Media We Like: “Backlash to the Walled Gardens?”

Here come the I.I. team’s headline roundup. Last week was terrible for Google. Will it be the beginning of advertisers standing up against the walled gardens? Ten brands rock in programmatic buying, whether doing it in-house or letting agencies pull the levers. We are just in the 1st inning of Sales Tech growth – hello to another crowded LUMAscape. (See our previous weekly picks here.)

YouTube Advertiser Exodus Highlights Perils of Online Ads (The New York Times) – Mar. 23, 2017
Google and YouTube are facing a full-scale advertising boycott from major brands like Wal-Mart, PepsiCo and Verizon. (CNET, Mar. 24)

The Top Ten Programmatic Advertisers (AdExchanger) – Mar. 20, 2017
The ten brands who fully embrace data-driven marketing, and understand how to work with a vast partner ecosystem and quality oversight.

Some responses following by P&G Pritchard’s seismic talk:
Premium publishers say They Can Solve His Digital Ad Problems (Advertising Age) – Feb. 16, 2017
DCN, an association of publishers including Hearst and NYT, argues that advertising with high-quality websites is one way out of the digital mess. “The primary way to avoid fraud is economic rather than technical.”

Voice from DSP: A New Era for Advertising Transparency Is Here (The Trade Desk) – Feb. 14, 2017
“To really move the needle on, our industry has got to reduce the conflict of interest it has accepted in the past.” In 2o16, The Trade Desk passed $1 billion in platform spend as non-display products gain stream. (AdExchanger, Feb. 16)

The Future of Sales Tech (LUMA) – Mar. 14, 2017
With over $25bn already invested across thousands of companies in MarTech, it is easy to see how the Sales Tech sector could experience similar growth – if not more.

(Join in! Tweet us or tell us on LinkedIn of some media that you think is worth sharing.)


You Can’t Spell Exchange without Change


Header Bidding – the new black, taking the market by storm, the must have, top of the trends.

So why is it such a threat?

Header bidding shifts the power dynamic away from the SSPs and exchanges, moving it back to the publishers. Publishers who manage their own header bidding have created what exchanges promised to create for the last five years: a highly competitive auction for a publisher’s inventory. Not only are publishers making more money with header bidding, they are gaining a bigger advantage, transparency of demand, and inventory control.  

Who is winning – and who is losing – thanks to header bidding? Why do I believe it ultimately spells the demise of many exchanges?


  1. Digital advertising was born.
  2. Digital advertising was sold much like TV, print and radio, mostly on a guaranteed basis via phone calls, faxes and emails.
  3. Digital inventory exploded and “remnant” (unsold) was born.  
  4. Remnant was sold via networks, used for house ads, or went unsold.  
  5. Networks figured out how to create vertical networks and other aggregation methods, providing reach and contextual targeting to buyers.
  6. Networks started deploying audience targeting tools and were the first to really leverage data (with the exception of Google, who always knew how to leverage data).
  7. DMPs and other data companies emerged, created huge pools of profiled cookies.
  8. SSPs, Exchanges, and DSPs emerged to create the ability to “real time target and bid” on remnant inventory.
  9. DSPs leveraged the audience data to drive performance and the size of the RTB market exploded.
  10. Publishers were pushed to “be transparent” with their inventory and add higher quality inventory to what was sold programmatically, increasing eCPMs of exchange inventory, but not necessary the overall eCPM of publishers.
  11. Exchanges, and DSPs starting making some serious money (each taking about 15% of the spend) creating the so called “AdTech Tax.”  
  12. Meanwhile, companies like Criteo realized that being in the header gave them first look for all inventory (not just unsold), driving up eCPMs for publishers while cherry-picking inventory.
  13. Technology-learning publishers began to experiment with “header bidding,” often leveraging DFPs’ dynamic allocation tools.
  14. Open source header bidding wrappers and adapters became available and the market exploded.
  15. Header bidding began driving up CPMs for publishers, allowing them to capture top dollar for high-value inventory.


Header bidding is exploding because publishers reason (often correctly) that they are getting screwed by the second price auction and the intermediaries who seem to be rigging the system. With header bidding, publishers are able to bypass the the waterfall of exchanges, increase their overall eCPMs, gain more control of their inventory and only use their exchange(s) (mostly AdX) to sell what is truly now “remnant”.  

