Defragmenting Media With Real-Time Bidding

“Data Driven Thinking” is written by members of the media community and containing fresh ideas on the digital revolution in media.

Today’s column is written by Zach Coelius, CEO of Triggit, an online advertising technology company.

It would be hard not to notice that display media buying is changing dramatically.

Interesting new companies are popping up left and right, VCs are making significant bets, and the big boys- Google, Yahoo, the agency holding companies, and the old-line media giants- are making moves in the space.  Display advertising once thought to be an unmitigated disaster is now discussed on earnings calls and in boardrooms as the next hot opportunity for growth.

At the core, the changes we have been seeing in the space over the last year are centered on innovations in how we manage, allocate and price display inventory.  Transparent exchanges, audience data and real time bidding are significant structural developments that enable the entire industry to innovate and improve.  But while we were concentrating on improving, something even more important has happened.  The groundwork we have been laying is starting to get to such scale that it has the potential of solving a much bigger problem: media fragmentation.    To understand why this is such an important problem, let’s look at the issues fragmentation causes.

The advertising business was built on the ability to create compelling messages and deliver them to targeted audiences at scale. With the advent of digital media and the Internet, the foundation changed.  Audience attention is now fragmented across millions of websites reading, writing, watching, socializing and creating.  Gone are the days when NBC could deliver your commercial to 90% of the public and enable you to share your message.  In digital, the process of planning, RFPs, trafficking, tracking, auditing and paying when the audience is so scattered has become intensely manual, tedious and incredibly expensive. Very simply, the entire advertising industry formula is being broken as a result of media fragmentation and our inability to efficiently and effectively put our messages in front of the right audience at scale in digital media. This fragmentation is holding back billions of dollars currently spent offline from moving online, as it is nearly impossible to allocate the really big budgets in the status quo online.

Fear not, fragmentation’s days could be numbered.

As we have all focused over the past year on the developments in the exchange space and real-time bidding (RTB) as a way to do things better- better targeting, better tracking, better ads- RTB is slowly being accepted as a standard by our industry.    Because RTB is an open standard that anyone can adopt, the same network effects that made the Internet what it is today are driving this process of adoption. The virtuous cycle of more media buyers using RTB leading to more media sellers adopting it has begun.  With the industry goliath Google enthusiastically supporting RTB, it is hard to believe that this process will not continue to accelerate.   This cascade effect of widespread adoption has the potential to dramatically change our entire industry.

As transparent RTB becomes an industry standard, we no longer need to depend on one exchange or media provider being big enough to solve to the problems of media fragmentation and to be able to take the entire budget with sufficient reach and frequency.   Instead a demand-side platform (DSP) with RTB capabilities can now plug into all exchanges and media sources.  With this method of aggregating inventory, a media buyer can buy across millions of websites and billions of impressions with the click of a mouse and utilize a single system for buying, optimization, reporting and billing.  Using one platform eliminates the highly inefficient and non-scalable processes surrounding RFPs, IOs, spreadsheets, trafficking systems, de-duplication nightmares and attribution that we face in the status quo.  By making large-scale media buying possible through one source, the process suddenly becomes a hell of a lot simpler, cheaper, more scalable, more transparent and ultimately more effective.  We may have the chance to solve the media fragmentation problem caused by digital.

As we spend the next year working though all the bugs, buzz and BS that this platform shift is certain to throw in our faces, let’s remember that we could be on the path to something much bigger then simply making ads a little more targeted and budgets a little more effective.  If we can build a system that addresses the problems of media fragmentation there is a very real possibility that our industry could lead the way into the next generation of media buying.

Follow Zach Coelius (@zcoelius), Triggit (@triggit) and AdExchanger.com (@adexchanger) on Twitter.