As our open internet is under strain, we must remember open is better than closed
On 6 August, the open internet will celebrate its twenty-sixth anniversary. That’s the date when Sir Tim Berners-Lee released the world wide web’s first website from his office at Cern. The domain looked roughly like what you can see on the screen below.
Before you linger too long on the graphic design deficiencies of the world’s first website, consider this: what if Berners-Lee had decided to patent his invention and profit from it? The open internet might never have existed.
As it turns out, he almost did. In an interview with Time in 2001, Berners-Lee told of how he had explored the possibility of creating a company called Websoft to capitalise on his invention.
Imagine what today’s world would look like if Berners-Lee had decided to make the internet a proprietary walled garden? It’s an alternate reality in which iPhones, Amazon, eBay or Netflix couldn’t have started without Berners-Lee’s explicit permission, and in which their transformative technologies would have been sharply limited by Websoft’s self-interest.
Luckily for us, Berners-Lee stood fast to his ideals. He consciously avoided building an inefficient ecosystem comprised of incompatible browsers – the modern-day equivalent of early railroad networks that used different (and incompatible) track gauges. Instead, he designed the internet to be a single open system that fostered creativity and collaboration.
Yet today, the open internet is under strain. It is fast evolving into a closed system in which a handful of behemoths enjoy outsized influence over content distribution and monetisation. In a world where just two companies command 48% of all digital advertising revenue (and 66% of incremental ad dollars), and in which creators of content – be it great journalism, music or film – rely on a handful of large content aggregation platforms for audience distribution, the internet looks a lot smaller and a lot less open than its original conception.
Fortunately, the companies of the open internet are pushing back. Increasingly, we see publishers resisting disintermediation from their audiences and advertisers. Specifically, some have adopted header bidding as a means to bypass DoubleClick for Publishers (DFP), a legacy ad server that is structured to favour Google’s proprietary ad exchange, AdX, at the expense of open auctions.
Header bidding enables publishers to ‘open’ their inventory to multiple sources of demand equally, rather than relying on demand from AdX alone. It brings a new level of free-market competition into digital advertising. And it’s working: eMarketer reported that early adopters saw their CPMs rise by as much as 48%. Publishers have also reported other benefits such as increased yield, lower latency and fewer passbacks since switching from a waterfall set-up to header bidding.
We’re familiar with the argument that Exchange Bidding in Dynamic Allocation, or EBDA, will drive header bidding into obsolescence. But in fact, even though Google announced that it would remove its ‘last-look’ auction advantage, EBDA remains a closed system. It does not offer demand from major internet players such as Facebook, Amazon and AppNexus and, according to one report, retains much of the opacity in pricing that inspired header bidding in the first place. Header bidding is still the only solution that enables multiple demand partners to bid on an even playing field, allowing publishers to gain insight into the actual value of their inventory.
Header bidding is just one step in the creation of a more open internet. We also see publishers replacing DFP altogether with ad-serving and forecasting products that allow them to monetise their inventory with greater transparency and intelligence.
Using an ad server that supports open dynamic allocation – technology with smart algorithms and visibility tools that provide a single transparent auction – also helps publishers optimise for maximum revenue. Publishers can allocate impressions with control and ensure pinpoint delivery on all guaranteed campaigns. It’s the very embodiment of open architecture and the antithesis of the walled gardens’ black-box approach.
Whether publishers transition to a more fair and open ad server or incorporate header bidding into their monetisation strategies, they will find new pipelines of demand sources that enable them to earn what their inventory is truly worth. This benefits everyone – advertisers access quality publishers and their audiences more directly, publishers increase the demand for their inventory and consumers enjoy compelling digital material free of cost. This virtuous cycle encourages competition that helps publishers fund the ongoing development of their content. It helps content creators retain control of their own destiny.
In a 2014 interview with Wired, Berners-Lee expressed optimistically that when it comes to the internet, competition has historically resolved issues of economic imbalance and will continue to do so. AppNexus agrees. An open system that fosters competition and collaboration will always, in the end, beat a closed one.
In furtherance of this goal, we’ll work with anyone – friends, customers, partners, competitors, private companies, non-profits, academia – who joins in our commitment to building an open internet that works for advertisers, publishers, consumers and everyday users alike.
Berners-Lee put it best, before a global audience of 900 million during the opening ceremony of the 2012 London Olympics: “This is for everyone.”
By Michael Richardson, Senior Director, Product Line Management, AppNexus.
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