The Dream Of A Well Curated RTB World

Transparency.  Viewability.  Verification.   Our lexicon of the hottest terms in the ad tech space all revolve around a central theme: lack of trust. Looking back to the beginning of real-time ad exchanges, the incredible reach, scale, and targeting abilities of RTB platforms were so transformative for marketers that they didn’t worry as much about fuzzier metrics. However, as the honeymoon phase wore off, the corrupt elements of the RTB universe presented themselves via the results of advertising campaigns and marketers began to demand more from their demand-side platforms (DSPs).

Show Me What’s Happening

Marketers stopped giving the benefit of the doubt to ad impressions bought on exchanges or DSPs, and began to require that platforms prove the value of the media being bought.  This brought about a push for domain-level transparency, the rise of 3rd-party verification companies, and re-energized industry efforts around battling fraud. The burden of proof had shifted onto the media providers, and in the absence of evidence, the new presumption was that the ad impression was unacceptable. Some prominent agency holding companies even began to require 100% viewability from partners.

Best of Both Worlds

For well over a decade, media networks were able to retain the veil of obscurity over their inventory and run successful businesses. However, it would be naïve to claim that verification will be displaced by trust at this point. But what if we could bring together the best of the old, premium inventory media sources with the benefits of the new RTB universe? If traditional marketing benefits (brand-safety, good performance results, desirable audience demographics) could be combined with the benefits of real-time bidding (individual user targeting, massive reach and scale, elastic prices), marketers would realize the high performance of new RTB metrics and see the desired reach of their advertising, all while delivering cost-effective performance objectives. This is the dream of real-time bidding, and one that Collective is turning into a reality. By taking the inventory curation from our premium network, and applying them to the data science-driven optimization of our proprietary real-time bidder, we have removed the fear and doubt from media buying with high performing, highly scaled, brand-safe media.

The Flaw Of Averages & Risks Of Non-Transparency

AdExchanger recently published an article discussing the risks of averages and non-transparency within our space. The article uncovers the flaws of complacency within campaign results, where the average KPI of all tactics falls within goal, and yet individual tactics are outside the desired range of performance. The article also lends great advice for Media Planners on how to proactively structure campaigns to ensure transparency into the strategies they propose. While this advice is sound, digital marketing is still in need of a tool to help marketers easily determine where their dollars are being utilized correctly, and where they may be able to trim the fat.

In an industry where testing is common, it is reasonable to assume that at any point, a media plan could include tactics which bring down performance. This is accepted within our space, so long as the end result is a smarter, more efficient campaign. The risk however, is when a partner on a plan isn’t specific – to a delivery level – with the tactics they are running. In these cases, while the average performance of the partner could fall within the KPI goal for a campaign, complacency can lead to less than optimal tactics remaining on the plan for longer periods of time, and thus wasted media dollars.

VISTO™ holds a significant advantage for performance marketers, giving them a clear view into every piece of their campaign, not just an attractive top line stat.

Take for instance the following example:
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The KPI goal for this campaign is a .3% CTR. In aggregate, all tactics under this campaign strategy have hit the KPI, and the client is happy. More often than not, however, there are multiple tactics that a partner will run in order to test new strategies, segments, or utilize incremental budget. Below is the same media plan report, except with full tactic transparency provided by the VISTO™ platform.

Targeting Tactics

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Of the four tactics running, only two are hitting the client KPI goals. With this extra level of insight, it becomes clear why advertisers need a deeper, more transparent view into their media plan. Further, when offering managed services in running a campaign, we provide transparency into all changes made by the optimization team. See below example:

Campaign Optimizations

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The transparency level of VISTO™ makes monitoring of the “flaw of averages” a less tedious task. Allowing marketers to be more proactive across their plan holistically is invaluable, and can only lead to more efficiently spent marketing dollars.

To quote the article:

“Just like averages can hide the true picture, failing to have a full view of investment can damage the effectiveness of performance media.”

Read the full article here

Moneyball 2.0

Welcome to a world of multiple exchanges, complex algorithms, confusing jargon, aggressive middlemen, and tuned-out clients. Sound familiar? Well, it’s not ad tech. It’s Wall Street.

