Over the past twelve months, an ever larger piece of the UK’s advertising spend has moved to digital publishers. At the same time, increasinly sophisticated planning, trading and buying methods have emerged. Jay Stevens, Vice President and General Manager, International at the Rubicon Project, explains why the arrival of demand-side platforms (DSPs) is an important development for the UK’s online industry.
Over the past twelve months, an ever larger piece of the UK’s advertising spend has moved to digital publishers. At the same time, increasinly sophisticated planning, trading and buying methods have emerged. The arrival of demand-side platforms (DSPs) is an important development for the UK’s online industry.
Five agency holding groups control eighty per cent of the online advertising budget in the UK. Each of these has created a trading desk to fix the problems inherent in the buying of digital media such as duplication, opacity, poor quality advertising and inefficiencies.
DSPs are responding to agency demand and growing fast by aggregating inventory from multiple sources enabling bids on display inventory across ad exchanges, yield management platforms, and ad networks in real-time. This is exciting technology, but it raises concerns about whether they threaten advertising networks by squeezing margins and competing with them for budgets and the potential risks to publishers.
Over the past three years venture capitalists have invested heavily into DSPs. Some, such as VivaKi and B3 are owned by agencies, some by networks, like ADSDAQ and Turn, and others like MediaMath and Triggit are independent. Google’s acquisition of Invite Media for $70 million in June 2010 further validated this space.
We have seen rapid adoption of demand-side platforms but it’s still a nascent technology and we estimate that real-time bidding (RTB) will account for just three per cent of the total UK online display spend in 2010. But, this will ramp up dramatically to between £120m and £200m in 2011 with critical implications for the advertising landscape.
Advertisers and agencies are excited by this increased automation, optimisation and real-time bidding focused on using audience data, algorithms and auction-based pricing to increase margins, drive scale, optimise and deliver ROI. It represents a new source of demand for publishers with access to high quality brand campaigns and the ability to offer the right advert to the right user at the right time, at the highest possible price.
Publishers can set floor prices in real-time to manage supply and demand, and all things considered, incorporating RTB into a yield management platform to achieve a higher level of lift in monetisation. However, publishers have several major concerns, such as the risk they will lose their data and compete with their in-house sales teams as well as the commoditisation of media resulting in the erosion of rate cards.
Publishers need to protect themselves by working with a publisher side platform designed to increase revenue and protect publishers. They must establish trading permissions which specify which partners may access which inventory, how, where and at what price. These should be contractually agreed to avoid storing up trouble for publishers and networks at a later date.
As DSPs and real-time bidding prove themselves over the next year, increasing marketing budgets will move online, and I expect we will see this having a knock-on effect with optimisation techniques being extended across all aspects of media planning and buying.
By Jay Stevens
Vice President and General Manager, International
About the Author
Jay Stevens is VP & GM, International at the Rubicon Project, an ad technology firm which provides real-time yield optimisation for publishers. Prior to joining Rubicon, Jay served as the SVP of Audience at MySpace. He was the social network’s first hire outside of the US and oversaw operations for 12 of their European territories during the first two years of his tenure with the company.