The introduction of RTB irreversibly changed the way remnant inventory is bought and sold. It was a true game changer — increasing yield for publishers, creating new opportunities for buyers, and ramping up efficiency for both sides.
As RTB established itself as the way to sell remnant, many predicted that every online display impression would one day be bought and sold in auctions. RTB was going to be the future. That future has yet to materialize.
But many advertisers think that future is closer than it is, that the best inventory is already being sold on the exchanges. Unfortunately, there’s a major misalignment between perception and reality.
A Persistent Myth
Many top-tier publishers have been skeptical about RTB since day one. Of those who have found value in the incremental sales made possible by RTB, virtually all are still unwilling to parcel up their best inventory and make it available on exchanges.
Many advertisers, on the other hand, seem to have bought the story that premium inventory from recognizable publishers is available. It isn’t.
A recent survey from OpenX and Digiday found that while 57% of publishers said the only inventory they sell on the exchanges is remnant, a mere 12% of buyers believe they are only buying remnant. So, while over half of publishers say they are only using RTB for remnant, most buyers believe they’re buying publishers’ best inventory.
This information asymmetry hurts both parties. Advertisers aren’t getting what they think they’re paying for, plus they’re likely to get false impressions about how quality inventory performs. That can lead them to assume that premium inventory doesn’t matter for their bottom line, when in fact, it may. Those wrong impressions hurt publishers as well, falsely devaluing their best inventory by equating it with the leftover stuff.
One solution is for publishers to just go for it, to start selling everything in RTB. But for large publishers, it is in their best interest to save RTB for remnant.
The Publisher’s Dilemma
Premium publishers, or better yet recognizable publishers with strong brands, have a good reason to be hesitant about opening up their best inventory to indirect channels.
The risks, namely cannibalizing direct sales, channel conflict, and creative or brand safety issues, outweigh the benefits by a long shot. Plus, the lack of guaranteed sales with indirect channels makes it hard, if not impossible, for publishers to forecast revenue. Publishers would be better off letting some inventory go unmonetized than risk devaluing their best inventory.
Selling top-quality inventory via RTB dilutes its value. In an RTB environment it’s too hard (often impossible) to differentiate between high and low quality–subjective differences that are easy for humans to spot. That results in publishers being forced to sell ad space for pennies when the fair and reasonable price is in dollars.
RTB can value impressions based on audience data and domain information, but it can’t truly capture or understand subjective judgments like publisher brand equity, which means that top sites’ best inventory is routinely undervalued. Publishers continue to favor direct sales because it lets them to work with advertisers to find fair prices that lead to favorable outcomes for both parties — high ROI for advertisers and sustainable revenue for publishers.
Of course, many publishers are all too eager to label every single impression as premium, even when it clearly isn’t the case. But for publishers with great content, a valuable audience, and a solid brand, there is something to be lost by dumping valuable inventory into black boxes.
RTB Isn’t the Answer
The best inventory on the web isn’t being sold via RTB, and that isn’t likely to change. That isn’t necessarily a bad thing. New technical developments in programmatic direct, for example, can help streamline the buying process, making it easy for buyers to access premium inventory without the risks for publishers. As long as buyers and sellers both understand what is available via RTB (and what isn’t), there can be efficiency gains for premium ad sales without RTB.