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Going All In On Real Time Bidding Is Like Driving The Wrong Way Down A One-Way Street.

Take The First Off-Ramp You See.
by Todd Garland, Founder & CEO at BuySellAdson February 10, 2016

Header bidding may solve a few of the problems that have been introduced by ad technology over the last decade, but if we’re being honest with ourselves, billing it as anything but Real-Time Bidding 2.0 is disingenuous. Programmatic direct may not solve all that ails us either, but it will certainly undo plenty of the damage already inflicted by disjointed processes. In fact, for publishers, it will provide them with the perfect RTB off-ramp, and the first step towards regaining some semblance of control over their inventory again.

Header Bidding: A programmatic technique where publishers can offer ad inventory to a variety of ad exchanges simultaneously, taking bids on inventory before deciding which ad to publish.Is the second edition of Real-Time Bidding (RTB) going to save the ad industry? Is it going to double profits? Is it going to return power to the buyer-side of the sales equation? Should we consider it a panacea for what ails the industry? No one comes right out and answers those questions, but if you take a moment and deconstruct the arguments made by RTB apologists, it’s pretty obvious that they think it’s all possible.

The next chance you get, sit in on a Rubicon Project earnings call. Take notes, and then ask yourself why all the growth chatter is aimed at guaranteed orders, and how does the company intend to extrapolate that potential? It’s not because direct, guaranteed sales are dying. It’s because they realized they’re partially responsible for the ad-blocking nightmare we’re all living in, and they’re looking for an off-ramp before they’re confronted with the head-on collision that’s appeared on the horizon.

I don’t think programmatic direct is just helpful, I think it will restore the balance between publisher and advertiser.

Absolutely, header bidding is the first real threat to Google’s hegemonic grasp on RTB, but it’s also another step towards furthering ad-tech’s ultimate goal of controlling and influencing the entire transaction process between buyers and sellers of online advertising inventory. Lack of inventory control is something publishers should be rebelling against. Offloading the display decisioning into a bidding process ultimately controlled by companies in the business of obtaining inventory at the lowest possible cost can simply be described as a conflict of interest. The fact that the ad-tech industry keeps thinking that adding more intermediaries into the mix is the solution to a rather simple problem clearly illustrates the industry’s nearsightedness and inability to evolve with publisher needs.

“It’s time to get out of the kiddie pool, and stop worrying about the pennies RTB networks are fighting over today.”

With RTB 2.0 (a.k.a header bidding), publishers now stand to make a little more than in the past, but those newly revealed profits still come at the expense of a massive, double-sided opportunity for both publishers and advertisers as well as a market re-alignment. It’s in this opportunity that programmatic direct has found its home and meaningful growth over the last year and half. Outside of the technological benefits, which RTB is looking to duplicate now, programmatic direct offers publishers the ability to control their inventory while giving advertisers access to unique placement opportunities as well as the most valuable inventory publishers can produce.

By selling direct, publishers have the ability to build deep, direct relationships with advertisers who complement their brand and have aligned goals, something that is impossible in a world dominated by exchanges and other indirect programmatic offerings. Plus, it’s okay to talk to humans. Really. It’s a good thing if the discussions are valuable for both parties. Programmatic direct software facilitates the execution, reporting, and transactional considerations for deals, freeing parties up to chat about more strategic and higher-level opportunities. The software acts like a personal assistant whose goal is to ensure that details are in place, and deals get finalized.

Put bluntly, programmatic direct is, by design, built to enable long-term relationship growth that fosters years of business — not one-off campaigns.

The goal of programmatic direct and self-serve direct platforms isn’t extracting the most revenue from each sale. In actuality, it’s the complete opposite. It’s about strengthening relationships with advertisers and offering them placements that will outperform their expectations. There is no place in programmatic direct for the sub-optimal inventory that dominates most exchanges today. It’s about offering advice, and changes to IOs that may not make sense on the surface but offer unparalleled returns. Put bluntly, programmatic direct is, by design, built to enable long-term relationship growth that fosters years of business — not one-off campaigns.

Of course, the only way any of this is possible is by restoring the publisher’s inventory value, and giving them the automated capabilities to bundle up and sell their offerings in the most streamlined, authentic way possible. That means relying less on RTB as a “first-look” intermediary, and instead serving them remnant impressions. If you’re wondering why ad-tech avoids talking about direct sales, look no further than the arguments made above, and their fear of restoring power to publishers. Relinquishing their competitive advantage over publishers is not something many RTB advocates are even willing to consider.

It’s important to point out that today the most requested “advertising” inventory sought by advertisers is custom offerings. Display, which is largely what makes RTB networks go ‘round these days, is often a secondary or even tertiary upsell pitched by sales teams. While RTB is busy wringing out every last drop of value from the dying display inventory online, both publishers and advertisers have already moved on to more exciting opportunities. Today, the only way to access those opportunities is through direct sales channels. Historically those sales were conducted over email and telephone, but platforms now exist to manage those processes.

It’s time to get out of the kiddie pool, and stop worrying about the pennies RTB networks are fighting over today. While they’re off playing, the rest of the industry has already upgraded to the deep end (it has a software-powered water slide after all). Today, display placements are a secondary conversation, and savvy advertisers have already moved beyond display as a campaign entry point. It’s time RTB considers doing the same.

It’s time to move on.

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