Programmatic conflict in China: iPinYou's point of view on PDB and RTB

This Q&A is a followup to an earlier article about conflicts of interests in China's programmatic market. It specifically addresses the second scenario highlighted in that first article by Charlie Wang, chief operating officer of ReachMax, that of “The car repair shop with an agenda”. 

Would you like to respond to the point of iPinYou being engaged in both PDB (programmatic direct buying) and RTB (real-time bidding)—effectively being a car repair shop with an agenda?

This is a very important point. PDB and RTB are formats of programmatic buying that can be managed by a DSP. So the key difference between PDB and RTB is whether the inventory is guaranteed or not. If the inventory is guaranteed, it's PDB. If the inventory is not guaranteed, it's RTB.

Our practice, which is a global practice, is that clients should use one DSP to manage all the different formats of programmatic buying. There are a few reasons for that.

First of all, the concept of programmatic is actually to reduce the layers between the advertiser and the audience. So there should be only one system used. If you are using multiple systems, you are basically paying unnecessary costs. PDB and RTB systems are dealing with different types of inventory, and advertisers have to use one system to decide which form of programmatic is better against their own marketing targets. 

Depending on the inventory available on the ad exchange, we will decide at different times of the day and in different geo-locations whether to use PDB more or RTB more. It's not a decision that can be decided beforehand; and it's not a decision that can be separated completely. It is more like a dynamic process of optimisation.

For example, a lot of our clients are doing video campaigns and they want to target each individual for three times under the frequency-capping rule. This frequency capping has to apply across PDB and RTB, and cannot be separated. Otherwise the frequency cannot be controlled.

Secondly, the blatant reason why some vendors say they should be separated is because they only offer the PDB product. An RTB product actually requires much more investment in technology and infrastructure. My company has thousands of servers compared to a pure PDB vendor with less than 100 servers.

Thirdly, there are a lot of clients today using data to enable better targeting. You cannot imagine the client going to different DSP platforms and asking them to integrate with many third-party DMP or data vendors. This is very inefficient and actually creating additional work. If you separate RTB and PDB, you have to integrate at least twice.

[Editor's note: The situation described in the previous paragraph is distinct from the "playferee" conflict described in our original article, that of tracking companies measuring performance against data that they also sell, which Huang said is a very real problem].

So in summary, your view is there should be no separation of RTB and PDB.

The only reason why Reachmax is highlighting so is because this company only offers PDB technology, and as I mentioned, PDB involves much less complicated infrastructure to be set up. It's this company's story to sell to their clients. It's all about a point of view. We take the point of view for the benefit of our clients. From a client's perspective, it does not make sense to separate PDB and RTB. Other ad-tech vendors with limitations in technology need a way into the clients' business. They can "create" conflict, but this is sacrificing the clients' best interests.

Is there a client's case you can elaborate with?

Let's say in Shanghai, a very tough market with video inventory in high demand, a client may combine PDB and RTB to achieve its primary objective, whether it is reach, guaranteed impressions or target-audience percentages. General Motors and Unilever, for instance, use both PDB and RTB in China. For other case studies, click here.

How about the claim of media arbitrage by bundling RTB with PDB?

That's a separate and much bigger issue; that's a company trying to cheat by being non-transparent. And in these cases, clients deal and negotiate with publishers privately, and the money is paid directly from clients to publishers.

Campaign Asia-Pacific welcomes further input from companies mentioned in the other conflict scenarios in our original piece on this topic. Please write to [email protected].