Real-time bidding (RTB) took the online display ecosystem by storm when it emerged just a few short years ago. In 2011 alone, RTB spending quadrupled, according to eMarketer, and it now accounts for nearly 10 percent of the online display market.
Despite all the growth, a lot of digital marketers are still weary of RTB as a mechanism for buying display. It's not surprising, considering the slow adoption of other efficient ad buying practices, like ad networks and exchanges, which were met with equal amounts of furrowed brows and hand wringing when they came on the scene.
RTB is still a young technology, and advertisers are probably right to exhibit a fair amount of skepticism. But, RTB is maturing, and here are three reasons why.
Inventory is getting better
One of the biggest reasons why advertisers don't utilize RTB is because they don't know where their ads are going. RTB is essentially blind buying, and that lack of transparency is a major turn off for buyers who fear they're only buying impressions that will have little impact on their campaigns.
Fortunately, all of that is changing. One year ago, only 50 percent of the inventory available via RTB could be verified by page level technology. This was blinded inventory, which mean advertisers had very little insight into a pages true structure and content type, and it performed very poorly for advertisers who bought it.
Today, 70 percent of the inventory is verifiable. This isn't the result of a technology improvement either -- it's purely the result of better inventory from the exchanges. As more buyers utilize RTB, the more opportunity there is for ad sellers to profit off of the technology. Publishers and arbitragers have found that selling quality inventory via RTB encourages advertisers to bid higher.
CPMs are on the rise
The result of those higher bids within the RTB environments is of course higher CPMS, which is great news for publishers. Another one of the earliest concerns about RTB (as well as networks and exchanges) was that they could commoditize inventory and ultimately cannibalize direct-sales inventory.
But advertisers are finding that the beauty of RTB is that it lets the buyer determine the value of the impression they are bidding on. When an advertiser encounters an audience they are very sure will convert, they're going to try to outbid the competition. That impression may be a 5-cent CPM to some advertisers, but to others it's $1. Factor in improved transparency, and buyers are going to start spending more to get their ads in front of their target audience.
Platforms are opening up
When the AppNexus Platform opened up to a plug-and-play model earlier this year, it was a huge shift in how we've previously thought about online display buying. Suddenly, buyers no longer had to negotiate separate deals with vendors for access to targeting and data tools that improve RTB performance and efficiency. They could simply turn on different tools within an open platform and monitor the results to find the perfect mix of targeting technologies.
The more open the technology landscape, the better. When buyers have access to several tools and data sets across multiple DSPs and agency trading desks, they're likely to spend more money. And that's good for all of us.
Alex White is GM of data and trading at MediaMind.
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