Why are the exchanges doomed? First, they’re not all screwed. Some were losing under the “exchange daisy chain market.”  They were the third, fourth, or fifth call on the chain and saw lousy inventory that had been picked over by AdX, AppNexus, Rubicon… Certain companies, in particular OpenX and Index Exchange, made early big bets on the header bidding model.  All of a sudden, they were seeing 100% of a given publisher’s inventory, and their volumes and eCPMs increased. (Yes, they also incurred a “listening fee” for 100% of the inventory, but top line exploded.) AppNexus jumped on the bandwagon a little later, with their open source solution, However Rubicon was late to the party, as was Pubmatic.  

Rubicon has reported header bidding as the primary culprit in their recent earnings calls. One need look no further than the recent stock price collapse of Rubicon. It has been blaming header bidding for its sinking performance for the last few quarters, but was overwhelmed with bad news with its recent reporting (which resulted in hiring Michael Barrett, a consistently successful CEO (successful at selling the companies he walks into).

Most importantly, publishers, particularly the comScore 150, were figuring out how this was all working, and began taking control of the process. Now everyone is talking about server-to-server integration for header bidding. This seems to overcome the real technology problems of header bidding by creating a single header bidding call and having someone else then manage the bidding process. Usually this “someone else” is the exchange. They have the technology infrastructure needed to manage the extraordinary volume created by this system.  

Server-to-server also creates a new problem related to cookie matching, but let’s assume this will get resolved over time. The biggest part of the challenge is exchanges’ unwillingness to cookie sync.  

Shenanigans, deception, and more of the same-old-same-old.  

While server-to-server integration clearly solves most of the problems associated with the speed and load times of header bidding, it leaves publishers exposed to different problems.  One traditional complaint of publishers regarding exchanges was that the actual fees charged by such intermediaries were less than transparent. Also, publishers suspected that, in some cases, exchanges were front running their inventory, creating additional spread within auctions, adding or subtracting data for their own benefit. Publishers felt cheated, but were not certain whether it was true.  

Over the last few years, as more bid stream data has become available, these suspicions have sometimes been confirmed. Certainly, some deceptive practices have been identified.  As with most things, transparency is the greatest disinfectant.  

The problem with header bidding managed by the exchange is that it opens the ecosystem back up to the suspicions of self dealing. In one instance recounted by multiple publishers, some exchanges seemed to win a disproportionate amount of inventory when they were the “wrapper” compared to when they were only an “adapter” inside someone else’s wrapper (i.e., when they manage the whole auction they win too much, compared to when they are just another bidder).

Simply put, server-to-server, at least as most people are discussing, is basically a publisher selecting one exchange and giving them all their inventory. Now they are not just seeing the “unsold,” but 100% of the inventory (like all header-bidding). However publishers are opening themselves up to many of the same transparency problems of yesterday’s exchanges.

Why is this a threat to the exchanges? Simple – the biggest publishers with the highest quality inventory don’t need to use an exchange. Companies like Purch have already tackled this themselves, and we are seeing the emergence of other companies stepping into the breach to either support publishers deploying their own server-to-server deployment, or creating new pricing models so they do not have an incentive to play with the auction.  

I suspect the biggest and best publishers will migrate to a fully-transparent server-to-server model, which will force the exchanges (who are used to working of a healthy percentage of the media spend) to become more transparent, change their pricing, and provide different levels of service. Publishers will jointly create a cookie-syncing solution, and eventually attract the largest DSPs to bid directly, and not through an exchange at all.  

Exchanges will be forced to provide their services to the mid- and long-tail. While some can survive, many will fail. The winners will likely be the exchanges already focussed on the long tail (think SOVRN) versus those competing for the comScore 150.  

There are many exchanges in the market, some focused on a more vertical approach (think mobile or video) and others providing higher-quality service and trying to differentiate in other ways. However, the biggest exchanges were and are “display first,” and their business models will come under increasing pressure as header bidding technologies become more ubiquitous, and as the expertise to deploy one’s own solution extends further into the market.

These trends don’t fix many of the other problems with the programmatic marketplace (fraud, walled gardens, viewability, effectiveness…) but this shift is going to return some of the pricing power back to independent publishers. That can only be good for the industry.

It’s 2017… Tear Down These Walled Gardens!

