Why RTB is a game-changer for digital ads

Real-time bidding is set to revolutionise not only how media is purchased, but how campaigns are planned and created and even the skills marketers need.

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“It is early days, but real time-bidding (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,” predicts Daphne Sacco, director of internet marketing at eBay International.

BSkyB has also been an early adopter of RTB in display advertising. In July 2010, it accounted for around 2% of Sky’s display adspend. By January 2011, this had grown to 18%. Matthew Turner, head of online sales and marketing at Sky, hopes this will reach 50% by 2013.

“It’s not a linear progression more two steps forward, one step back but we are increasing our activity in the area,” he says.

RTB, which allows brands to bid for individual online users’ ad impressions in real time, is reaping encouraging results for advertisers and, in the UK, it is forecast to account for 15-20% of display ad spend this year, up 3% from 2010 (source/ comScore).

For those companies that have already adopted RTB, changes are afoot. Turner says he can see the profile of marketers shifting in the long term as the display space begins to more closely resemble search.

“It is about managing data,” he says. “I can see an increase in demand for people with stronger analytical skills and background.”

Sacco agrees. She has hired an economist in the US and someone with a technical background in Europe to work on RTB, due to the huge amount of data that needs to be gathered, stored and crunched. “My marketing team is looking a bit different,” she says.

RTB is also having an impact on creative. Sky has made sure its agencies have the right technical credentials to fit its strategic vision. Turner says Sky has been testing dynamic creative which allows different versions of an ad to be delivered to each user, depending on their profile for several months, based around retargeting within RTB.

“We are probably looking at five or six different considerations of what those ads would look like to a consumer. So if someone goes to the prospect area of our website, we will serve up a prospect message and in certain instances it will be specific to a product they selected or were looking at. We have seen positive results so far,” says Turner.

Ebay, which works with digital media agency Essence, has been using dynamic creative in the US since 2007 and plans to adopt it in Europe.

I can see an increase in demand for people with stronger analytical skills

“There is a need for dynamic creative because you want to try to serve a current ad based on the data you receive in RTB,” says Sacco. “Sometimes it might be better to serve a creative featuring a product; at other times, you might want to deliver a brand message, or even a coupon message or fashion message.”

RTB is also changing mobile display. Mobile ad specialist StrikeAd has been working with agencies and brands to offer RTB-enabled inventory since January. It recently worked with a retailer that wanted to engage users of its m-commerce platform in specific promotions.

“One successful campaign showed that RTB drove click-through rates (CTR) 50% higher than [our] non-RTB network statistics,” says StrikeAd co-founder Simon Wajcenberg.

“We worked with the agency to develop different creatives for specific consumer profiles, and the RTB features on our platform were used to match the profile of their ideal target consumer against people using their mobile phones at a specific time and location.”

But while RTB is reaping results for early adopters, the innovation is proving slower than expected to gain widespread traction.

“We have been talking about RTB for nearly two years, but it isn’t yet really in the public consciousness,” says Turner. “It’s funny that, for a bunch of marketers, we aren’t able to make it any sexier. Surely we can come up with something better than calling it RTB?”

Jonathan Wolf, chief buying officer at retargeting company Criteo, which works with John Lewis and French Connection, says that while the supply side has grown over the past 12 months with Rubicon and Admeld bringing RTB capabilities to the European market, and Microsoft recently launching its exchange in the US and Europe growth on the demand side has been slower. Aside from Turner’s belief that the innovation hasn’t been marketed well to advertisers, Wolf says that while RTB is an efficient way to buy individual impressions in real time, it only really transforms results for advertisers if they use an engine that can calculate real-time prices.

“Without this, it is a way to buy an audience, but ad networks have provided this capability for many years,” Wolf says. “Our publisher partners say there are still very few players truly buying with real-time prices on RTB today, so most of the benefits are not yet being seen.”

Another challenge is getting more publishers on board, although this is changing. EBay’s Sacco explains: “A year or two ago, publishers were concerned that it was an under-tested space, but they are realising that it is okay to put some of their inventory into RTB because advertisers are willing to pay more when they have more data around making decisions on the media they buy.”

Wajcenberg is seeing a similar obstacle to growth in the mobile space. “The biggest challenge is securing enough inventory to meet the demand we are seeing that’s what is driving our conversations with publishers, ad networks and supply side platforms.”

Julia Smith, former head of IASH and now communications director of real-time ad network Jemm Group, says the confidence of publishers needs to be driven by brands.

Brands need to be willing to pay more for the right users

“The value of inventory needs to be determined by its relevance and context. Brands need to be willing to pay more for the right users. Only by doing this will publishers begin to trust RTB and deliver more premium inventory through RTB suppliers,” she argues.

One issue deterring publishers is the EU Cookie Directive, which came into effect in May 2011 (although UK websites have a year to comply), which requires users to give consent to websites using tracking cookies.

Lee Baker, director of the Association of Online Publishers (AOP) says the industry “has to get this right”.

Turner agrees that the directive is a concern. “We have an ongoing project to identify how we will treat that in the coming months, but it remains to be seen what the implications are for RTB.”

The space is still young and advertisers are still learning. Sacco says eBay has learnt the importance of detailed evaluation. “Bidding at an impression level, you are paying a different price for each impression, so you really need to review the data and your results at a granular level to see what works.”

Turner says Sky is still testing different demand-side platforms (DSPs) to see what works best and to avoid duplication.

