Demystifying real-time bidding

ad:tech London is launching first ever Real Time Summit aimed at advertisers, agencies and publishers who need to know more about this rapidly growing sector.

Real-time bidding, or RTB, has been big news in the US for a while now. Back in 2011, eBay International director of internet marketing, Daphne Sacco predicted: "It is early days, but RTB is going to be as big an initiative in Europe as it is in the US, where we are seeing triple-digit increases in our ROI." And she was right.

According to a recent study by International Data Corporation (IDC) the UK RTB growth until 2015 will outstrip US, France and Germany. By 2015 RTB-based spending will stand for 27 per cent in the United States (up from 10 per cent in 2011), 25 per cent in the UK (up from 6 per cent), 21 per cent in France (up from 4 per cent) and 20 per cent in Germany (up from 4 per cent). Total spending on RTB in the US will reach $5.1 billion and $680m for the UK.

This ain't chump change.

Getting past the jargon

So what is RTB? In a nutshell: it allows brands to bid for individual online users' ad impressions in real time and pay what they want. No longer do advertisers face the wastage of bulk buys and the time-consuming efforts involved in negotiating directly with individual website publishers. Crucially, there's also the opportunity to put to work the wealth of data that marketers have on their customers and their target audience, along with everything websites know about their users.

"Real-time bidding has fundamentally changed the digital marketing landscape," explains DataXu VP of business development, Adrian Tompsett. "Before RTB, the majority of digital media buys were transacted with ad networks and publishers on an IO (insertion order), which offered limited transparency into what they were actually buying."

With the advent of demand side platforms (DSPs), marketers are now able to evaluate each impression before buying, and only purchase those impressions that deliver their goals most efficiently. "It's like hand-selecting each apple for your pie, rather than blindly buying a mixed bag of apples and taking pot luck," says Tompsett.

Advertisers first decide to put a specific ad in front of a specific individual on a given site and then bid for that impression. If they win the bid, the ad is served. Advertisers (and their agencies) decide in advance what they're prepared to pay to reach different audience profiles.

Once the advertiser has decided what they're willing to bid, the process is set up on an RTB platform so that the bid happens automatically when the right person logs on to a participating site. The DSP should then report back on what the advertiser has bought and the rates the inventory was sold for.

"RTB is a tool that contributes to more effective trading, so your time and resources can be spent on the actual content than how and to whom the ads are delivered," explains Carl Nelvig, VP R&D at Burt.

How will it help me?

RTB fans argue that the tool not only prevents digital waste, but is essential due to the increasing size and speed of the internet. Plus, it means customers more likely to see the ads that are relevant to them, meaning they're happier to receive relevant ads and far more likely to buy your product or service.

And it's good news for buyers and sellers too. "Sellers can control the transparency and floor pricing of their inventory and the advertisers and creatives they want to accept, while buyers can positively target by category or even to URL. They can also utilise block lists to ensure they do not appear against a given website or category," explains Sue Hunt, Director, Right Media EMEA at Yahoo!

However, some are still not convinced of the advantages. "While ad exchange is predicted to grow rapidly, there is a feeling that it still needs to convince marketers and advertisers of the benefits of investing in RTB," says ad:tech head of UK, Chris Asselin.
 
"Although the benefits of RTB are very easy to grasp -- allowing advertisers to set the price they are willing to pay to target specific users, and offering the publisher chance to maximise their inventory -- there's still a lot of scepticism and criticism," explains Asselin. "The ad:tech RTA Summit has been launched to knock down myths, re-establish facts and provide advertisers and publishers with simple and actionable knowledge."
 
Online video and RTB

One of the ways RTB is now being utilised is through online video advertising. "Video advertising continues to go from strength-to-strength in the UK with ad spend doubling every year," says SpotXchange CEO and founder, Mike Shehan. "Buyers are increasingly looking to capitalise on the RTB developments seen in display and include video within programmatic buys."

In a study commissioned by SpotXchange, Forrester estimates that video RTB will represent 15 per cent of all online video advertising spend in the US in 2012 growing to 22 per cent by 2013. Europe is also poised to see significant growth in video RTB. "In an industry which is looking to bridge the gap between RTB and brand advertising, video RTB may be the key. After all, online video advertising has been the most successful digital channel in attracting brand-spend online."

How can I find out more?

That's where the ad:tech London Real Time Summit comes in. The summit is a day of learning, from explaining the basics, walking you through which exchanges will work for you and much more. Involving panel discussions and keynotes, it's a chance to learn the essentials, review what's coming next and work together to get the most out of the medium.

"ad:tech has given the industry a much-needed platform to discuss what RTB means in context with other key developments," says Shehan.

Jay Stevens, Rubicon general manager and VP International, agrees: "Publishers have become increasingly sophisticated, especially in the UK, establishing private marketplaces with leading agency trading desks and exposing first party data in their bid stream to increase cost per thousand," explains Stevens. "ad:tech is addressing these important changes with a dedicated conference that Rubicon Project is proud to participate in. We have been working with ad:tech around the world for the past four years and this conference links our participation in the Sydney and New York events with London."

Companies speaking at the event, include: Doubleclick, DataXu, Burt, Right Media, SpotXchange, A&N Media, Rubicon and Quantcast.

The ad:tech London Real Time Summit will be taking place at the ad:tech London show on day two of the event: Thursday 20 September 2012. The summit is invite only or part of the conference pass. Call Neill Wightman on +44 (020) 3180 0861 to enquire about conference tickets.

>>>Take a look at the Real Time Advertising Summit programme

Catherine Thurtle is the UK editor of iMedia Connection

 

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