AdTech has manifested into a two-tiered ecosystem: independent publishers and “walled gardens.” The latter are the cool kids on the playground – you can play with them… just as long as you play by their rules.

Let’s start with some clarity: Facebook and Google are the poster children for the lot which includes Amazon, Snapchat, Yahoo, AOL, Microsoft, LinkedIn and Twitter… the walled gardens, AKA the “easy button.”  PRINTADTECH notes that all require the use of their own systems, dashboards and metrics. With that, these walled gardens retain significantly more of each dollar into their respective ecosystems.

Compare them to independent publishers, and the indies’ data doesn’t measure up. The walled gardens are able to reach a much larger audiences with deeper targeting power. At our last Roundtable it was noted that Facebook and NewsCorp (an independent publisher) hold different apparent value in the marketplace, and that is reflected clearly in a recent Yahoo Finance post, “The two tech giants [Facebook and Google] accounted for 103% of the growth in the digital ad industry, while everyone else shrunk 3%.”

Big buts, though. If your company makes its money by selling online ads, or you are an ad agency… your warm-fuzzies have vaporized. For you, easy-button companies have a different name: Frenemy. Industry professionals including Sir Martin Sorrell, CEO of WPP, the world’s largest advertising agency, have argued that the industry must take action, and In a recent Huffington Post article, Mark Haviland, EVP at Rakuten Marketing Europe stated, “In order to combat walled gardens and earn the trust of advertisers, the digital world needs to be increasingly transparent.” Note the language here. “Combat.”

Put another way – AdTech as an industry cannot continue to allow the players to be the referees. DIGIDAY notes that Facebook and Google are restricting third party AdTech companies from operating on their networks, stating, “It raises questions about whether Facebook and Google’s AdTech products can be trusted to function objectively, or if they’re merely being used to funnel ad spend through their respective media networks.”

Forrester took a deeper look at the sacrifices made in customer intelligence when working with walled gardens, recognizing that the value coming back over the wall isn’t necessarily equal. Of the research, Media Post summarized, “The short-term benefits are the ability to leverage unique user identification for targeting the measurement. However, the strategic and operational downside of closed ecosystem is that they increase cost and prevent brands from reaching consumers across channels. They leave marketers with a dangerous blind spot, losing ownership of key data pertaining to their consumer over time and coming to depend on walled gardens for customer intelligence.”

Facebook admitted to its third measurement blunder, and advertisers are calling for more accountability. Procter & Gamble announced they would be cutting their investment in targeted Facebook advertising, and Sorrell notes on the Huffington Tech article, “it could even result in budgets being switched to focus more on traditional channels, such as TV.”

Substitution is not a remedy, however. If we are going to continue enjoying the fruits of the walled gardens – and they are juicy – a checks-and-balances initiative has to be implemented now.

Stop Calling It an AdTech Tax

We cringe when we hear it: tax. It feels awful, it sounds unfair. But taxes are additional costs tacked onto the original service or product that often have nothing to do with the deliverables themselves.

Weather transactional fees or SaaS, our fees are necessary to leverage all the amazing stuff we do for brands, agencies, publishers… AdTech has changed the game, embraced and continues to define the digital, attention-based economy. If we allow our revenue to be thought of as a tax, we will never define our value and maximize it openly and appropriately. And what’s worse, our hard-earned dollars will continue to seem somehow an unfair burden that nobody wants to pay for.

What we need is transparency, which will allow all parties to see the real value in AdTech.

According to Advertising Age, through the massive shift of programmatic revenue the IAB estimates that less than 45 percent of revenue into the ecosystem actually reaches the publisher. The IAB also notes that, “understanding where dollars are distributed across the stack from advertisers to publishers can be quite disorienting in the current programmatic landscape.”

…Well, that’s reassuring.

What happens if we have transparency, and all sides can see what-costs-what and who was involved in delivering an ad to real eyeballs? In our last roundtable, we quoted Mike Driscoll, CEO of MetaMarkets when working with a marketplace, “each time they increase the transparency they share with their partners, they actually see that market activity increases… transparency drives market activity.”

What happens when a marketplace is transparent?

