Advertising technology is a booming industry. Hardly a day goes by without another tech player announcing a big round of funding. The thinking behind all these companies is that the system for buying and selling digital advertising is hopelessly broken. All of these dozens of companies purport to fix one or several of the problems that plague the system. And yet there’s a regular call for fewer point providers, more transparency about who is getting paid for doing what. We spoke with a leader in the ad tech world to get this executive’s take on the state of the industry.
What’s the biggest problem in ad tech right now?
It’s crappy inventory for audience buying. You have a finite amount of quality inventory, and there aren’t too many ways to access it. You could be buying via an exchange and you could have a frequency cap of three, but some other exchange or network or DSP is already seeing that same page with 13 impressions. Frequency capping occurs at the platform level, not the publisher level. Everyone is trying to reach the same user multiple times, but nobody understands where they sit in the ad-delivery stack, whether you’re No.1 or No. 24. Another huge problem is cookie bombing. It keeps shit inventory in business. You have publishers who pass their tags to exchanges at the lowest CPMs to drop cookies on as many users as possible. You can buy dog-shit impressions for 25 cents and finding users who will purchase what you’re selling at some point down the road so you can take the credit and get paid. It perpetuates the bad inventory.
Is inventory quality a problem on ad exchanges?
Absolutely. It’s ridiculous. Look at the volume numbers. Every exchange platform and SSP and DSP is claiming 200-400 billion impressions a month. Where is it coming from? It’s not all coming from Forbes. It’s coming from the absolute long-tail [user-generated content] publishers. It’s all still out there. Most of these places are serving it blind. It’s difficult to see transparently where your impression is coming from before you buy it from any programmatic trading platform.
Should publishers worry about programmatic buying?
Yes, to the extent it perpetuates undifferentiated, unviewable inventory. That brings CPMs down. Until that inventory gets flushed from the programmatic system, publishers should be wary about putting their inventory into exchanges. Anytime you’re putting yourself in a swimming pool with the lowest-common denominator inventory you’re going to be diluted. All it takes is one person to piss in the pool.
Are there too many ad-tech players without real value propositions?
Every single ad tech point solution is incentivized to be disruptive. They’ll tell an advertiser, publisher or agency whatever they have to to get a trial of their service. People operate out of fear. They end up spending way too much time worrying about the 5 percent edge cases like data leakage for publishers or brand safety for advertisers. Eighty percent of the time is spent on 20 percent of the result. If I were a buyer, I’d buy everything direct. I’d probably stop there. I’d want to cover my ass.
Is confusion a real problem?
There’s too much money going to agencies who don’t know how to navigate and effectively buy online. The marketer’s lazy, the agency is scared and plays defense. Then you layer in this $4 billion of venture capital investment. The problem is nobody wants to commit to figuring out how to do it right.
Are agencies behind?
Agencies are just doing what marketers are telling them or allowing them to do. I don’t begrudge them their 15 percent. I know a lot of agency people are as smart as the ad tech people. I don’t think the agency needs to be there [in ad tech]. I think the agency people should work for marketers.
What’s a secret about targeting that nobody admits publicly?
Intender cookies are inaccurate in regards to gender. We’ve seen agencies run tests against the validity of cookies on a data exchange. The gender is wrong 30-35 percent of the time. There’s a huge amount of discrepancy.
What about agency trading desks?
Agencies are self-interested and preservation focused. Trading desks are just ad networks, so are DSPs and SSPs and exchanges. They’re ways to aggregate fragmented distribution at a lower marginal cost to the buyer or seller. It’s more or less all the same from a philosophical standpoint.
What do you think of the now-ubiquitous Luma ad tech landscape slide?
It’s unnecessarily complicated. You could bucket people into transactional relationship managers, transactional technologies, and buyers and sellers. Relationship managers are DSPs, ad networks, etc. Transactional technology providers are ad servers, Appnexus, Operative. The extra category is ingredient. Everyone else is an ingredient. There are a lot of people, Terry included, who are incentivized to make things more complicated than they are.