New era dawns for display advertising

Given the accountability and rigour of digital marketing, it might seem odd that most display advertising relies on charm, influence and negotiation for bulk discount, as opposed to technology and algorithms for precision.

But over the past year, real-time bidding – buying through an ad exchange, using a technological interface called a demand side platform – has been heralded as the future of display, eliminating the wastage of bulk buying. What hyper-efficient algorithms have done for search, they now promise to do for display.

Ciaran O’Kane, industry analyst and editor of online ad trading website ExchangeWire, has predicted that real-time bidding will improve the transparency of display buys. “The idea of being able to price inventory in real time and buy at the single impression level is quite exciting, and will change the way the medium is bought and sold,” he said earlier this year.

Buying through technology, rather than people – using data, metrics and analysis – offers hope of unprecedented accountability and efficiency. But what exactly is real-time bidding? How does it relate to ad networks and media agencies? And why should marketers be interested?

An ad exchange is like an online auction, where single display impressions are bought and sold in real time. By setting data points based on a target audience using a demand side platform, advertisers can plug into several ad exchanges at once, bidding for the single impression that best fits their criteria. They can bid across a huge number of sites and for a range of campaigns within seconds. The process is similar on the sell side, with publishers using a supply side platform interface that plugs into multiple exchanges, letting them set price floors and controls on their inventory.

Marketers such as American Express head of digital acquisition Matthew Turner (now head of online marketing and sales at BSkyB) have been exploring buying display inventory through ad exchanges for about 18 months now. What’s important for AmEx, he says, is that impressions reach an audience that is not just likely to convert, but that has the right level of income and a good enough credit rating to make it through the application process. The correct use of data is critical.

“We’re now looking at digital display as an ’always on’ channel, rather than as [intermittent] campaign activity,” explains Turner. “We have historically run digital display on a campaign basis, but we’re now at a point where we’ve got such a level of high-quality inventory through exchanges that we’re able to think about display as a way of always building awareness or running direct response, similar to the way in which we treat search.”

Though, according to Turner, just 20% of the display budget is put through real-time bidding, the efficiencies AmEx is making are enough for the brand to keep developing it as a viable way of trading.

“Given that both display and real-time bidding are running the same process, it comes down to efficiency and cost-effectiveness. [Trading desk] Infectious Media gets the same budget as our media agency but is able to realise the efficiencies of its buying platform. It tends to be that its activities are over-performing,” Turner says.

Daniel Stephenson, head of digital and marketing at COI (Central Office of Information), runs more than 300 campaigns a year to reach niche audiences such as ethnic minorities, or to drive response around issues such as the prevention of knife crime.

“Though we’ve just had our budgets cut, which will impact on any experimentation in this area, exchanges are very appealing to our kind of activity, bringing in keyword targeting. Though, to be honest, we’re still not seeing the volume of inventory that we get with networks,” says Stephenson.

Ad networks, as inventory aggregators, have historically taken the drudgery out of buying across multiple sites, large and small, and can still offer scale and volume across the niche sites that Stephenson would look for. It’s likely that, having already established relationships like this, marketers will be doubly confused when presented with the proposition around real-time bidding.

According to director of the Association of Online Publishers Lee Baker, much of the confusion around real-time bidding stems from the interchangeable terminology and various layers of technology. “It’s very hard to get any clarity when definitions are changing all the time. It’s extremely confusing thinking about who’s trading with whom,” he explains.

There are currently five ad exchanges in the UK, operated by big digital players including Google, Microsoft, Yahoo! and Orange, with some leaning towards a particular vertical or type of inventory. The key differences are, however, technological – whether or not they are enabled with real-time bidding – and how this infrastructure impacts on communication with the supply and demand side platforms.

Confusingly, players that operate ad exchanges also have their own display networks, with advertisers able to buy display inventory in both traditional and automated ways.

Media buying and planning agencies – dealing directly with publishers or with ad networks – have traditionally been the main choice for marketers wanting display inventory. But now automated trading desks, such as Infectious Media and Efficient Frontier, with data and analytics skills sets, demand side platform buying capabilities, layers of brand safe verification technology, and campaign management and optimisation tools – are offering their services to marketers.

Media planning and buying agencies, meanwhile, have flocked to develop their own real-time bidding capabilities, decking themselves out with licensed or bespoke demand side platform technology. Group M introduced its trading proposition B3 in October last year, and Vivaki has its Audience On Demand; but these are just a handful of offerings within the space.

Federica Aperio, managing partner at digital auditor Billetts, urges advertisers to look at the investment – and commitment – that media agencies are putting into building their own display trading desks and demand side platforms. A survey by display advertising trade organisation IASH last year indicated that the lack of time and resources in building the skillset needed for automated display trading was one of the greatest obstacles to its wider adoption.

“These aren’t simple tools and they need substantial development capital and servicing resources,” Aperio warned last year. “If the big agency groups aren’t investing big bucks to support them then advertisers should be wary. Clients also need to be sure they’ll know which sites their brands will appear on and be confident the agency will still be able to offer a holistic view of campaign performance, including all buying points like search, affiliate, premium inventory and demand side platform inventory. Otherwise advertisers are merely swapping one set of transparency issues for another.”

Introductions to real-time bidding have come both from brands’ own media agencies and through trading desks’ efforts to promote themselves as media buyers, but the channel is still too nascent to have definitive advice on the best route for marketers. Those experimenting with real-time bidding have said a lot depends on existing relationships and agency infrastructure.

“In the long term, real-time bidding provides an opportunity for marketers to go more directly to publishers,” says Baker. “Those agencies that aren’t providing value, optimisation tools, targeting or analysis will start to consolidate, and networks with big volumes of blind inventory will start to disappear. As a result, the structure of agencies and networks is changing.”

The ultimate goal will be to bring not just display, but all digital marketing channels together under one dashboard, with data from search informing display buys, in turn informing social media and mobile spend. And as every marketer’s goal is to make the biggest impact with the most efficient budget, such cross-channel accountability would create the optimum digital marketing infrastructure.

“At the moment, it’s all a bit of utopian vision, but we’ve seen microcosms of success [in real-time bidding],” says Baker. “The big question will be how much will demand side platforms account for? There has been caution from all parties – but, given the growing appetite for experimentation that AOP is witness to, we’ll certainly see percentages swiftly grow.”