Advertising marketplace design

In the past decade several Nobel prizes in Economics have been awarded in the broader area of market (mechanism/auction/game) design. This is not surprising as the combination of Internet connectivity and ample computing resources are causing automated markets to pop up all over. One of biggest and fastest-growing in recent years as been the programmatic advertising market. For example, variations of the Vickrey–Clarke–Groves auction power the Facebook and Google ad exchanges.

When lots of players are lining up to feed at the advertising money troth, it sometimes becomes difficult to separate reality from marketing hype. The programmatic hype is that it brings efficiency to advertising (and does your laundry to boot). The reality is very different. While there are many benefits to programmatic advertising, it also causes and exacerbates many problems in the advertising ecosystem that hurt publishers, advertisers and consumers in the long run. The root cause is that the leading open programmatic protocol–OpenRTBfails to align marketplace interests. This is what happens when adtech optimizes for volume as opposed to quality.

About Simeon Simeonov

I'm an entrepreneur, hacker, angel investor and reformed VC. I am currently Founder & CTO of Swoop, a search advertising platform. Through FastIgnite I invest in and work with a few great startups to get more done with less. Learn more, follow @simeons on Twitter and connect with me on LinkedIn.
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