Advertisers and publishers are familiar with real-time bidding (RTB) as it has been used in display advertising, with great success. Audience data is being used more to buy online video, too. With RTB, advertisers can be more selective about video inventory and place premium bids on the most valuable audiences. It also gives them impression-by-impression control as they bid on ads.
Advertisers are already benefiting from RTB in video. For publishers, the challenge is how and when to respond to the call for RTB without sacrificing control over their inventory or yield. Here are the five drivers that have caused online video RTB volumes to explode in 2012.
Publisher RTB phobia fading
On the supply side, publishers often perceive RTB as unsafe, and worry that the process degrades the value of their inventory and brand equity. In reality, RTB is very safe. Publishers control their floor rates, inventory segmentation and how much volume goes into their specific RTB channel. Full transparency of advertisers running on publisher sites is provided with private exchanges. These mechanisms help publishers eliminate channel conflict, maximize yield, and protect their brands.
Today, premium publishers are having no problem selling the majority of their inventory direct to marketers. But this phenomenon will change as online video streams increase, advertiser demand spikes and publishers realize they can use RTB to gain efficiencies and increase revenues without compromising internal sales practices or creating unnecessary overlap in the marketplace.
Big buyers' mindset and RTB infrastructures in place
Major advertisers have run out of patience for ad tech companies that are not completely transparent. RTB demands more transparency, and agency trading desks and associated traders have begun to realize the benefits from display RTB. Video is but a hair behind display and will take advantage of the shift in mindset. Fortunately, since referring URLs are passed on every impression opportunity, RTB is the most transparent method for buying online video.
Also, online video leaders have built scalable infrastructures that can handle the demands of syncing audiences with an ecosystem seeing users 12-15 billion times daily. Finally, DSPs have built support for online video. This will result in much faster growth for RTB-based online video trading than we have seen in display.
Industry standardization decreases innovation costs
Another barrier to RTB for video (and all channels) is the high integration costs, which limit innovation for the entire industry. Each company has its own RTB API, making integration with supply type sources and other partners a complicated and expensive process. The IAB is already working to solve this problem by working with companies like DataXu, SpotXchange, Turn, Pubmatic and the Rubicon Project to define a standard RTB API for both demand- and supply-side platforms to communicate in the ad-buying process. This new standard, OpenRTB, is a common language for real-time media buying, and it will boost innovation as integration costs decrease.
RTB delivers accuracy and peace of mind
Exchanges will deliver more situational awareness and better categorization of inventory in bid requests, enabling advertisers to make more accurate valuation decisions. For example, what is considered above or below the fold? If the ad placement is below the fold, but the user scrolls down to “view” it, does it matter that it was below the fold in the first place?
Currently, no IAB-backed definition exists for user- versus auto-initiated pre-roll inventory. In 2012, this will change. As exchanges make this information available to the buy side, all benefit when brands know for certain they are being delivered what has been promised.
Better metrics resonate with advertisers
Click-through rates are still the primary success metric being used by media buyers because they are easy to track and straightforward to define. However, for video, the completed view rate provides brands with a similarly easy-to-track metric that maps far better to engagement.
The best metric for video is an A/B test for each creative variation, but that’s difficult to manage across multiple network buys. How do you keep your control groups clean unless audiences are perfectly split? RTB makes it easier to purchase inventory for these tests, since DSPs have a universal view across all supply sources to ensure clean test/control groups.
RTB growth doubling
In 2012, we are confident that publishers will make more premium inventory available via RTB and more agency desks will incorporate RTB into their budgets. LiveRail’s internal estimates put the value of all video-RTB buys in the U.S. at $50 million in 2011, and it expects growth for 2012 to go well into the triple digits. The desire for RTB is here. If the industry can rally to better define this process, standards and video ad units, it looks to be an explosive year for RTB in video.