(VIDEO) Too Much Money Fueling Ad-Tech Chaos: IAB's Rothenberg

04/14/2015 09:15 pm ET | Updated Jun 14, 2015

Sometimes, it takes a former reporter to tell you straight. Even if you don't like the sound of what Randall Rothenberg has to say, the Interactive Advertising Bureau (IAB) president and CEO has a sharp and timely view from his vantage point at the top of the online ad industry.

That view -- you may see the explosion in ad tech vendors as indicative of a boom. In fact, it may only be hurting the business.

"There is too much money -- especially venture capital -- looking for a home," Rothenberg tells Beet.TV in this video interview. "It alights on too much minuscule segment innovation."

"Rather than creating step-change advances in the way our industry moves forward ... it tends to create more chaos."

Case in point -- the explosion in ad tech operators measuring the "viewability" of online ad inventory, following recently-agreed standards on that metric. You may think that is a good thing. But Rothenberg sees a down side.

"There are 17 accredited viewability vendors in the field and at least a dozen more in the pipeline to be accredited by the MRC," he says. "This proliferation of vendors has been an utter obstacle, they've just confused everybody. It is frustrating that you have a vent cap industry that would finance so many companies of so little importance in the grand scheme of things."

Rothenberg should know. He spent 10 years reporting media and marketing for Advertising Age and six years as technology and Sunday magazine politics editor at The New York Times before becoming senior director of intellectual capital with the consultancy Booz Allen Hamilton.

It was in 2007 he was tapped by the IAB to lead its operations, bringing his independent industry eye to the online ad sector's trade body, which defines ad standards.

Data from CBI Insights reveals $518 million in venture capital was poured into ad networks and exchanges between 2013 and 2014.

But with his experience, Rotheberg thinks the many, many VC-fuelled ad tech firms vying for customers are merely "features, not companies."

"What venture capital has done is essentially financed the outsourcing of the R&D function," he argues. "This makes a lot of sense -- why should a company take on all the costs on its own... ?"

"The problem is each one of these little features has to turn itself in to a company. That's a lot of redundant expenditure on unnecessary functions. It creates a lot of inefficiency."

This is segment is part of Beet.TV's "Media Revolutionaries," a 50-part series of interviews with key innovators and leaders in the media, technology and advertising industries, sponsored by Xaxis and Microsoft. Xaxis is a unit of WPP.

Rothenberg was interviewed for Beet.TV by David J. Moore, Chairman of Xaxis and President of WPP Digital. The interview took place in January at the Wynnin Las Vegas during the Consumer Electronics Show.

You can find this post on Beet.TV.