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BREAKING NEWS & VIEWS

Real-Time Bidding and the RTB Ecosystem


Wednesday, July 21, 2010


Real-time bidding (RTB) is the fastest-growing form of display advertising delivery and will significantly impact publisher CPMs and the amount of ad inventory we see from advertisers. The technology has been described as revolutionary and, in a nutshell, it gives advertisers the ability to target messages to the right user, in the right place, at the right time. The goal of RTB is to achieve the highest possible value of a single ad impression by dynamically delivering reach to targeted users on an impression-by-impression basis.

This is a competitive bidding environment in which advertisers attempt to reach individuals based on specific demographics and psychographics, assigning a value to each impression used to reach specific users in real time. This is a brave new world for the publisher, where networks and exchanges will look to take ownership of our users and our data, segmenting our audience in an attempt to deliver the most highly targeted eyeballs for advertisers. We need to take ownership of our users and our data, earning premium CPMs through targeted ad delivery and the use of RTB technology. 

To that end, let’s take a closer look at real-time bidding and the ecosystem in which it operates. There are burgeoning industries and players within them that you may have never heard of, so we’ll take a deep dive on this subject and spend time looking at RTB enablers, agency buying desks, DSPs and sell-side platforms, ad networks and exchanges and the data providers that make this all possible.

Sell-side platforms have become real-time bidding technology providers. You can see this in the offerings of two of the major online advertising yield optimizers, Pubmatic and AdMeld. Working with them comes in a couple of flavors. One, layer their product onto your existing ad serving platform and have them deliver RTB ads—over your site or network of sites—that they have sourced; or two, and better yet, take the product to advertisers yourself, using the sell side platform’s technology to target demographically using dynamic bidding. 

Data exchanges/providers are a key element within RTB. Examples of these companies include BlueKai, Exelate and Quantcast. Publishers, ad networks and agency buying desks are jumping into these data exchanges and both trading and reselling data. Most exchanges purchase data from Web companies that have identified the specific characteristics of a user. These data sellers build user profiles off of the data that a user enters in online forms and behavioral patterns shown in web browsing. The data exchange acquires this information from various sources, links the data to an ad serving platform and delivers advertising to users across their network when specific advertising targets match up with user data points. 

Agency buying desks may be the most interesting piece of this ecosystem. These are the units within large media buying outfits that focus on media trading and real-time bidding.  In this space are organizations like: B3 (WPP/Group M); Adnetik (Havas Digital); Cadreon (IPG); Varick (MDC Partners); ATOM (Razorfish); VivaKi (Publicis). These groups have large amounts of client ad inventory to unload at any one time, against very specific targets, and this is where publishers need to jump in and carve out a piece of this growing RTB display ad pie. Many desks work with DSPs to facilitate real-time bidding.

Demand-side platforms (DSPs) connect buyers with multiple sources of inventory and can facilitate RTB campaigns. This group of companies, including [X+1], Invite Media and Triggit, are on the cutting edge of media trading and real-time bidding and allow advertisers access to their proprietary technologies to deliver RTB campaigns.

Ad networks and ad exchanges are also in the RTB mix, and they’re often confused as being one in the same. Ad Networks aggregate ad inventory, match it with advertising, and layer on targeting and optimization technology, using third party data. These entities includes: Advertising.com, Fox Audience Network, Lucid Media, Audience Science, etc.  Ad Exchanges are marketplaces where networks, publishers and advertisers buy and sell media in RTB auctions. They have access to data suppliers to facilitate RTB and count AdBrite (AdBrite Exchange), ADSDAQ (Contextweb), Ad Exchange (Google/DoubleClick) and Right Media Exchange (Yahoo) among their ranks. 

Online advertising in a real-time bidding enabled world will drastically change the contextually adjacent sponsorship model that we’ve lived in for decades. Most important to the publishers in the above explanation of this ecosystem is the data exchange, agency buying desk and the RTB enabler. With these three entities, we can tap into our own infrastructure to start delivering highly valuable ad campaigns and more effectively monetize inventory that may otherwise go unsold. The pace of change here can be frighteningly quick and your organization needs smart people thinking about these technologies, how to leverage them in relation to your own assets and what innovations to come will impact your business and our industry in an age of seismic shifts.

Minsider columnist Alex Baxter is VP and GM of Parade Digital.

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COMMENTS
1.
Good summary, but the piece that could use more refinement is what you refer to as "right place". It seems that without an independent assessment of the quality of the advertising environment, advertisers won't have any way to decide the right page or site to place an ad to reach their target audience.
Posted by jmdavis2000 on Thursday, July 22, 2010 @ 10:35 AM
2.
Thanks for the good summary, Alex. I think it's good to mention "recency" as an important attribute of RTB, too. It's recency that gives RTB the immediacy that amounts to a user's first impression. Our company is in planning to offer RTB remote buying to agency buying desks within weeks.
Posted by Tom Doyle on Friday, July 30, 2010 @ 01:56 PM
3.
Tom, thanks for the post. Would love to chat about your progress on RTB remote buying.
Posted by Alex Baxter on Monday, September 27, 2010 @ 06:07 PM
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