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How to address concerns raised by real-time bidding

How to address concerns raised by real-time bidding Joe Casale

In late 2010, the Interactive Advertising Bureau released its "Quality Assurance Guidelines" to give advertisers and agencies the means to vet their supply sources and a mechanism to take action against non-compliance. Since then, the rise of real-time bidding (RTB) has brought about an even greater need for transparency. After all, a significant amount of spend is being allocated to data-driven buying models.

In the RTB environment, agency trading desks (ATDs) or direct marketers who use demand-side platforms (DSPs) to conduct these impression-level media buys are the ones solely accountable for what they buy and how it performs. This makes understanding the source of inventory absolutely essential. Additionally, RTB places priority on whether an impression meets specific audience criteria and whether factors like ad visibility, user frame of mind, site quality, and page subject could impact brand safety and performance. While buying conditions and processes can change, supply remains constant. Buyers need to screen supply sources up front, regardless of the buying model, to ensure the efficiency of their buy and that brand association is never compromised.

Here are ten questions buyers can ask exchanges to evaluate the suitability of their supply:

What are the inventory vetting practices?
RTB represents one-stop access to multiple supply sources and, as many in the space put it, far more impressions than anyone will ever have the budget to buy. The fact that supply significantly outweighs demand at this stage underpins the importance and need for buyers to have full transparency into how each source acquires and vets its impressions to guarantee the quality, cost, and performance of the media buy.

Are there any standards or guarantees associated with the supply?
Standards and guarantees ensure that ad visibility, site quality, page subject matter, and all other factors that might influence performance and brand safety are never compromised. Without any standards, the buy side is left totally accountable.

How is inventory accessed for RTB?
The further removed a supply source is from a DSP, the less control it has over platform stability, bid solicitation mechanisms, and demand optimization. These factors can impact the efficiency and the ROI of the RTB buy.

What signals are sent out at bid time?
At bid time, supply sources release various signals (such as visibility into inventory and placement quality) to qualify media for bidders in real time. Signals affect bid strategy optimization and the fair valuation of impressions, which impact RTB campaigns.

How are bidders screened?
The mechanism by which a supply source vets bids to its inventory is a sign of its quality, business standards, and ability to attract premium publishers. Supply sources with no bidding constraints prefer the maximum number of bidders per impression; others are selective and filter bidders based on their pre-determined eligibility, generally set by their publishers.

What auction format is used?
Auction formats speak volumes about supply quality and the actual effectiveness of bids relative to cost. Auction structure and the reasoning for that structure can show any inherent biases that can impact the performance of your media buy. The most common auction format in RTB is the second price auction, a format that encourages buyers to bid the highest price for each impression because it will give them the best chance to win the impression. In addition, they'll only have to pay the bid price of the second highest bidder. But buyers should always know if the auction is a true second price auction or if any additional costs are buried into the format.

Is bid solicitation optimized?
Supply sources that optimize bid solicitation in an attempt to make the most efficient use of resources can artificially skew a DSP's access to inventory. In such a case, not every DSP integrated with the supply source will have equal access to 100 percent of its impressions. Buyers should know where their DSP is integrated and what the impact might be.

What are the query processing standards?
The more efficient the auction and the faster bids are processed and completed, the quicker the impression displays in front of a user's browser. Ad visibility, performance, cost, and efficiency in RTB all depend on an auction's ability to process queries in a timely manner.

How much of your technology is licensed from third parties?
Generally speaking, the partners that have greater control over their technology can better understand and anticipate issues and develop solutions through ongoing innovation. How a supplier integrates technology within its business practices shows how established and invested the company is in its business.

Define your business model
Knowing the business category your supply source occupies can provide intelligence regarding the nature of its inventory. Advertisers can use this knowledge to eliminate supply channels that don't complement their values to reduce risk and protect brand integrity.

RTB needs the same level of transparency as the rest of the online advertising industry. To make it a reality, media buyers must challenge their RTB supply partners. By screening supply sources up front, regardless of the buying model, advertisers can ensure the efficiency of the buy and the safety of the brand.

Joe Casale is CEO of Casale Media.

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Joe has been involved in the R&D of groundbreaking communications technology for more than 40 years. His keen interest in microcomputers led him to explore the emerging field of electronic communications and he eventually expanded his focus to...

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