April 19, 2010
Picture the scene. It’s 2004 and Scott Ferber, one of the founders of Advertising.com, is giving one of his inspirational companywide speeches via WebEx. The slide is showing “Ad.com 2.0” when Ferber delivers his vision: “We want to be the eBay of online advertising!”
He went on to explain about how their AdBid technology, which allowed customers to set their own CPMs, CPCs and CPAs every day, had ended up increasing rates as customers saw for themselves the effect on volume as each rate was entered into an auction for each impression. The natural progression for this technology was setting up an advertising marketplace where buyers and sellers could come and trade inventory, setting their own rates depending on volume and ROI goals and all benefiting from AdLearn, Ad.com’s proprietary optimisation algorithm.
Fast forward to late 2007 and I’m sitting in a Right Media introduction meeting whilst working for Media Contacts (Havas). They talk about marketplaces, buyers and sellers trading inventory and auctions for each impression, all benefitting from a unique optimisation algorithm. All the agency people around me are becoming excited and start discussing how best to make use of this new concept. I’m sitting in the corner looking at my peers wondering where they’ve been for the last 3 years.
Then it hits me. #1 Ad.com never ended up releasing its marketplace to the masses. Whilst it had the technology, it instead used it to bolster its own network preferring to keep the concept proprietary. #2 as a result agency people had never been given the ability to buy inventory in this way before. This 2nd revelation turned out to be a bit of a curse as well as a blessing, but that will be the subject of another article…
So fast forward again to 2009, Real Time Bidding is all the rage, and I’m once again scratching my head wondering what all the fuss is about. Surely exchange bidding is real time? And if not, surely this is a simple natural progression of the technology that would happen behind the scenes with no big song and dance, after all, exchange bidding had certainly been sold as real time up until now. Then I read Mike Nolet’s excellent blog on the subject and, happy to be away from marketing hype and down to some proper techie speak, he provided the gem that made everything fall into place.
No more redirects. Proper, back end integrations. Smart software running on big iron. It all seemed so much more elegant than our current discrepancy ridden, chaos ensuing redirect methodology. By doing all the complicated stuff in data centres housed in military style bunkers rather on users’ desktops, you not only make the whole process much more efficient, but through the easy and open exchange of data, companies can become truly specialist in a particular niche. Instead of all adservers having to have their own retargeting technologies, you can just plug in someone else’s data. Similarly behavioural companies will not have to build their own adserver in order to sell their data.
Mike Nolet talked to me about the problem with the Right Media ecosystem. For it to work, everyone had to be using Right Media. This was the same with Advertising.com’s version a few years previously and both these companies have suffered as a result. RTB is different as no one company “owns” the standards that build this ecosystem. Much like the growth of internet, the use of open, agreed standards should provide the basis for every kind of company that wants to trade in the ecosystem to flourish, instead of being held back by a poor adserver, reporting system, or other commoditised technology service.
So what’s holding it back? Well until a critical mass of companies buy into the concept, it will remain niche. Up until now, trying to be the one stop shop for online advertising was the goal for many a network (and agency for that matter) and this may take time to unlearn. However, much like Microsoft, the once great monopolist, is now seeing the benefits of using open standards across at least some of its products, so too will networks, data companies, behavioural specialists and dynamic creative providers (to name but a few).
Of course, these companies could follow Apple’s lead and try to keep everything proprietary. It certainly works for Apple (most users do not care that they are locked in to a single platform since the product is so good). But are there really any online ad companies that would boast that their products / services are as good as Apple’s? I await with interest…