The hottest new trend in adtech is “RTB,” or real-time bidding. And it’s often a way to rip off advertisers, according to Konrad Feldman, CEO of Quantcast, one of the larger players in the RTB market.
In some cases, “they’re actively being gamed,” Feldman told me recently when we discussed the state of online advertising and the clients that buy it.
RTB, or “programmatic” advertising, is a way for advertisers to target or “retarget” users on the web with cookies. Basically, if you looked at some shoes on a web shopping site but didn’t buy them, you might find yourself being retargeted with shoe ads next time you look at Facebook. Your web browser will tell advertisers that you went to the shoe site, and when your Facebook login is activated advertisers get an instant signal — shoe shopper has arrived in Facebook! — and shoe ads appear in your news feed. The advertiser hopes you click on that ad and actually buy the shoes.
About $5 billion in spending will go on retargeting in 2014, according to IDC.
Feldman’s concern is that the last ad you saw — on Facebook in this case — gets all the credit for driving the sale. A marketer might naturally conclude, “Hey, retargeting ads on Facebook are really effective,” and increase their RTB ad budget as a result. In fact, everyone in adtech knows that it often takes several different ad impressions in different media to fully persuade someone to buy something. The last click may get the attribution for the sale, but that attribution would be false. (He’s not singling out Facebook, by the way — we just used that as an example because Facebook runs a major retargeting exchange, FBX. Quantast also places ads in FBX along with 27 different competitors such as Turn and Triggit, companies that Feldman has been at war with since at least last year.)
It goes without saying that Feldman believes Quantcast has the analytics to cure this problem, so we can take it with a pinch of salt. But when he sat down for coffee with Business Insider in San Francisco recently, he used unusually strong language about the way dollars were being spent in RTB.
To be perfectly clear, he wasn’t literally accusing his rivals of perpetuating fraud or wrongdoing. But he was saying that some RTB buying companies are essentially enjoying the ignorance of their clients.
“There is huge waste in RTB,” he says, because the last click is getting all the credit. “The measure of the outcome in the best case is incorrect … in the worst case, they’re actively being gamed.”
“Retargeting is an important part of an overall campaign strategy but it is typically getting too much credit,” he says.
Feldman believes that as advertisers get superior analytics on exactly when and where consumers see ads, clients will stop thinking that retargeting is working miracles. “Proper data will clean up the ad space, attribution will clean up the ad space.” Naturally, Feldman hopes that Quantcast — which is prepping itself for an IPO — will be able to provide that data.
In the meantime, he believes that many advertisers are wasting their money on retargeting, and that his competitors are happily taking it when they know their ads aren’t solely responsible for the budgets they’re getting. “Some of these emperors will turn out to have no clothes,” he says.
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