  • Advertisers have the opportunity to spend their money more effectively
  • Advertisers have a POV from which to understand audience scarcity and understand the higher eCPMs for that audience
  • Publishers can stand behind the costs for reaching their high-value audiences
  • Publishers have the opportunity increase their revenue by selling smarter
  • AdTech can evolve to a more competitive ecosystem

The IAB agrees – and have essentially put their foot down by creating the Programmatic Fee Transparency Project. The initiative, led by Carl Kalapesi, VP-industry initiative at IAB, recognizes the lack of transparency that has undermined trust and liquidity in the marketplace, vowing “The IAB Programmatic Fee Transparency Project will develop guidance around fee disclosure and transparency within the programmatic ecosystem.”

Opacity is ultimately wasteful and counterproductive – we all know that trust builds lasting relationships. We will continue to deliver, innovate, and monetize our work, but our revenue is based on direct results. The first step in transparency is not calling our revenue something it isn’t.

So don’t call it a tax.

Who’s to Blame for the Current Ad Tech Trust Gap?

Recently, PluggedBD held an executive-level roundtable titled “Transparency, Measurement and Viewability in the Digital Age,” which began with a discussion about what Procter & Gamble Chief Brand Officer Marc Pritchard meant when he called for “… new [transparency] rules for agencies and ad tech to get paid.”

Not one of the panelists, representing every aspect of ad tech, could exactly answer the question, which prompted moderator Jonathon Shaevitz, CEO of Industry Index, to ask a second question: “Who’s to blame for the ‘trust’ mess we’re in?” That’s when the conversation got really interesting because solving marketing biggest “whodunit” is how we start down the road to redemption.

Who’s really to blame?

The angst in the room was palpable as the group struggled to solve this “whodunit,” with panelists assigning blame in equal measure to agencies, publishers and CMOs — all the while acknowledging they weren’t really sure whom to blame.

But to me, the culprit is clear. Without hesitation, I’d have raised an accusing finger at the one group not in the room: venture capitalists (VCs).

What’s the evidence?

The case against VCs starts with the basic fact most VCs tinkered in an industry they knew little about. As a result, they applied their typical investing formula — 1) “cool team”; 2) “cool tech”; and 3) “cool SaaS Model” — indiscriminatingly to marketing, with unfortunate consequences:

  1. “Cool team”: VCs overwhelmingly favored engineer CEOs (often young) who often lacked any understanding what their marketing customers really needed.
  2. “Cool tech”: Ad tech is now a fragmented, dysfunctional ecosystem because of VCs predilection for “cool” tech (versus useful tech), which heavily burdened the industry with so many similar startups that advertisers struggle to distinguish one from another. The knock-on effect is that most advertiser attempts at frictionless marketing management are doomed to end in failure. A most unhealthy outcome all around.
  3. “Cool, SaaS business model”: This is possibly the most damaging ingredient in the VC formula because it created a misaligned incentive structure that rewarded low quality digital deliveries instead of high quality audience interactions.

The real crime

It’s clear in hindsight that a lot of damage was done by the VC investment formula because it steamrolled marketing’s own, albeit “uncool,” formula that is equal parts art, science and execution. This fundamental mismatch directly led to ad tech becoming a toxic, adversarial brew that undermined long-term and trusted relationships across the marketing ecosystem:

  • Advertisers were pitted against publishers in a zero-sum game where advertisers “win” by getting the best inventory as cheaply as possible, and publishers “win” by selling the worst inventory possible at the highest price possible. No wonder everyone is twitchy.
  • Agencies and ad networks fight to deliver profitable media buys because too many people have their hand in the arbitrage cookie jar.
  • Everyone is playing a perverse metric, hot potato game whereby SaaS businesses are quick to pass the metric buck to anyone, ad networks blame other platforms, and everyone blames agencies for whatever they can get away with. Everyone loses.

The road to redemption

Blame is useful to help us to adapt a new attitude that gives us the fortitude for the long and arduous journey ahead. The place to start is for advertisers and agencies to fully appreciate that every dollar spent in advertising doubles as an investment for ad tech ventures. The VC model was not kind to marketer-led ventures, which is part of why there is such a lack of transparent, process-driven ventures. With this new consciousness, though, advertisers can wrestle control from VCs to determine which ventures thrive with these “investment” guiding principles:

  • Funnel marketing dollars to ventures that deliver a system level solution that integrates the art, science and execution of great marketing versus narrow point or SaaS solutions.
  • Reward platforms that develop pre-campaign proformas with business-centric KPI’s like Cost Per Visitor (CPV) to create transparency and trust.
  • Rethink the scale equation with a new sensitivity towards the realities of quality digital scarcity. Move away from tonnage metrics towards smaller and meaningful metrics that can be traced to revenue-generating activities.
  • Go the extra mile to hear new ideas in ad tech, especially from marketer CEOs. The effort has profound implications in reshaping the ad tech landscape of tomorrow.

