• by Tim Koschella , Op-Ed Contributor, December 2, 2015

Today, there are essentially two ways in which mobile advertisers can programmatically access video, native and banner inventory: Open RTB and its custom variations, or via mega-publisher APIs.

The latter was pioneered by Facebook’s ad platform, soon followed on Twitter and more recently, Pinterest, Facebook-owned Instagram and Yahoo-owned Tumblr.

This raises the question: Will major social platforms around the world, including each of the national champions, eventually have their own custom ad APIs? If so, how will mobile advertisers buy inventory programmatically between the worlds of custom APIs and Open RTB, to deliver consistent campaigns across channels?

Let’s take a closer look at the differences of buying through each method.

Per its name, OpenRTB is an open protocol that can be used by anyone. It’s widely used by DSPs, SSPs and exchanges across the ecosystem to trade inventory on a programmatic and real-time basis.

Some programmatic ad tech players use variations of Open RTB, such as Google’s DoubleClick and Yahoo’s BrightRoll, which go through Protobuf, a lightweight and custom variation of the standard.

OpenRTB allows for a great deal of transparency, as demand-side players have access to all information available with each bid request. They can compare prices and quality across exchanges, selecting the best inventory sources to make their bids on an impression-by-impression basis.

RTB gives advertisers and demand-side marketers a near-guarantee that they are spending their ad dollars in the most efficient and cost-effective way possible.

Now, consider the social mega-publishers. They are popular among advertisers mainly because of their first-party data integration and offer granular targeting options and high levels of user engagement, provided either through a self-serve interface or through the platforms’ ad APIs (for programmatic buying).

When going through these APIs, buyers may get live, granular insights into their campaigns and refined campaign management options, but have no control over which impression they are bidding on.

Ultimately, it’s a black box; the decision of which ad impression to display to which user and how much to pay for this user works behind the scenes. This leaves the advertiser with merely aggregate-level reporting and optimization capabilities, resulting in limitations for cutting-edge campaign strategies, such as they exist today on RTB.

It seems that, while RTB mechanisms balance the interests of publishers and advertisers alike by providing maximum transparency, social APIs can be interpreted as a result of a power shift toward the juggernauts on the supply side of the mobile ad ecosystem.

When Facebook turned to ads for monetization in 2008 and 2009, for example, it relied on desktop ads purchased through the Facebook API. In 2012, Facebook launched its RTB-based FBX retargeting exchange to great fanfare.  Some predicted it could become a larger source of RTB inventory than Google’s AdX exchange.

But since then, Facebook has neither brought FBX to mobile nor made any further efforts to grow its exchange.

Facebook’s VP of advertising said that FBX will not be a focal point going forward, as it’s built for desktop and will not be coming to mobile.

For the sake of transparency and openness in the industry, we’d better hope OpenRTB will make the race, or that social mega-publishers move past APIs and begin to adopt RTB for mobile.

The alternative is that advertisers will be left relying exclusively on the information furnished by mega-publishers themselves, with no way to verify it and fully cognizant that those publishers have every conceivable business incentive to interpret results in their own favor.

Perhaps Facebook’s acquisition of LiveRail marks a first step to open up Facebook Audience Network (FAN) inventory to the open RTB world? We’ll know soon enough.