Real-time bidding

There is a great deal of excitement in the market about Real-time bidding (RTB). News has also filtered thru’ that Microsoft has added RTB functionality to their AdECN platform. Views on RTB are divided – for and against. There is a school of thought which says that adding a real-time elemtn will improve performance of online campaigns. And there is a school of thought which says that a proper business case needs to preceed a full-fledged adoption of RTB.

Let’s dwell a bit on what RTB is all about?

What if an advertiser can reach a specific consumer? RTB aims at achieving this end objective.

RTB is a contrivance that allows all participants in the online advertising game to buy impressions in real-time. The prospective buyer can quickly analyze an impression and bid accordingly. When I say quickly, I mean in seconds.

RTB allows the publisher to define an audience and segment their inventory to introduce advertisers to valuable users. An advertiser can bid for an impression in real-time to reach a specific consumer. This is done impression by impression, meaning it is highly targeted – an value can be assigned to each ad impression. In other words, RTB enables the advertiser to use the right consumer at the correct time.

This is done on an impression-by-impression basis, which makes it highly targeted and means that an individual value can be assigned to each specific ad impression

Benefits of RTB

RTB enables the media-buyer to improve and optimize campaigns. RTB allows pre-programming to set a maximum bid per impression.

It helps the publisher better monetize his inventory. RTB allows the market to decide what the value of an impression is. Remnant inventory always goes abegging – RTB might enable the publisher get better value for remnant inventory. Remnant inventory will at last find its place under the sun.

Results from RTB

Results from RTB have been extremely encouraging. Whether it is CTRs, conversion rates or Cost per action. In each of these areas an improvement upwards of 100% has been recorded.

Availability of the requisite sophisticated technology and expertise to further the uptake of RTB is a lacuna. But, with passage of time, I am sure this gap will be quickly plugged.

Advertising Exchange

The online advertising marketing place is multi-tiered. On the one hand you have the publisher who directly solicits clients for advertising inventory. At the next level you have the network. The network ‘recruits’ publishers and sells their advertising inventory to their (network’s ) clients. At the next level you have the advertising exchange.

An ad exchange is like a stock market. It is a mechanism that allows buying/selling of ad impressions openly, transparently. The ideal ad exchange would manage risk and maximize return on every impression purchased. Research conducted by different agencies indicate that a fairly large number of advertising professionals – over 50% - who have not yet ‘adopted’ the ad exchange plan to do so soon.

Benefits of the ad exchange

A buyer’s target has always been to find an efficient way to be able to buy advertising inventory. Upwards of 20% of ad inventory remains unsold. In this context, an ad exchange benefits different players in different ways –

The seller can reduce unsold inventory thereby increasing overall yield. Given the amount of unsold inventory, the ad exchange is a very good mechanism for the publishers to monetize unsold, remnant inventory.

The buyer can ensure better ROIs and achieve better reach for their campaigns – the ad exchange’s dynamic bidding rules enables the buyer get inventory at the best possible price

Disadvantages of the ad exchange

An ad exchange is not the panacea for all ills – it has its own flaws.

Firstly, different ad agencies offering different models like Real time auction and prepay. Neither model has an established superiority over the other. In fact, it is not very clear which model works best for the publisher.