The eerie parallels between today’s Wall Street and the increasingly automated world of advertising are unmistakable in Michael Lewis’ new book, “Flash Boys.”  (Lewis has shed indirect light on our industry before with his 2003 book “Moneyball,” which became the the hero narrative for quants.)

In “Flash Boys”  a group of entrepreneurs take on the big banks and high-frequency trading firms, because those players are using opaque private stock exchanges to rip off unsuspecting clients.

This contemporary high-tech Wall Street is, on the surface, very similar to programmatic ad tech. Clients entrust professionals with their money; the professionals make trades in a complicated system of bidding alorithms and exchanges; and a host of middlemen and technology people manage the handoffs between buyer and seller. Sounds a lot like marketers putting ads on digital publishers through a programmatic system.

Given the parallels, players and would-be players in programmatic should sit up and pay attention to “Flash Boys” — if for no other reason than to avoid Wall Street’s mistakes.

Here are the similarities between “flash boys” and programmatic advertising:

Math Men. Like advertising, Lewis’ Wall Street, on the surface, is dominated by client guys with expense accounts. Underneath is a class of mathematicians, software programmers and IT guys, who are building the plumbing and the logic that makes the whole financial system work.

Murk. However, a market built by Math Men has major clarity issues. Just as in programmatic technology, the plumbing of the new Wall Street is complex and hard to understand. And according to Lewis’ descriptions of clueless salesmen and clients, Wall Streeters would rather live in a world they don’t fully understand than look stupid by asking questions.

Agency problems. Murk breeds a disease that’s best described by microeconomics: agency problems. The textbook definition of an agency problem is when a “principal” hires an “agent” to act in the principal’s best interests; but the agent’s interest may conflict with the principal’s. Agency problems thrive in murk. When the principal can’t understand what the hell the agent is talking about, the principal is going to have trouble applying his or her judgment.

The tragedy of murk and agency problems is that they slow down the adoption of a system that can actually benefit everybody. Don’t trust your agent? Now a principal will become mistrustful, and simply avoid the new system.

What Programmatic Advertising Can Learn from “Flash Boys”

Many of Michael Lewis’ books view exotic worlds through the eyes of a naive hero figure. In “Moneyball” it’s Oakland Athletics baseball coach Billy Beane (played by Brad Pitt in the movie). In “Flash Boys” it’s Brad Fukuyama, a trader for Royal Bank of Canada. In their small ways, both heroes took on an established system and won.

I would argue that any of us entering the deep dark woods of programmatic should emulate this Michael Lewis hero archetype in order to be the best champions of our businesses in a complex world of advertising technology.

Heroes are ordinary. Fukuyama and Beane didn’t know a damn thing about the exotic worlds of high-frequency trading or statistics (respectively) when their narratives begin. They are not powerful people in their industry. They do not even have especially distinguished careers. Yet they change the system. Translation to advertising: Advanced degrees are not required to take command of your programmatic strategy.

Heroes ask stupid questions that are actually smart. “Flash Boys”’ most compelling passages show how Fukuyama and his companions chip away at the secrets of high-frequency traders. They do it by asking questions, and by demanding answers they can understand. One is shocked by how many people they have to ask, how many times they have to ask, and how much balderdash they have to tolerate, to get real answers. Translation to advertising: Gird your loins for condescending answers to your common-sense questions, but stay strong.

Heroes are not afraid to demand change. Once the heroes of “Flash Boys” truly understand the system, they are able to create a solution that works for them. (Fukuyama has started an alternative exchange called IEX in response to the experiences covered by “Flash Boys.”) Translation to advertising: The programmatic ecosystem is in its early days; the way it works can be shaped by clients with clear ideas and demands.

I am in no way suggesting that the world of programmatic is a treacherous place in need of reform. Quite the contrary; I believe that programmatic advertising offers astonishing efficiencies for marketers, and those efficiencies can be used to benefit those marketers’ products and customers, employees and shareholders.

What I am suggesting is that the ecosystem of programmatic advertising will benefit from a plain-English approach. Businesspeople — marketers and media folk alike — can, and should, still speak Business even after they cross the border into Technology. Math-man dazzle and murky terms should not be tolerated. Agency costs can be avoided; efficiencies can be gained; and, as we build the ecosystem we deserve, we can all be heroes.