Buyer and seller beware: programmatic advertising is on the nose right now. This week we learnt that global brands are boycotting YouTube, having discovered that their ads are not only appearing on hate sites, but actually funding the haters. Discovering you have Nazis on the payroll? Priceless.
Now one of the world’s leading online media brands — The Guardian — is preparing to sue Rubicon Project for undisclosed buyer fees, said to be worth several million US dollars.
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It confirmed the action in a statement to Business Insider. “We can confirm that we have commenced proceedings against Rubicon Project for the recovery of non-disclosed buyer fees in relation of Guardian inventory.”
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The publisher says an analysis of programmatic trading of its inventory reveals it only yields 30 pence in the pound. Given that 80 per cent of The Guardian’s digital display is traded programmatically, you can see the cause of Guardian’s anxiety.
For its part Rubicon hit back, saying its fees were disclosed in its SEC filings and in its contract with The Guardian. In a statement to US-based Digiday, it said, “Without buyer fees we would need to charge sellers more, and we think our approach is fair. We charge buyer fees for certain services we provide and have disclosed that fact publicly, including in our SEC filings, and in client contracts, including a contract we signed with Guardian over a year ago. We split our fees between sellers and buyers, reflecting the value we provide to both.”
Until it is tested in the courts, of course, we don’t know which party is more right.
It certainly makes an interesting challenge for incoming CEO Michael Barrett, the former boss of Millennial Media.
Barrett is probably in no mood to hand back anything. The company is in trouble, having come late to the header bidding game and subsequently seen its market capitalisation tank by 70 per cent in the last year.
Investment site Seeking Alpha observed that “It’s a spillover of tension between adtech and publishing, as programmatic ads take over display advertising, crimping publishers’ takes to make more revenue room for data vendors.”
More than two thirds of US inventory is bought programmatically, a figure likely to be reflected in other developed advertising markets. And programmatic is still growing its share.
For publishers it looked like a cheap, easy win — push off the cost of sales to a machine. Likewise, brands thought they could trim both inventory and staff costs. But, as each is learning, programmatic carries its own dangers. Brand safety issues are significant and ad fraud is ripe.
Brett Wilson, then-CEO of TubeMogul*, told Which-50 last year that typically more than ten per cent of ads on third-party exchanges are fraudulent. Wilson’s company rebates its clients for any fraud over a small level (about three per cent) as a matter of course each month.
Meanwhile, some of the less savoury practices of the the industry were thrown into sharp relief last year during the legal stoush between Criteo and SteelHouse. Each company accused the other of fraud, but they settled before the case went to court and issued a joint “Nothing to see here, folks” statement.
*Brett Wilson now works for Adobe following its acquisition of TubeMogul earlier this year.