We need a holiday, so let’s celebrate the 10th birthday of programmatic advertising. We can call it 10 because 10 years ago, Google announced it was buying DoubleClick for $3.1 billion, effectively launching the modern age of display advertising. (Digital know-it-alls are likely to quibble with this: DoubleClick launched its ad exchange several months before the Google acquisition, and there were others, such as Right Media (acquired by Yahoo) and AdECN, (acquired by Microsoft), which also launched before DoubleClick joined Google. Please ignore these historical footnotes.) Under Google’s care, DoubleClick has thrived and proven the once-radical idea that advertising could be targeted and transacted on an impression-by-impression basis, in an open, real-time market, at enormous scale, by computers. It’s also become a significant early proving ground for machine learning techniques that can optimize bids based on results.
Not everyone has been supportive. From the start, criminals sought to exploit the system, privacy advocates condemned its cavalier attitude toward user tracking, consumers complained about annoying ads, and walled gardens like Facebook and Apple rose up to challenge its open ethos.
But Google nurtured DoubleClick and buttressed it with complementary acquisitions, and the Internet Advertising Bureau (IAB) became programmatic advertising’s true mentor and champion. The IAB Tech Lab developed and promoted open standards, training programs, and advocacy, and continues to be its most potent ally.
The array of forces that oppose programmatic advertising today is formidable. But for each chapter’s dire challenge, programmatic seems to come up with a new technology solution. When it looked like DoubleClick for Publishers was giving Google’s ad exchange too much power, ad tech came to the rescue with header bidding which opened the market so publishers could access buyers on any exchange. When viewability became the hot challenge, IAB and MRC came up with new measurement guidelines and a metrics certification process. When mobile took out cookies, device graphs and coops came to the rescue. When fraud looked like it had the programmatic market on the ropes, the Lab came up with ads.txt, allowing publishers to distinguish themselves from counterfeiters and giving buyers more confidence (the anti-fraud firm Pixelate recently reported that over 50% of the top 5,000 publishers were now using it).
While tech solutions haven’t exactly wiped out these problems, as with any serial adventure, their triumph has been to keep the hero (or perhaps anti-hero) alive for another day.
Now comes the most menacing challenge yet. When Europe’s massive new privacy law, the GDPR, goes into effect in May, programmatic may have finally met its match. Whatever one thinks of the law’s value or intent, it’s effect on programmatic advertising, which depends on the ability to track and target individuals across the web (some might add “anonymously”), could be devastating. Although the law is specific to citizens of the EU, without a way to identify them there’s no way to exclude them from the practice. And the problem with including them is that, under the GDPR, user consent is likely to be required in order to use personal data to target media (see What Marketers Need to Know About GDPR: Frequently Asked Questions Answered, subscription required).
So the IAB and Ad Tech have come up with a new plan: a way for publishers to convey user consent on an open ad exchange.
All of this is leading up to a larger climax: the introduction of blockchain technology into the battlefield. If you’re just waking up, blockchain is a way to implement a distributed ledger system that can process secure transactions without relying on any central authority. While most people associate blockchain with cryptocurrencies like Bitcoin, it’s their ability to implement secure contracts, called Smart Contracts, that makes them especially interesting to ad tech. Programmatic markets, with their enormous volumes of blind transactions between buyers and sellers in a low-trust environment that’s rife with fraud and reporting discrepancies. appear tailor-made for a blockchain system. So the gold rush has begun: The AdLedger consortium, NYIAX, Amino, AdEx, Kochava and MetaX are among pioneers developing solutions along these lines. Unilever recently disclosed it was working with IBM on a blockchain solution for advertising. And the IAB Tech Lab has established a working group to promote standards and adoption of blockchain ad solutions. A few, such as Faktor and Brave, have even more disruptive solutions that elevate the role of consumers in controlling their data in the supply chain.
There are still enough technical challenges to make the story interesting, and it might take another 10 years for a blockchain (or something like it) to become the de facto infrastructure for programmatic media. But the history so far suggests that its unwise to bet against the underdog.