• by Anthony Iacovone , November 9, 2012

First, RTB in mobile is at a tipping point today. Second, there are significant technological differences between RTB as commonly known and applied in online digital advertising, and RTB in mobile advertising. That said, MediaPost has chosen the right time to offer a dedicated column that addresses the ins and outs of RTB advertising whether for display, mobile or video.

As such, I think establishing some building blocks as a foundation for future articles might be the best place to start.

If you are involved in digital advertising, you are probably aware of RTB, a common capability of online advertising that occurs through a demand-side platform (DSP).  A DSP enables advertisers to place a bid on an impression based on their perceived value of a web viewer using pre-determined targeting criteria. The bidding is done within milliseconds on an impression-by-impression basis, not through a bulk-buy ahead of time. If there are multiple advertisers bidding, the highest bidder wins the placement (usually at one penny more than the second highest bid - better known as a “Dutch auction”), and a targeted ad unit is delivered.

The RTB process is becoming more common in mobile advertising, bringing along many proven benefits along with a unique set of new opportunities and challenges. Moreover, the advent and expansion of RTB in online and mobile advertising overall has opened to door for a much more transparent, efficient and measurable marketplace. This is where RTB will get very interesting.

In online display RTB, cookies are used as they have been for some time in traditional networks, to track and target a viewer’s behavior (audience targeting) and then determine the value of that viewer for a potential advertiser. Here n lies the rub for mobile RTB (although one could also argue its advantage): Cookies are technically deficient in mobile. As a result, cookie-based behavioral data that is available to online digital RTBs is simply not available in mobile.

For RTB to be effective in mobile, data must be aggregated from various sources and modeled using complex algorithms that can provide predictive results. In other words, hundreds of data sources and historical results provide a mathematical picture to determine when, where and whom to serve an impression to.

Much has been written about the sensitivities surrounding “cookies” that track personal behavior when consumers browse the web. Not only are consumer watchdog groups lobbying for legislation to restrict the information collected on individuals, but the FTC is also taking a hard look at how personal data is tracked and stored. Even Microsoft’s newest IE release has a built-in default to prevent behavioral tracking.

Amazingly, the limitations of a cookie-less mobile RTB system have spurned innovation that actually may raise questions in the near future about how and when to use pure cookie-based audience targeting. It is entirely possible that the data-driven approach born in mobile RTB may in fact provide a new path for online to follow in the near future.

The evolution of RTB in both online and mobile is just the beginning of a paradigm shift in digital advertising. This shift will move us quickly toward a data-driven, result-oriented advertising marketplace re-founded on cost efficiencies and beyond-the-click measurability. Mobile RTB is leading this shift, and will become even more important as we progress to the future. I look forward to continuing this dialogue, and I welcome your comments along the way.