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Is real-time bidding the future of online advertising?

31st Jan 2013
Contributor MyCustomer.com
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Real-time bidding in advertising technology is continuing to grow in popularity but how does it benefit marketers and is it here to stay? MyCustomer.com asked a number of industry experts. 

Online advertising is changing. The emergence of real-time bidding (RTB) platforms – whereby ads are bought in real-time via an auction – is transforming not just the manner in how ads are served but to whom. User data is tracked via cookies when they land on a site using an RTB platform, enabling advertisers to segment users and deliver ads that are genuinely of interest.

And interest in this new advertising technology is growing. As illustrated in a recent infographic from Infectious Media, RTB ad sales increased year-on-year in the UK by 112% and now accounts for 12% of total display advertising. 

Last month, parenting website Netmums became the latest to take this self-serve advertising-approach, with the announcement that it had signed the “very first flexible marketing deal” with Morrisons. The six-figure agreement would allow the supermarket to change its advertising on the site in real-time, depending on popular discussions happening on Netmums’ forums and feedback provided from users.

The supermarket giant claimed that moving to RTB would help differentiate the brand in what has become an aggressive supermarket price war, and said: “It’s the very latest in online best practice for brands as we consider that there are three parties in this partnership – Netmums, Morrisons and our Netmums members.”

Of course, Netmums isn’t the first brand to roll out RTB advertising. Facebook generated column inches late last year when it announced its own auction-based platform, Facebook Exchange (FBX). The new platform allows advertisers to bid for display ads in real-time, which when won, are then then served to users based on their browsing history, on the right hand of their screen.

Jonathan Beeston from Adobe, one of the platform’s beta testers, said FBX “can significantly improve targeting and reduce wastage”, and is an “incredibly effective way of buying media.”

Marketers’ gain

So are all marketers and advertisers in agreement that this new advertising platform is more effective?

Simon Ross, media manager at Ladbrokes Bingo, believes so. He says: “This is most definitely a smart tool, an evolution of social media that enables the advertiser to both listen and respond to what its customers are saying in real time and adapt key messaging accordingly.”

Mike Harty COO and co-founder of PowerLinks, adds that RTB’s ability to more tightly define audience segments results in relevant temporal ads that add value to the user experience and aid consumers in the discovery of new products and services.

“Smart publishers and advertisers can therefore join forces to achieve both of their goals, whilst having the potential to improve audience/ad interactions because of better relevancy (especially if contextual elements are added),” he says.

“As result, brands are more likely to get a tangible ROI and higher ad engagements out of an advertising model which laser targets a segment with an offer that is of interest to them.”

Richard Speigal, who runs an online advertising company and helped install a self-serve advertising system on Bath Mums, agrees that such platforms create more relevant ads: “Clickthru rates on web ads are pitifully low (typically 0.5% on banners) and famously annoy users, but people don't hate online ads per se - they just hate irrelevant ads. If brands can better target space, they get higher referral rates and consumers get less annoyed.”

The adoption of such platform indicates that marketers are now realising they need to adapt their strategies to keep up with their customers’ conversations, says Mark Haviland from Rakuten Linkshare.

He says: “The fact that brands will be able to alter their marketing messages in line with customer feedback will enable brands to deliver live content, and ultimately, ensure the right message is reaching the right audience at the right time.

“A conversational platform will allow marketers to add a unique dimension to the online experience. Real-time communications, dynamic ads and engaging content, like videos, allow brands to curate their products in interesting ways, engaging customers and building customer loyalty as a result.”

Alistair Dent from Periscopix adds: “The opportunity for marketers who are active and can take advantage of targeting wide groups of audiences cannot be understated. An advertiser won’t want to engage separately with a dozen or more different websites that each offer different data they can use for adjustment. The advertiser will need to work with a network who has standardised this data across its inventory.”

Consumer privacy

Marketers and advertisers certainly look to benefit but what will be the effects on consumers and will the new system raise any privacy concerns?

“Whilst privacy is always going to be a burning issue for consumers, it’s important to remember that real time ad trading is just two computers working through lots of 1s and 0s, rather than actually analysing the users themselves,” says Harty.

“However, as real time advertising becomes more and more commonplace, consumers will begin to see past these concerns, as the potential benefits of receiving useful, highly targeted content becomes more apparent.”  

Jo Nilsson, head of marketing at Polarn O. Pyret says: “The communication to the customer and the ad creative and format can be managed to avoid seeming distracting and intrusive. The biggest challenge will be for marketing teams to plan, create and execute response campaigns in much shorter timescales, and for the providers themselves to manage content and bookings.”

Future landscape

So with overwhelming support for the new platform is RTB the future of online advertising and, if so, will it change the digital marketing landscape?

“Real time is the future of advertising full stop, we have seen this in the display channel with real time auctions growing and subsequently becoming key to display channel, this too could have a similar impact. I most definitely see brands utilising and vendors offering this type of technology as standard to advertisers as part of wider brand monitoring and analytics packages moving forwards, all advertisers want to understand their audience better, but this goes on step further by understanding  and then responding,” says Ross.

Speigal says that we should expect to see self-serve become an important part of the landscape rather than a complete game changer. “It’s certainly one to watch over the next few years. Publishers famously earn very little from online ads and this model offers an important fix for that.”

Harty adds: “In recent years the performance of standard display advertising has dropped off a cliff, from the early days when ads delivered click-through rates of circa 10%, to today where typical performance is just 0.01%. 

“This is down to a number of factors, most notably low relevancy and the fact that users have become accustomed to avoiding display ads (banner blindness). As result, an increasing number of premium publishers are turning to real time advertising, which delivers more granular, targeted and relevant messages which better engage unique audience segments which in-turn increases performance.”

“As a result, I think we are going to see an increasing number of premium publishers moving in this direction,” he concludes.

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By GFarmer
05th Feb 2013 11:02

RTB as a platform is exciting news for the digital advertising industry but it is shocking that RTB advertising now counts for more than 12% of all online advertising while these brands don’t even know who is seeing their adverts!

What do brands really know about the user in front of the advert? The answer is not much. They might know where they are, what the URL is and if they are lucky they may have a bit more information from a cookie but realistically they don’t know much at all about their users.

What they need is an integration platform that can provide all the relevant details they would want and need about their users; details that users are happy to share in order to gain more relevant content. Cue Social Login – the ability for users to login to a website using their social network ID

If users logged in to a website using one of their social networks then all the social information could be fed back via the RTB platform providing brands more visibility and information about each visitor.

There are many more efficient ways to make the most of RTB. Why would you buy ad inventory based only on the URL and location when you could access vital data about age, sex[***], location, interests, marital status etc?

Richard Parboo

Head of UK Media & Publishing

@Janrain

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