Guest comment: Real-Time Bidding: why its advocates must articulate its advantages

Real-Time Bidding, or RTB, is already becoming a buzzword in the online advertising world.  Some experts have even forecast that the benefits it offers to all players in the ecosystem will see it bring about the next revolution in an already fast-paced industry. 

But despite these accolades, RTB, which was originally conceived as an advertiser-focused offering, is still at an embryonic phase.  This goes part way to explaining why it is not well-understood by many people in the digital marketing sector.   However, the potential that it offers demands that the online advertising industry takes responsibility for redressing the balance.

What is RTB?

At the core of RTB is advanced technology that lets publishers define an audience and segment their inventory accordingly in order to introduce advertisers to 'valuable' users.  These advertisers then place 'bids' dynamically (ie the 'Real-Time' element of the equation) on the inventory that will let them reach specific consumers.  This is done on an impression-by-impression basis, which makes it highly targeted and means that an individual value can be assigned to each specific ad impression. 

Very simply, RTB enables advertisers to reach the right user in the right place at the right time, and this potential for better-performing campaigns is good news for everyone involved:

Publishers adopting RTB make their advertising space more valuable and can therefore charge more for impressions (advertisers that have better performing campaigns can pay more to target the right users)

Advertisers see increased ROI

Users see adverts that are targeted at them and their specific interests, so their online experience is better because it is more relevant

The ongoing development of RTB technology is highly significant for publishers because it adds value to their inventory – and increasingly, this is being recognised. Over half (51.4 percent) of European publishers believe that Real Time Bidding (RTB) will increase the potential of their unsold page impressions.  This is a key finding of a survey that Improve Digital undertook in conjunction with 'New rules of revenue: online advertising 2010', an event that it hosted with the Association of Online Publishers (AOP) in February.

Does RTB work?

This vote of confidence for RTB is backed up by results to date:  Turn, Inc. facilitates RTB transactions for advertisers.  At the end of October 2009, it validated the potential for RTB by demonstrating significant improvements in click-through rates (up to 135 percent improvement), conversion rates (up to 150 percent improvement) and effective cost per action (up to 145 percent improvement) when compared to non-RTB inventory.

Other figures show that online advertising budgets are continuing to grow.   According to a bi-annual report by the IAB and PricewaterhouseCoopers, despite the global downturn, the sector increased revenues by 4.2 percent to £3.54 billion in 2009 (up from £3.35 billion in 2008).

But regardless of these positive statistics, there is no room for complacency.   Advertisers continue to push for more transparency and efficiency, and the capacity to engage directly with their target audience.  Publishers want better control over inventory supply and the price they can charge.  Increasing uptake of RTB can only work in favour of both these requirements.

RTB needs transparency

There is currently no shortage of sophisticated technology and extensive expertise in the industry to further the uptake of RTB.  However, this must be matched by a commitment to communicate what we have to offer in a clear and transparent way.  Improve Digital's survey also revealed that 90 percent of publishers believe that if digital marketing is to reach its potential, the sector must ensure that it provides comprehensive information that is easily understood by people outside the industry.  Even those within the sector feel that information is not always forthcoming – 22.5 percent for example said that the difference between an ad exchange and ad network is not clear.

RTB clearly has the capacity to continue the transformation of the advertising world.  But if it is to do that, we all need to ensure that providing insight into the digital marketing landscape is incorporated as a key part of our role.

By Nic Peters

Managing director

Improve Digital UK

www.improvedigital.com

About Improve Digital:

Leading premium publishers from all over the world partner with Improve Digital to increase revenues from ad networks, ad exchanges, balanced with their direct sales strategies. They protect their brand image and gain central insight and control. Its clients benefit from local presence, local market knowledge, and best-of-breed service. Improve Digital’s platform integrates technology from PubMatic, for whom it is the exclusive reseller in Europe.  Improve Digital has offices in London, Amsterdam, Hamburg and Paris and is a member of the IAB and AOP.

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