as there is a second price auction, exchanges will continually put downward pressure on CPM’s. Making this buying process even more efficient will only increase this downward pressure. I am not saying that what you are doing is a bad thing as I am a huge advocate of exchanges. The whole purpose of this thread, and even what Ramsey said earlier, is that RTB might not be the best thing for a Publisher. And that the people pushing RTB the hardest are people that are looking to gain from it.

      • Zach Coelius says:

        If there is downward pressure on prices why have prices gone up even though the amount of inventory grew by 10x last year. That doesn't make any sense. Given a normal supply and demand balance you would expect that prices would have gone down with a glut of inventory that large. Instead they went up.

        Answer this question for me. When a sales person sells me normal non-custom banner inventory at a premium CPM - say $10 - what value is added to the impression for the advertiser that make those ad impressions any different then if my advertiser had bought that impression with a automated tool? Why should the value and therefore price of either impression be different.

  5. Anonymous says:

    Unless bids from multiple DSP's are weighted against each other each will try and cheat the system by bidding the floor. The only way to make this work for publishers is to have a solution that bids the providers against each other on each and every call.

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