Real Problems With Real-Time Bidding

DataXu CEO Mike Baker helps marketers leverage their marketing investments across several digital marketing platforms, but one of those, in his estimation, is on shaky ground. Real-time bidding (RTB), while offering marketers the amazing opportunity to put their brand or offer in front of choice individuals, also presents them with troubling issues—not the least among them being whether the ad found the right customer at all. Baker has definite opinions about how some of these issues should be addressed, and he spoke to Direct Marketing News about them.

You say that marketers face serious challenges in RTB ad placements as the practice grows. What questions should they be asking?

What’s the life-time value of the customer clicking the ad? What’s the profitability? Is the attribution model rational? Is the attributon model being gamed by an ad network? Are they receiving very high bounce rates and is click fraud at play? Is the media partner or ad network that claimed to have the last ad served before a consumer purchased legit?

How do they find the answers?

At DataXu, we work with 10 separate filtering technologies that do fraud protection. We work with a click fraud forensics company, with brand safety and ad viewability firms. Companies like ours look at over a million ads a second; the volumes are tremendously huge. That begs the question: Can you adequately filter when running at that level of scale? Over two trillion times a month? Why can’t all of these creepy crawlies be filtered out at the source? If we go all the way up to the headsprings of the river, it would be the publishers, and the aggregators who make money from the publishers, who could clean up the problem. We’re talking about companies like PubMatic, Rubicon, and Google.

Do you perceive that most marketers are cognizant of these issues?

Some are not aware. Some are aware but do not have a framework in place and goals as to where they want to get in regard to these parameters. At agencies, there can be a reluctance to inform the client about an issue, such as where we think the attribution model should be changed because someone is gaming the system. Within companies, there can be a reluctance to blow the whistle on the practice, because what [the marketers] have been doing has been heralded as successful. You don’t hear, “Yeah about that program that you think works, boss, some of the conversions we get may not be real conversions.”

Why do you think it falls on the shoulders of big ad aggregators to fix the problem?

They are in the best place to review and control the quality of the supply chain. They have the incentive because they get paid on the transaction. And they can control the publishers’ practices. Programmatic marketing itself is not bad. It makes things more efficient. A marketer can buy an ad at the impression level. They can decide on the parameters of the buy and the price they want to pay. But there’s the issue of ad viewability, whether an impression came from a regular publisher or from a tool bar. Why can’t aggregators add tool bar inventory to the parameters when they ask buyers what they want to buy? In open RTB, they should deliver all the incidents of the individual transaction. They did it for above and below the fold; why can’t they do it for these other things?

What about the third-party fraud security companies? Can’t they clean this up?

Sure, but then buyers say, “Why should we pay for what is a supply chain problem?” DataXu says, we can bring in a third party to fix this and it’s only 6 cents more a thousand. And savvy buyers ask, “Why is it any more a thousand?”

Some concerned parties in digital advertising just formed a group called the Traffic of Good Intent Task force to deal with fraud. Will they help force the issue?

What’s good about the task force is that members of the buying and selling communities are working together to identify whether we can create a code to label certain kinds of ad traffic, and also to create a a code to eliminate it from the supply chain. It would be a big step forward for the industry to have informed consent and better policing of the supply chain.

What advice do you have for marketers who want to confront these problems?

Get smart about the issues. Work with a tech partner to understand some of this stuff—not a media seller, but a trusted tech partner whose interests align with yours. Take a part of your budget and bake a solution to the problem into your business plan for 2014. The broader problem for them is understanding the ROI of what they’re doing.

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