Is It Really Time for Your Brand To Be “RTB”–Real Time Bidding?

Any casual reader of my posts would know that I believe the future of advertising is increasingly real time (and RTB). In TV, this usually takes the Is It Really Time for Your Brand To Be “RTB”–Real Time Bidding? image RTB Button 300x240Is It Really Time for Your Brand To Be “RTB”–Real Time Bidding?form of copy rotation, given the very real difficulties in changing programming on the fly. In digital, however, it’s a completely different story.

One of the hotter trends in digital advertising is the continued rise of real time bidding (RTB). Rising out of seemingly nowhere just a few short years ago, RTB now represents over 50% of display advertising according to eMarketer and other sources. There’s even an app that tracks RTB adoption—The Rubicon Project.

Is this a good thing for your brand and should your agency be using it on your brand’s behalf?

Real Time Bidding (RTB)—What Is It?

Real time bidding is just what is suggests: the ability to bid on specific digital audiences in real time. Constructed in real time, RTB buys audiences thru bidding based on pre-defined parameters rather than the traditional approach of the media agency developing a digital media plan and then buying specific sites and placements.

RTB combines web browsing behavior, information about consumers thru third party cookies, sophisticated algorithms—enabled by demand and supply side platforms and ad exchanges. Demand side platforms, or DSPs, automate the purchasing of digital advertising on behalf of advertisers. Supply side platforms, or SSPs, manage the publisher’s digital inventory available for sale. Ad exchanges link the DSPs and SSPs together thru software tools that facilitate the purchase of display inventory in real time auctions.

RTB Example–How It Works

Example: You are in the car insurance market and your intended audience is females who recently purchased a car and aged 21 to 45.

The publisher provides its available inventory to the SSP (not all inventory is available for RTB). Your agency’s demand side platform (DSP) bids for individual digital impressions against your intended audience. The ad exchange conducts the auction through an automated bidding system that unfolds in the milliseconds before a webpage is loaded by a consumer.

If the loading web page is being viewed by a female aged 21 to 45 and who recently purchased a car, the DSP places a bid for the ad unit. If the price is right (e.g., your bid is highest), your bid wins the auction, your ad loads on the browser, and is served to the consumer on the publishers site. If your price isn’t right, you lose the auction and your ad isn’t served. And if the consumer isn’t your intended audience, the DSP makes no bid. This process is replicated millions and millions of times and builds your digital media plan in real time.

Real Time Bidding (RTB) Applications

  1. Audience Profile–The most basic approach with RTB is to bid for specific audiences. Audience profiles can be bought based on demographics, buyer behaviors, and past web browsing behavior, etc. This enables advertisers to be much more precise in buying only the audience that they want.
  2. TV Viewing Behavior—This approach enables you to buy digital audiences to complement your TV advertising campaign. For example, advertisers often want to use on-line to extend reach to consumers who are unlikely to see their TV campaigns. Presto, bid only for audiences who haven’t seen your TV advertising.
  3. Brand Impact—Current digital ad effectiveness tools measure the brand lift of your on-line advertising in real time, so it’s only natural that the DSP’s have enabled these tools to drive RTB. So, if your real time brand lift metrics show that certain sites and placements are performing better than others, the DSP translates this into real time bids for the best performing sites and placements.
  4. Sales—Not surprisingly, on-line direct marketing was an early pioneer of using RTB. Using response based measures, they used RTB to bid for specific audiences, behaviors, sites, etc. that were most associated with sales response. More recently, multi-touch attribution modeling is enabling the same for off-line sales response— and connecting this data to DSPs and the RTB process.

Real Time Bidding (RTB)—Too Good to Be True?

This really sounds like marketing nirvana—the ability to:

  • Buy only your intended audience without wastage (remember TRPs?).
  • Buy only those sites and placements with the biggest brand lift.
  • Buy only the placements which drive the most sales response.

Clearly, the market has voted, with over 50% of display ads now bought via RTB. But it still sounds too good to be true. Is it?

Issues with RTB

  1. Viewability—This is not an issue with RTB per se, but rather a broader on-line issue. Data from Nielsen and other companies show that ~ 40 to 50% of on-line ads are not viewable. That is, they aren’t “above the fold” and in view for at least one second. If an ad isn’t viewable, then it can’t be effective.
  2. Premium Inventory—Initially, publishers placed their remnant inventory into play with RTB. While this is clearly no longer the case, publishers continue to withhold premium display and online video inventory from RTB.

RTB isn’t nirvana, but it’s a pretty big deal. The confluence of audience behavioral data, software, and technology has yielded what should be a classically efficient market: where bidding defines value, buyers and sellers are matched at the optimal bid price and brands should benefit with improved ad effectiveness.

RTB is still young. While not perfect, it’s only going to get better. Keep your eyes on this one.

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