Even though ad exchanges and networks were created to lubricate the buying and selling of digital ad inventory, the system is still far from smooth.
One lingering issue is that of transparency: when online publishers can’t sell all their inventory directly to advertisers (often at a premium), they list the leftovers on an exchange. But if buyers know they can snap up exchange inventory—at a likely much lower price—they won’t agree to the direct deals up front. Publishers lose their premiums, CPMs go down, and everyone shakes their heads at digital’s failure to launch. That's why digital publishers have begun to introduce transparency controls into their exchanges, allowing them to sell leftover inventory without revealing their identities.
Yahoo!’s Right Media, one of the Web’s largest RTB exchange platforms, will try to quell those complaints for its partners with the introduction of a new set of publisher-friendly tools. The company, which services 250,000 publishers and up to 60,000 advertisers, announced today that it would give sellers control over what inventory they’re selling, at what price, and at what level of visibility. “All of these controls will give publishers more comfort in leveraging RTB as a capability and more effectively manage yield,” said Ramsey McGrory, head of Right Media and vp of North American marketplaces.
Features like transparency controls aren’t new—most ad networks offer some sort of tool to provide such options to publishers. That doesn’t mean advertisers, agencies, and buying networks have to like it.
Publisher controls essentially make it more difficult for buyers to game the system. “Buyers want buffets, they don’t want to order off menus,” McGrory said. “Given the choice they’d want complete transparency and the ability to bid one penny on every ad call.” A bargain, perhaps, but not stable forever. McGrory emphasized that publisher controls are good for the industry because they even out the value exchange between sellers (the publishers) and buyers (advertisers). If publishers charge too much, then agencies and advertisers won’t get the ROI and they’ll shift dollars elsewhere. If buyers pay too little, then in the long term, publishers won’t survive. “Gaming the system isn’t sustainable and everyone understands this,” McGrory said.
Of course buyers might disagree on one’s definition of evening out the value exchange. The point of such an ad platform is, after all, to pierce through the fog of the complex online content ecosystem. Giving publishers the option to conceal or "cloak" their URLs is like “going back to the bad old days of buying inventory through questionable means,” said Mike Baker, CEO of DataXu, a media buying company. The publisher’s argument that there is sales channel conflict is overblown, he said, because inventory bought directly from a publisher is often sold at comparable rates on an exchange. Cloaked URLs can result in a premium publisher losing potential business, since many advertisers strictly adhere to “white lists” of approved publishers. “If we can’t confirm a seller on a white list, we will not bid,” he said.
The debate—as complex as the digital ad buying ecosystem itself—isn’t likely to declare a winner anytime soon.