Barring a massive fiscal collapse, somewhere between 2 and 3 billion transactions will be made on the New York Stock Exchange tomorrow. The people trading and bidding on these stocks, bonds, and other derivative products will fail or succeed, in large part, because of the information they have that drives their trading. Information, as they say, is power. Yet, when applied to the exchange known as online advertising, information is gathered in hindsight. Now that the real-time bidding marketplace is expanding in triple digits, which lack of proactive intelligence must be filled.
RTB has been gaining traction over the past year. While at first it was accused by its critics as too much automation in a business where professionals still value the human touch, there were just as many excited about the prospect of RTB as there were those wary of it. Now it is reality: It's here to stay. During the first quarter of 2012, the supply of RTB impressions expanded 120 percent over the same quarter in 2011, according to results from a new quarterly tracking report being published by independent agency trading desk Accordant Media. The report estimates that the supply of RTB impressions soared 213 percent during 2011 versus 2010. This expansion is being driven by blue-chip advertisers and agencies, which, in turn, is attracting premium publishers to participate in the marketplace.
All of this is great news if the marketplace is approached proactively and predictively. That's where the human touch will stay in this market. We need to accept, however, that the rapid rise of RTB has moved the intent of online advertising analytics and metrics. A year ago, the sharpest companies had the best rearview-mirror results from clicks, to unique users, and even offline brand lift. That's still useful information, but it's not enough. Now leading-edge companies need to define the outcomes they want and predict the best way to achieve them.
Let's break down the "why" for buy-side RTB analytics. Before cookie targeting, a media planner would buy Vibe, SI, ESPN, etc., as a proxy for their audience; let's say the target demo was "sports enthusiast." Since then the industry has completely flipped on its head. The media planner no longer cares about the content. He just wants to find the cookie associated with "sports enthusiasts." He's not thinking about brand safety concerns, and that's his first mistake. His second mistake is not realizing that all sports brands are targeting the same "sports enthusiast" cookies. As it turns out, all auto companies are targeting the same "in-market auto" cookies, all credit card companies are targeting the same cookies, and so on and so forth. This process won't scale, and these impressions are massively overvalued. The targeting capabilities have become so acute, and the pricing for online media is still not efficient by any measure. It is not the future of internet advertising.
By using user cookie targeting exclusively, buyers are accessing only about 20 percent of all available inventory. Keep aiming campaigns at the same 20 percent of cookie-based inventory, and you enter diminishing returns rather than efficient ROI. Again back to the analogy of a stock market exchange. If only 20 percent of the stocks had historical and projected financials, what would happen? Stock pickers would purchase those stocks until some market equilibrium, at which point ROI would be near impossible to achieve. That's what happens if you're only cookie targeting, and it gets even tougher and cookied inventory smaller when you add in regulation.
The problem is that there is a measure of success on Wall Street: cash returned. Clicks aren't the standard in performance nor should they be. There is an industry-wide shift in how advertisers and agencies are measuring success. Those on the front lines of the 3MS initiative (Making Measurement Make Sense) are proposing that clicks and page views no longer make sense -- or define success -- for brands if their ads are never in view. Although standards are not yet set in stone, 3MS defines an impression as viewable if at least 50 percent of the ad is in view for at least one second. As new standards like viewable impressions are adopted, advertisers need new types of data to open up new and valuable targeting opportunities.