How I Explained My Adtech Business To My 7-Year-Old

Imagine another world. A world that has very special trees. These trees grow fruit. On this world, there is just one tree - the Anifrüt. It is called the Anifrüt tree because it grows any fruit. Here, there is only one plant upon which all fruit are grown. Moreover, when you plant one of these trees, you have no idea what it will grow. The fruit this tree bares are selected at random from all the fruit in the universe... apples or oranges, strawberries, dragon fruit, kiwi, or any fruit. In fact, it is even weirder than that. The Anifrüt has so much variety, that no two trees grow the same fruit and every season a new fruit replaces the old one on the tree. The Anifrüt farmers of this world needed a way to sell their crop. At first, they had a really hard time communicating with buyers. They made deals with their buyers to sell certain categories of fruit, at an agreed upon price. This way the farmers had a buyer in-hand before the trees bore fruit for the season. Over time, people started to group the Anifrüt fruit into groups. There were the sweets, sours, and the tarts. There were fruits with thick skin and those with thin skin. As time passed, the Anifrüt farmers noticed that when they were passing through the town square, they would get stopped by locals wanting to buy some fruit. They figured out that it might just be better to go hangout in the town square to sell the Anifrüt harvest instead of going to each and every customer.

When buyers saw the gathering of Anifrüt farmers in the town square, they realized how easily they could peruse each farmers goods. They could buy the specific fruit they need and compare prices. In turn, the farmers' need for money to buy seeds and supplies meant they kept doing some business the old way too; visiting their customers one by one to get commitments to buy the future crop.

Some buyers, didn't care what fruit would grow on the farmer's trees. Anifrüt Jam & Jelly Inc. made so many flavors, that they didn't care what the farmers produced, they could use it all. If they bought from enough farmers they would always get a steady supply of each fruit. The problem for the farmers was that only a small number of the biggest buyers would make these in-person deals.

The smaller buyers were in the town square, where they couldn't be sure if the fruit they want will be there and where few of the biggest buyers were shopping. The biggest buyers were still buying from farmers that came to their door because they were each trying to get the best fruit guaranteed for the next season. The biggest buyers were not shopping in the town square and their buying was not influenced by the little guys and the excitement of the town square market.

One day, a boy standing in the square overhears two buyers talking about what they are planning to buy. Hoping he could get his aunt to agree to the price he overheard, he runs across the square to his aunt's Anifrüt fruit stand. He quickly tells his aunt what he heard. The aunt tells the boy to run back to the buyers and tell them he knows where they can buy the best fruit in town, for the price they want. Being thrilled with the deal she made with with the buyers, the aunt rewards the boy for his help. Realizing that he could help everybody in the market, the boy starts to bring offers to buyers for a reward. Sometimes the deals are for the fruit the farmer has on hand and sometimes it is for a future crop.

And that is where our story changes. It changes here because this is where the adtech trading environments are today, RTB and Programmatic Direct.

In the RTB environment, each impression is sold separately. Each time the ad server deems appropriate, the impression is redirected into a complex fabric of technology that classifies it and collects bids from buyers. In Programmatic Direct there is additional value in the ability to automate buys for future inventory, at the RFP line-item level. Sellers can put together blocks of inventory and offer them for sale on a forward basis. Think of all of these technology providers as the boy that ran across the town square collecting bids for fruit in the market and future crops. (I totally lost my kid's attention through this part...)

To make the town square work even better, buyers need to compete with other buyers and Anifrüt farmers need to compete with other Anifrüt farmers. Buyers should be able to respond to multiple sell offers from Anifrüt farmers and Anifrüt farmers should be able to respond to multiple bids to buy. The boy decides to write the orders on a big board for everyone to see. The hard part is that there are all these different fruit prices, there are all these different package prices, and there need to be prices for cash-and-carry and future delivery. The boy's board is not a menu, it is something altogether different - it has a brain...

At MASS Exchange, we thought a lot about that board and those prices. We're not the boy running across the town square, we're that big board that he writes all the orders on.