It’s taken marketers over five years to get smart enough to challenge the black boxes that ad tech packaged itself in. The next five years will look quite different, as marketers create ad tech where trust is the norm, not the exception.

Roundtable Round-Up: Ad Transparency, Measurement & Viewability

Industry Index Roundtable 02-22-17

IT was only a matter of time. Marc Pritchard, P&G’s global chief brand officer, delivered the adTech industry at large a mandate on media transparency at the iAB Annual Leadership Meeting in January.

Moderator Jonathon Shaevitz opened our roundtable discussion recalling Mr. Pritchard’s demands for transparency – a rallying cry that many are happy to echo and get behind, to be sure, but what happens when we unpack this idea? What action is to be taken, and by whom? What do major brands like P&G mean by “transparency”? Who is responsible for fixing the problem? Is there true common measurement? Do we need to standardize and charge the Moats and WhiteOps of the ecosystem as the sheriffs of our (maturing) wild west?

The Prisoner’s Dilemma

Anthony Katsur, President of Sonobi, was willing to start by suggesting the problem starts with following the money in the ecosystem to the source – the brand/agency economic model. Brands are expecting cheap buys, niche audiences and high viewability, whereas agencies are incentivized to spend their client’s budget in-full and opaquely so they can deliver to some client measurement while maximizing their own returns.  Others suggested that the agency/brand relationship was a big part of the opacity problem, as well-defined in the 2016 ANA report.

Others noted that the focus on audience targeting for the last 5+ years has lead to unrealistic expectations of price and value. Katsur noted that when buyers demand a specific audience, but only with the limited, white-labelled publisher list, they then complain that eCPM’s are $40 instead of the $4.00 eCPM’s they had realized with less-targeted publisher list. Mr. Katsur pressed, “We don’t price supply. There is scarcity in the Comscore 150… what we can do is quantify scarcity.”  Using a whitelist (e.g., from well-ranked companies in the Comscore) solves many issues with audience and inventory quality, but scarcity –and cost– become untenable factors, and the high-quality, smaller inventory publishers with coveted niche audiences are excluded.

Mr. Shaevitz noted that while there is a clear need for brands/agencies to have some intense couples-therapy sessions, there is plenty that adTech can do outside of that holding their breath waiting for brands and agencies resolve their differences.

Trip Foster, EVP at Adomik, expanded on this idea, stating, “If there were true transparency inside the AdTech machine, it would actually cast light on that [brand/agency] relationship with a lot more clarity. [Brands] would see that on 20% of the dollars spent on media are reaching the publisher.”

Yes, there is strong evidence to support the brand/agency relationship being a major factor in waste. But the traditional pricing of adTech –where technology is bundled with media– causes obfuscation between the dollars into the ecosystem and the dollars out, and that many established companies benefit from the status quo.

As Mr. Katsur explained, “It’s the Prisoner’s Dilemma.” The market would grow if everyone was willing to share more and be transparent, but the supposition here is that neither party has the ability, or the desire, to communicate with the other.  Others argued that this inability to communicate is not real – Communication is possible, and it takes the adTech industry’s leadership to change the status quo.  “We [adTech vendors] can shed more light on the issue rather than waiting for the issue to be solved [at the agency/brand level],” Mr. Foster stated.

Getting SaaSy

Many felt that changing the pricing model to SaaS helps resolve many problems by effectively forcing transparency on the media transactions. A SaaS pricing structure allows them to provide a transparent data set to their clients. Mike Driscoll, CEO at MetaMarkets explains, “What we found in general when we work with a marketplace…each time they increase the transparency they share with their partners, they actually see that market activity increases… transparency drives market activity.”

Publishers, Pull Yourselves Together

Stephanie Layser, Director Advertising Technology at NewsCorp., offered to the roundtable that some responsibility for the state of transparency lies with old-guard publishers. While they have always understood their users better than anyone based on their first-party data, they have been behind on putting it all together and producing products that advertisers want.

