• by Michael Kaushansky , September 13, 2012

We see how the digital media ecosystem is rapidly shifting from planned negotiated buys to a more dynamic environment where advertisers are actively bidding for what they think are targeted impressions.  This ecosystem is rapidly growing, in part because of the increased availability of supply -- publishers’ inventory that has been opened up to the exchanges.  The growth of the exchanges is further exacerbated by an increased demand for buying transparent inventory and an ability to bid for it in real-time.  In order to make buying decisions, the demand side asks for data, while the sell side selectively reveals just the right amount of data without the risk of cannibalizing their directly sold inventory. 

Due to the volume of data transactions between the demand and sell sides, systems have been developed to facilitate the buying process. These systems operate in real time and are defined as real-time bidding platforms (RTBs).  With the rise of multiple RTBs, advertisers now have various options offering them the ability to cherry-pick any online impression and to bid accordingly. 

So now the real question is, how should an advertiser select the right RTB platform for a campaign?  Arguably all these RTBs have access to the same inventory via the exchanges. Although some claim to have access to private exchanges, we have found that access usually limited and insignificant at this time.   The most common example today is selecting multiple RTB platforms bidding on your behalf for the same inventory -- and as a result, increasing the price for the same set of audience (cookies).

To help advertisers select the right RTB platform, we have defined a four-step evaluation process you should consider implementing: 

1.    Overlap correlation analysis.  We can easily run analysis to determine whether there is a significant overlap across RTB platforms.  The key, though, is not to simply run an overlap report but to conduct a time-series correlation.  All RTBs begin their targeting process by collecting your first-party data to learn more about your customer.  At the onset, all RTB platforms tend to target similarly; it is only after they gather enough data points that their unique algorithms start to differentiate targeting.  Using a time-series correlation will allow you to check if the overlap decreases over time.

2.    Targeting effectiveness.  Simply having evidence that a significant overlap exists among RTB platforms is not enough to make a decision.  A particular RTB platform can be targeting the same users but can also stand out by performing better and achieving higher conversions goals.  Although they may target the same cookies, they may be targeting users at better day-parts and throughout more effective sites.  To validate this, you will need to rely on advanced attribution models to see the true impact of one RTB platform versus others.

3.    Price efficiency.  In the end the decision may come down to price.  If the overlap and the performance among the RTB platforms is very similar, then it’s clear they are reaching the same audience and most likely on very similar sites.  In that instance it should come down to price.  The least expensive RTB platform should win.

4.    Champion challenger approach. Finding the most effective and efficient RTB platform today does not guarantee that this platform will continue to perform above-par over time.  Keeping a 5%-10% sample of your budget dedicated to the second best RTB or even to a new RTB player is a healthy way to always stay on top of your vendors.

Long term, we see traditional media inventory shifting to an exchange environment.  Establishing our four-step RTB platform evaluation process, will not only ensure the most effective media investment now, but will also allow you to stay ahead of your competitors when the new inventory hits the exchange markets.