Of Taxes & Chaos…

Interesting blog entry from Eric Porres of Lotame earlier this week, about the various and increasing “taxes” levied on online advertising.  I particularly liked his closing thought on 3rd party verification providers.  In a very early stage market with multiple competing vendors and approaches, the real potential exists for the scenario he outlines – i.e., several different parties to a media transaction winding up with different, conflicting “verification” reports and creating chaos. We have seen examples of this in our own business already on campaigns where 3rd party verification was used.

Let’s also keep in mind this problem only gets worse if the verification market moves (as is claimed to be the goal) from passive verification (reporting) to active prevention (blocking).   It’s one thing to have a set of false positives in a reporting package, creating a media provider / agency discussion that is pure friction for both sides.  It would be an entirely different thing to have “underdelivery” (and thus underpayment) due to those false positives.  What is friction squared?

I tend to agree with Eric that the right answer is for the incumbent ad servers to develop their own standards for verification, much as they have done with impression counting.  Personally, I think this could actually be done as either a feature within the demand-side ad serving platforms (DFA, Atlas) or the exchange platforms (AdX, RM, AdECN) themselves.

There are arguments for both, but I think the exchange platform might actually be the right integration point, particularly if blocking is the ultimate objective.   It seems like this approach would also facilitate additional active services.  On the demand side, perhaps focusing more broadly than just objectionable content.  On the supply side, perhaps helping publishers to avoid instances of “blocking” by preventing problems before they occur.

friction2

About Andy Atherton
I am currently an SVP at AppNexus. I previously spent four years as COO and cofounder of Brand.net, a pioneer in programmatic reserve technology and leading digital media buying solution for top brands. Prior to Brand.net, I was Vice President of Pricing and Yield Management for Yahoo!, responsible for maximizing monetization of a global portfolio of display inventory worth $2B annually. Beginning in 2002, I created, developed and globalized Yahoo’s PYM function over a period of five years. Prior to Yahoo!, I was president and cofounder of Optivo, a venture-backed start-up that developed price optimization software for e-commerce retailers. More on LinkedIn...

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