“All these problems with viewability, transparency… didn’t exist ten years ago. Before we started this adTech ecosystem there was this 1:1 relationship between the publisher and the advertiser. Then it started to be [about] targeting audiences. We wanted to look for this person wherever they are, and we don’t care about where they are on the internet, and then it became this ‘1 to Many’ [targeting]. We [publishers] could sign up for four different platforms easily. For agencies… it made it a lot easier to look in four different systems and get it all done,” she said.

Publishers often selected the easiest short term solution and did not invest in talent and technology to create differentiation.  Some publishers and adTech companies also ignored the rampant growth of fraud and its impact to viewability and measurement. With the addition of fake news and entities like Methbot coming to light, the onus is also on legitimate publishers to provide transparency and real value. By using their internal resources to develop products and use adTech programmatically, publishers can deliver impressions within a better packaged framework. This will require publishers to demand transparency from their technology partners to keep the entire process open and accurate.

Transparency Now or Legislation Tomorrow

Regarding keeping the entire process open and accurate, our thoughts turn immediately to third party oversight. However, while companies such as Moat, DoubleVerify and WhiteOps all offer robust verification and protection, each is going to market with their own currency. In short, this competition to lead the industry and capture their own monopoly rent leads to some inaction and challenges with reconciliation when publisher and advertiser are using different methods and have no framework to account for discrepancies.  So while no one advocated requiring some sort of universal currency for transparency, many participants recognized that the status quo, particularly with bad actors impacting the market, could lead towards government incursion.

While some agreed that this can be solved on a case by case basis between publisher and advertiser (e.g., select one shared measurement tool and go forward), others argued that a more standardized currency would benefit the overall marketplace. All agreed that confusion of measurement is limiting growth.  

Further, as cookies are replaced with new tracking and targeting technology, accountability will become magnified continue to seep into the public. Building trust with transparency is a current imperative to avoid having outside entities dictate the rules of engagement. Michael Driscoll adds, “The truth is we need these guys because who else will do their work? The government?”

Using Your Head(er Bidding)

A clear trend in the industry over the past 18 months is header bidding. While the benefits of higher yield for the publisher on the same inventory are clear, it also adds data and clarity to the transaction between buyer and seller, if only as a byproduct.

Jonathon Shaevitz offered, “One of the things publishers have done poorly for the past ten years is control their data.” Where legacy SSPs made their money on each hop, members of the roundtable were quick to point out that each hop also created an opportunity for information loss and replacement with less-relevant data – and worse – false data injections, and trust was eroded.

Header bidding begins moving the needle of data control back into publishers’ hands, allowing significantly more publisher data to be transmitted, allowing the buy side to assess the quality of the environment and impressions with increased fidelity.

An increase in overall fidelity surely leads to a safer marketplace. The challenge again is to follow the money to the source. Publishers must work to present advertisers with clear value to explain why they are paying more for the same impressions.


  • There is plenty of blame for industry opacity and a lack of cooperation to go around the industry, and no one at the table shied away from accepting some responsibility. Admittedly, some is simply the growing pains of a maturing industry.
  • The flawed and opaque agency/brand relationship continues to play a large role in holding back transparency based on lack of communication and shared priorities
  • The SaaS model is helpful in keeping AdTech’s hands clean, letting dollars pass through the ecosystem without a hidden tech tax – but who will accept the tech invoice?
  • Legislative reach into the adTech industry may not too far away. Without clearer value on the publisher’s side and shared goals on the agency/brand side legislated regulation may significantly stifle innovation and evolution in AdTech.
  • Light disinfects. More data leads to more transparency. Header bidding isn’t daylight, but its flashlight is a step in the right direction.




Seho Lee, VP Programmatic Sales at Unruly

Jeremy Zeleznock, VP of Strategy at Genesis Media

Trip Foster, EVP of Revenue at Adomik

Stephanie Layser, Director Advertising Technology at NewsCorp.

Chris Smith, Founder & CEO at Stitch Video

Corey Kronengold, CMO at Smart AdServer

Anthony Katsur, President at Sonobi

Mike Driscoll, CEO at MetaMarkets



Jonathon Shaevitz, CEO at Industry Index