• by Dan Mosher , August 7, 2012

Real-time bidding (RTB) has the potential to change the way digital video is bought and sold. At my company we believe more than 50% of video impressions will be bought via RTB over the next three years. At this point, it’s not a question of if, but when?

First some background: an industry study recently said that RTB for video will generate $667 million in revenue in 2013, up from close to zero in 2011. Additionally, in the display ad world, Google recently stated that RTB accounts for 80% of revenue on its AdX platform. Furthermore, Facebook’s recent announcement of an RTB exchange for its inventory demonstrates the power of this model across different advertising ecosystems.

Our assertion is that RTB will comprise the lion’s share of video buying rests on a few assumptions:

• First: Buyers of digital media, brands, agencies, DSPs, ATDs and even publishers increasingly want to deploy advertising against a specific audience. RTB enables a buyer to make a decision about an impression at the time the impression is requested based on data the buyer has about that user. The typical parameters that video buyers use today include: 1) the actual video content that follows the ad, or 2) the content around the video player on the page. In this current market, each of these parameters should matter less than the specifics of the user who is watching the ad. The content following was the old paradigm and the user is the new paradigm.  RTB enables this new paradigm.
• Second: RTB allows display buyers to incorporate video as part of their overall buy, opening up a huge new revenue stream. In the same vein, it enables traditional TV buyers to know exactly how many unique users and impressions they achieve for a particular audience.
• Third: Video advertising is quickly expanding outside of traditional Web video onto mobile phones, tablets and connected TVs.  The content that precedes the ad includes games and radio apps as well as standard video content. To a standard video buyer, this may create fragmentation with their buy. An RTB buyer, however, is targeting a specific audience and is paying a particular price for that specific impression. RTB buyers are indifferent to the type of content or device as long as they are reaching the targeted user base.

RTB and exchanges will allow buyers to consistently target audiences and access video across all four screens. The naysayers stipulate that premium video inventory may never be available on an RTB basis. The case BRX makes to premium publishers is that RTB buys are an additional source of demand that they are not seeing today. If buyers are enabled to access inventory through this method, it is not competitive with direct sales efforts because RTB is a different product since buyers are seeking audiences, not sites. Premium publishers can set floor prices and set up specific block lists to prevent competitive advertisers or advertisers that are being sold by a publisher’s internal sales teams.

Video RTB is ready for prime time, and this will be a key trend as we head into the second half of 2012. The technology has advanced to the stage where it can be utilized at scale. The key value proposition – buying a specific audience across multiple devices at scale – leads us to believe it will contribute to more than half of video buying within the next three years.