Don't Fix RTB

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steveThe Sell-Sider” is a column written by the sell side of the digital media community.

Today’s column is written by Steve Goldberg, senior adviser at EmpiricalMedia.

The industry has gone into full hand-wringing mode over fraudulent traffic, spurious clicks and low levels of viewable ads.

That is good.

After all, these are serious issues and they are unfortunately commonplace in open RTB marketplaces, such as those operated by Google, Rubicon, OpenX, AppNexus and Yahoo.

So, how do we fix open RTB?

Optimists believe the fix is on the horizon and coming in the form of filters, fraud detectors, better processes that minimize or remove fake sites, content farms (ad farms) and improved buyer oversight.

The ad business version of the pessimist, the “skeptics,” are not so sure any of these measures — or measurement — are really going to work or even come to market.

They point to economic disincentives, impending IPOs, cat-and-mouse behavior of bot operators and traffic vendors, multiple measurement standards, aggressive pricing and arbitrage by SSPs and other tag-based vendors as reasons why traction may be evident but success can’t be achieved.

I’m not an optimist or a skeptic. I’m a realist and asking a different question.

Specifically, is fixing open RTB worth the effort?

I know I’m in the minority, but to me, the answer is “no.” The technological and economic obstacles to cleaning up this colossal mix of good and awful are simply too great. Bottom line: Things can get better but never really fixed.

Instead, every possible effort should be made by the relatively new and current leading companies in the ad supply chain to continue developing various programmatic direct businesses and opportunities.

And, at the same time, buyers and sellers should push as strongly as possible for these one-to-one interactions rather than worrying about open RTB. And buyers and sellers should also pressure intermediaries to exert their primary technology and marketing efforts to do more to facilitate automated direct sales.

In the end, the quality of the product, the buyer/seller interaction and the value and benefits of automated direct sales (where things like fraud are much harder to pull off and for which it’s impossible to avoid responsibility) will prove superior to the cost benefit of exchanges and related real-time pitfalls.

In the short term, there is certain to be resistance as vendors like Pubmatic, OpenX and Rubicon weigh the pros and cons of investing too heavily in disparate business lines while looking at imminent IPOs or exits. It has proven controversial with some in the industry, but I believe the current SSP vendors will own this space over the long term.

Ultimately, however, market demand for automated direct transactions from both buyers and sellers can and will drive big vendors to be more aggressive in these areas, and that will be good for them and the marketplace.

But I’m not advocating for someone to take a wrecking ball to exchanges — far from it.

Exchanges and RTB, like many other parts of the ad business, have a real and valid role. It is just not a role for everyone. It is similar to cable cars in San Francisco. If the whole City by the Bay needed to rely on cable cars instead of a combination of buses, metro service, taxis and cars, it would be a mess. But those cable cars still have a purpose.

There was a time (a really horrible time, actually) when every site and seemingly every marketer bought and sold pop-over and pop-under advertising. People thought the problem was pure user experience but the real problem was adoption ahead of use case.

Turns out, pop-unders are still around but the use-case is primarily for utility sites and enterprise marketers trying to leverage comparison shopping, alternative purchases or to manage abandoned consumer-buying processes.

Open RTB has a much larger use case, in terms of budgets and revenue potential, but like the pop-under, one could argue that adoption is ahead — vs. behind — of where it should be.

This means exchanges and RTB will and should always be a vibrant opportunity for direct marketers, those who want to reach highly defined niche audiences at some sort of scale, those who focus on click through rates alone and those who really benefit from real-time vs. near real-time campaign adjustments.

And everyone else, when and if possible, should just back away and adopt other forms of automated direct channels.

More than hand-wringing, pontification or well-intentioned admonishments from the IAB, this pragmatic redirection will form a virtual fence around open RTB and push together ad inventory pools with serious pitfalls and the marketers who don’t mind.

You can follow Steve Goldberg (@stevegol) and AdExchanger (@adexchanger) on Twitter.

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