The Risks of RTB

Ramsey McGrory, a 10-year veteran of the industry, leads Yahoo’s Right Media Exchange (RMX) and directs Yahoo’s strategic use of data and insights for Yahoo’s North American marketplaces, developing strategy for the company’s video, display and search products. McGrory spoke to Digiday about RMX and the role of audience-buying in the industry’s future.

Does real-time bidding represent a long-term shift in the market, and if so, does it add real value to the game? Real-time bidding is a long-term shift in the market, but whether or not it adds real value is a valid question. Clearly, it enables buyers, and it can drive yield for publishers. RTB has evolved for publishers and so has their understanding of RTB’s risks and rewards. RTB providers can offer publishers features like URL masking, floor-reserve pricing or the ability to visualize the bid landscape. However, the cost of providing RTB in its current form may be prohibitive since media dollars spent don’t necessarily support standalone RTB instances. For example, when a buyer has a low bid-win rate or when the buyer is purposely “lurking” to collect data and not bid, there’s a cost to the RTB infrastructure to provide this access. RTB providers have begun responding to this in four ways: one, instituting a minimum dollar-spend per month to cover the baseline costs; two, instituting a “cost per look,” meaning that you can participate in RTB but there’s a cost for every bid request the buyer receives; three, optimizing the stream of bid requests going to the buyer to improve the bid-win rate; and four, enforcing “bid bundling” whereby the RTB provider is pre-auctioning all the bids in their marketplace and then forwarding the highest bid back to the bid requestor.