We read with great interest Stephanie Clifford’s article in the New York Times on real-time bidding, “Instant Ads Set the Pace on the Web,” this morning.
At the Rubicon Project, we’re watching the evolution of real-time bidding very carefully as we are deeply concerned about the true impact of this buzz-worthy new technology on the value of inventory for publishers. RTB is attention-grabbing, indeed – but it’s not necessarily all good news for publishers of digital content.
“The RTB ecosystem has been characterized by a lot of technology investment in buy-side optimization tools that attempt to buy high-quality inventory for the lowest possible price,” noted Tom Shields, CEO of Yieldex, which provides publishers with yield optimization and analytics tools for premium inventory, in our Q309 Online Advertising Market Report. “Publishers would be wise to be wary of exchanges until they can deploy equivalent tools that maximize their revenues, rather than minimize their inventory value.”
It’s still early in the game for RTB platforms, but the past two years have shown that once inventory gets pumped into an exchange or demand-side platform that’s designed for advertisers, and not designed to boost a publisher’s yield, it’s likely to have a negative impact on a site’s brand value – the value of its audience falls by the wayside in a bidded race to the bottom.
“As with any new technology or capability like RTB, I think it is extremely important to invest the time up front to best understand the potential impact(s) to your business and create a well thought out short- and longer-term strategy about how to best leverage for increased revenue with proper pricing controls and insight,” said Jason Kelly, Vice President of Strategy & Revenue Management, Digital at Time Inc. (again in our Q309 market report). “There are a lot of lessons learned about how we as a publisher community managed the rapid proliferation of ad networks early on, without a significant amount of investment up front to clearly identify the longer term impacts on our overall channel management strategy. We are now working our way forward as an industry through investment in strategy, people and technology like the Rubicon Project and others to more actively manage these channels – and RTB falls into that category.”
Many of these platforms ultimately value all inventory equally, from the New York Times or Sports Illustrated, to a niche WordPress sports blog. For certain ads, that’s okay. But publishers correctly argue that a reader that sees an ad against the trusted brand of a well-known site is more valuable than a reader seeing the ad on a site they don’t fully trust.
At the Rubicon Project, our priority is to help publishers gain access to the most possible sources of demand, and offer industry-leading technology to automate that access – but only with careful consideration of the impact on pricing for publishers.
As we detailed in our recently published manifesto, “PRINCIPLES of a REVVOLUTION or, the ad server is dead,” we are committed to providing publishers with efficient and safe access to all sources of demand. From principle # 3:
“There is a proliferation of companies focused on servicing advertisers who spend online. Continued global expansion and an underlying shift in how digital ad dollars are transacted [e.g. increased use of auction-based pricing, and development of demand-side platforms (DSPs), and real-time bidding (RTB)] will result in more disparate sources of demand for publishers. The advent of DSPs and RTB tools for demand channels adds revenue opportunity for both sales partners and publishers but also comes with the cost of further fragmentation and risk. Our priority is to help publishers gain access to all possible sources of demand through industry-leading technology that automates that access – but with careful consideration of the impact of those technologies on pricing control for publishers.”
We will provide publishers with a safe, efficient and profitable way to transact with all demand channels available to monetize their inventory.
Tags: ad networks, market report, New York Times, pricing, pricing integrity, RTB
Well said. Efficiency is great. Cherry picking a publisher’s best audience for rates lower than ad networks is not.
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This post was mentioned on Twitter by KaraWeber: Good story by @stephcliff in #NYTimes this morning re DSPs and RTB. Here’s @RubiconProject perspective on this topic: http://bit.ly/bVQ2M5...
Hey guys,
Your blog post runs a little hollow. Did you see the quote from the Chief Sales Office of United Online (public company and massive publisher) that they’re getting 50% more revenue from RTB? Clearly they’re doing it an a way that is brand safe for them, otherwise they wouldn’t continue the practice. Seems like there are already solutions out there, you’re just not providing them???
Jonathan – thanks for your feedback.
Our response is anything but hollow – we believe strongly & deeply in empowering publishers to leverage sales channels as effectively, but also as safely, as possible. And while publishers who do not have direct sales teams (like UOL) may be willing to take greater risks, the Web’s most premium publishers, like Time Inc., and publisher advocates like Rob Beeler of AdMonsters (see his quote on this subject here: http://www.clickz.com/3639800 ) and Tom Shields of Yieldex agree.
Tthere is a major revenue opportunity for publishers from sales channels, and from the multiple ways of enabling those sales channels to buy on their sites (RTB is one – buying via API’s, cookies, audience segments are othere examples). Publishers require technology that enables them to plug in to all sources of demand, and sell via all technology channels. We think they should do so safely, and are prepared to ensure that they can do so through technology engineered specifically for that purpose.