“Ideally, we would like to get to a position where we are using two, maximum three, DSPs that are properly structured and organised so they are not stepping on one another’s toes.”

Test and learn are the watchwords.

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VIEWPOINT

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Sarah Staughton

Head of marketing P&O Ferries

P&O Ferries, with our media agency MPG Media Contacts, has been using RTB since Q1 2011. RTB offers us the opportunity to gain a competitive advantage because we can leverage the power of our own audience data, alongside custom targeting, to make buying decisions that get closer to the absolute value of each impression. We only pay for what we want at the price we know it to be worth.

Our current RTB solution is Adnetik, which offers a primarily audience-led buying execution, without underplaying the importance of context in terms of delivery.

Historically, RTB users have bought audiences without regard to inventory; whether the ad was on the FT or a long-tail news blog may not factor into the buy. In contrast, agencies have traditionally bought media placement directly as a proxy for audience. For example, an airline would run an ad in The Times business section.

Adnetik allows us to aggregate data from relevant public and private sources, such as proprietary ad server and third-party data, to give us access to defined audience targets over controlled inventory sources.

RTB was initially trialled on a single campaign with a small budget, compared against eight other providers. It ranked third on ROI, generating 17% of total campaign bookings with 11% of the media budget. We have now shifted a greater portion of media budget to RTB. Performance continues to improve as our data set grows, with RTB now accounting for 41% of sales volume.

RTB has allowed us to segment our buying far more effectively, developing separate suites of banners for a range of different audience touchpoints.

The next step is the introduction of dynamic banner executions, which will allow further flexibility in terms of leveraging our data to put the right message in front of the right people.

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Alex Bennett

Digital marketing consultant

Nationwide Building Society

We have tested RTB as a buying medium through Adnetik over several months for loans and current account campaigns. We now aim to extend the tests with Quantcast and Adnetik.

It is an efficient means of buying online display for a number of reasons. We can analyse impressions before buying to understand the attributes of particular users or audiences before deciding what we would be willing to pay for access to them. We can turn targeting around very quickly from data gathering. And it allows us to buy media on an impression-by-impression basis.

We previously ran our RTB through a demand-side platform and plan to use this approach again for the new testing along with Quantcast. While agencies offering display engine marketing act in a very similar way to an agency trading desk by operating across one or more DSPs, Nationwide uses Adnetik due to an existing relationship with our media agency.

RTB cuts wastage and gives campaigns the potential to be more efficient. Performance over time can be improved through deeper understanding of the profiles you wish to trade in. As active learning is gathered, cost per acquisition efficiencies will improve.

One of the main lessons learnt from running the first DSP test with Adnetik was that the pixels need to be operating for at least two months for the CPA to come down into an acceptable range reasonably quickly.

Acronyms explained

RTB real-time bidding

People online are identified based on a cookie, then companies bid for the ad impression in real time, aiming to show them something that fits their interests.

DSP demand-side platform

A technology that companies and agencies can use to bid during RTB.

DEM display engine marketing

This allows companies and agencies to synchronise bid management across all ad exchanges.

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VIEWPOINT

Phil Macauley

Regional managing director

Quantcast

The transition in today’s display ad market reflects one of the biggest changes in media since the start of the internet. A core component of this change is new technologies, such as real-time buying, that enable advertisers to carve out their most valuable audiences in real time. We agree with Google that half of all online ad impressions will be traded in real time by 2015.

The things that marketers think about most in display are performance and scale. In the web’s early days, we used the TV model of reaching audiences via demographic targeting, which doesn’t perform well. Today, advertisers are using site retargeting, which is delivering great performance, but is limited in sales volume. The big challenge is to achieve high levels of both.

Choosing the right partner can be confusing. Success will only come from those partners working with the largest data sets (think petabytes) and an approach that is rooted in technology, with the best RTB performance and predictive modelling techniques.

With the advent of new technologies, publishers are being empowered with better tools to help them to measure, segment and package their audiences and layer targeting on to their packages where necessary. As we go forward, more and more of the conversation will be focused on attribution too. Today, the success of a campaign is judged on the performance of the last ad seen by the customer before they buy, but attribution is about trying to understand and quantify the impact of what you do higher up the purchase funnel on people’s buying decisions.

Quantcast provides publishers with tools to better measure, segment and package their audiences and leverage targeting to increase yield optimisation in their direct sales. We enable advertisers and agencies to understand, find and buy targeted audiences in real time. We are working with massive data sets that allow us to best understand the UK internet audience, but we know that data alone doesn’t work.

Our Quantcast Lookalikes technology for understanding your audience and finding millions more, plus our ability to operate in RTB, ensure we can reach the right person at the right time with the right message in the right place on the page. All these things need to come together to get the most from RTB.

topline trends

  • RTB is changing the face of brands’ marketing teams, with a greater requirement for technical and analytical skills due to the importance of data.
  • To fully leverage the benefits of RTB, there is a move towards the use of dynamic creative to ensure the most relevant creative is served to each individual, based on real-time data.
  • RTB is starting to make its mark in the mobile space. StrikeAd has just worked with a retailer to drive CTR 50% higher than its non-RTB network statistics.
  • While the supply side of RTB has grown this year, the demand side has been more sluggish, with publishers and advertisers slower to embrace the concept.
  • The EU Cookie Directive, which came into force in May 2011, is of some concern to the RTB industry, requiring consumers to give their consent to websites using tracking cookies. It remains to see what impact it will have on growth.

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