The Role Of Real-Time Bidding For Marketers

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Ad Agents"Ad Agents" is a column written by the agency-side of the digital media community.

Joseph Leon, Managing Director EMEA of Essence Digital, a global, digital marketing agency based in London and New York.

In 2011, the biggest hype, the loudest buzz and the best conversation starter in digital media was without doubt RTB – (Real Time Bidding). Big words, such as revolutionary, seismic and rocket science, were bandied around and based on remarkably similar sales pitches from several leading RTB players, you'd be hard pressed not to believe that half of NASA's scientists had jumped ship to join the digital revolution.

At its most basic, RTB is a mechanism for trading ad space in real time - sellers can essentially hold an auction for each impression and advertisers can assess, price and bid for it dynamically.

The main benefits for advertisers are indisputably cost efficiency and targeting – you pay the right price for what you need and discard what you don’t. But in practice, what does this mean for advertisers?

Today, RTB is predominantly used in trading display advertising, and its effects are being felt in three key areas:

  • 'Display CRM': Back in 2009, Mike Baker of DataXu, a leading DSP, wrote that RTB “can make cookie re-targeting more powerful and scalable.” While the sophistication of retargeting has certainly developed since Mike’s article was written, it still has some way to go before fulfilling its potential. Ultimately, RTB can transform tactical retargeting into something akin to ‘display CRM’; in other words, a tool for managing and maximising the value of existing customer relationships. Coupled with client-side customer data, RTB can facilitate segmentation, pricing and optimisation across an array of dimensions, such as status (e.g. visitor, active customer, lapsed customer); interest (e.g. products, categories); intent (e.g. page views, session time); latency (e.g. time of last interaction); value (e.g. transaction history) and originating source (e.g. display, SEO, affiliates) - all enabling innumerable up-, down-, cross-sell strategies to be executed flexibly and efficiently.
  • Prospecting: The cost efficiencies and targeting benefits of RTB are helping advertisers move their display activity further up the purchase funnel, which is key to unlocking scale. In addition to capitalising on existing intent like re-targeting, display is increasingly being employed as a ‘cold’ acquisition channel to stimulate intent, leveraging RTB to identify and value prospects effectively. However while higher funnel prospecting represents one of the greatest promises of RTB, it is also one of the most challenging. Despite some convincing sales pitches, not all brands and products are suitable, rigorous testing is essential and success is far from guaranteed.
  • Branding: Headlines last week suggested that online brand spend may shortly surpass direct response. While much of this can be attributed to online maturing as a channel; in minimising waste, improving targeting as well as providing stronger frequency controls, RTB has certainly played an important role. Standardisation of richer formats, ad verification and private marketplaces are still a work in progress but in 2012, RTB brand investment will and should increase.

So RTB can help improve and expand the scope of your display marketing. However to unlock its potential, there are major considerations:

  1. You need a platform, or even several platforms for accessing RTB inventory: The overwhelming majority of RTB inventory is accessed through DSPs (Demand Side Platforms), such as Invite, Mediamath, DataXu, and AppNexus. Pricing, functionality, technology and support all vary, and your own requirements and priorities will be unique. Consider your options carefully.
  2. You need access to the right skills: Whether you use an agency, a specialist or manage in-house, there is little doubt that the requisite skills for trading RTB media effectively differ drastically from traditional media buying skills – datamining, testing frameworks, analytics, auction dynamics, campaign management all feature heavily. Make sure you have the right people with the right skills.
  3. You need to understand both your customers and your prospects: In other words, an ability to translate customer and prospect behaviour into actionable insight. This is likely to impact how you aggregate, store, query and action data.
  4. You need commitment: Despite all the noise, RTB remains in its infancy. It is evolving in every aspect – liquidity, technology, solutions and best practice among others. There is no silver bullet for achieving success, and commitment (both time and money), patience and even daring are key.

Finally, while RTB is today dominated by display, it is worth taking a step back to consider the wider implications: RTB represents a change in how media is traded, the benefits are clear on both the buy and sell side, and it is relevant to all forms of connected media. And yes, that includes TV.

RTB-enabled mobile and video inventory are already scaling fast, social and potentially search are but a small step away, and it’s not hard to imagine our primetime commercial breaks being traded through RTB at the level of individual household in the not too distant future.

Display is just the tip of the iceberg.

Follow Essence (@essencedigital) and AdExchanger.com (@adexchanger) on Twitter.

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