Debunking Ad-Tech Myths
Much is made of the advertising-technology industry. We hear it’s complicated, it’s not adding as much value as it’s taking and that inventory isn’t very good. (A recent Digiday piece with the views of an anonymous advertising-technology executive included all these things.) The problem is they’re myths.
Myth 1: There’s not enough quality inventory for advertisers. That’s wrong in many ways. While inventory is not infinite, it’s awfully large — roughly 20 to 30 billion impressions a day available through exchanges and networks. And a huge amount of it is perfectly fine inventory. “Quality inventory” in the digital-ad business is code for “my inventory is good, and nobody else’s is.” Well, the truth is that there is a lot of inventory of good quality out there. The challenge (and not the largest!) for the world of ad tech is figuring out which bit of inventory is good for a particular advertiser. It’s out there if you can find it.
The exchange ecosystem has made huge investments in protecting brands from quality problems. The standards that we keep up in terms of making sure that every page is appropriate for each advertiser goes far beyond what traditional publishers ever tried to maintain. Most exchange inventory comes from the largest thousand publishers. Yes, there is long-tail inventory, but that’s not most of what’s out there. And by the way, many small sites are excellent homes for advertising. Blind serving is also a thing of the past. Transparency is the first step towards trust, and the entire ecosystem is built on providing buyers the transparency they need to be confident that they are getting quality inventory, while giving publishers the protections they require. There is balance, but it is built on openness and trust.
Myth 2: Publishers should worry about programmatic buying. Last we saw, exchange inventory was growing at 20-30 percent a quarter, and yet the Internet overall is growing at just a few percent. Why on earth would publishers pour their inventory into exchanges if this leads to lower prices? Answer: It doesn’t. The new world of bidding and exchanges is actually good for publishers, is raising floors on pricing, and makes inventory easier to sell. The magic of the exchange world is that it doesn’t turn inventory into undifferentiated commodity. Just the opposite — smart buyers are able to uniquely value every single impression — the true value of each impression can be exposed. In many instances, true impression value on a per-impression basis equates to multiples of CPM over direct pricing.
Myth 3: Ad Tech is too complicated. Is confusion a real problem? What I see in the industry is a lot of people working really hard to figure out what all these new tech options can really do. It’s hard work, and the whole industry is ridiculously, wonderfully committed to testing out whatever cool stuff the techies cook up. I spend most of my time talking to agency folks and marketers, and everyone is trying to understand, figure out, manage all the new opportunities. Of course, not everything is tested quickly or perfectly, but what I love about this industry is the culture of acceptance of new ideas and the commitment to engage them.
Myth 4: Programmatic buying introduces a new set of undifferentiated middlemen. This line of thinking is pretty much an insult. It’s like saying that all websites are all just the same because they’re just words and pictures on computers or that every home should have four walls and a roof. There are multiple approaches to solving the key problem of the digital ad world (what’s the best ad for this Web page and person?) and these approaches represent different ideas, technologies, and efforts to create real value. It’s clear that both the buy side and sell side are undergoing transformational changes to their respective business models. Companies in the middle that execute programmatic buying well not only provide real-time insight into the mind and pursestrings of the consumer but also stand to transform buyers and sellers into strategists and elevate them from tactical spreadsheet jockeying.
Publishers, advertisers and agencies that bury their heads in the sand and try to hide from the changing world of ad tech are going to get left behind. They can try to create fear with smoke screens, or they can join in with the changing world that will ultimately benefit them. Great websites with great content that are good homes for advertising will do well. The Internet is built on the premise and promise of technology, change and transformation. That process isn’t anywhere near over.
Richard Frankel is president and co-founder of Rocket Fuel, a marketing technology firm. Follow Rocket Fuel on Twitter at @rocketfuelinc.
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