The Exchange Game - Why Advertisers Should Be Playing

• by Tracy Gross , February 16, 2013

We have been hearing a lot of chatter about the explosive growth in the Real Time Bidding (RTB) space. In fact, the headlines are saying that 2013 is the year of RTB. And it seems as though technology platforms, trading desks, demand-side platforms (DSPs), ad verification partners, and the like are coming out of the woodwork, offering solutions to get advertisers and agencies bidding for digital media impressions.

Along with the growth comes continued skepticism from the publisher side. Change is hard, and much of what may be motivating this skepticism is coming from an interest in protecting turf-control direct sales efforts, including pricing, data, and inventory.

Language like “remnant,” “cheap,” and “low quality” has been floating out there, creating doubt in some buyers' minds and leading to a state of slow, or even sometimes “no,” adoption for some brands. Yet despite the fear, growth continues and long-term projections indicate that RTB will produce a very healthy stream of buying.

The debate also continues about whether or not RTB is ready for more upstream branding campaigns, or if its primary value is limited to its roots in direct-response campaigns. Click-through rate continues to be a primary measure of campaign success. But as inventory availability grows, technology improves, and data continues to feed the targeting process, we will see more opportunities to drive success through other measures. The growth of video inventory also points to more robust branding opportunities in the near future.

Regardless of the obstacles, it’s clear to me that RTB is a viable marketplace and something that advertisers need to consider as they move forward with digital buys. I recently attended OMMA's RTB conference in New York City, where industry leaders talked of a future for RTB outside of the digital ad space. The day may be coming when media buyers find themselves bidding for traditional media within an exchange.

With the winds of change constantly upon us, looking toward the future and being prepared will be critical.

Applying the same test and learn strategy that you would for any digital buy is a smart way to proceed. There will be situations when RTB isn't right, but advertisers and their buying partners should examine the facts before taking a pass. There could be a tremendous upside.

Getting Into the Game

Here are a few of the things to keep in mind as you consider playing the exchange game:

1. The volume is there, and it's growing. RTB inventory accounted for 13 percent of all display inventories in 2012 and a projected 98 percent growth rate in 2013. Growth of premium inventory, including an influx of video and mobile inventory and the maturation of the Facebook exchange, is a fact and will continue to make for an attractive buying option with improved targeting technologies.

2. The proposition in the early stages of RTB was all about lower costs. As more premium inventory becomes available, and demand continues to grow, so will the cost. As we move forward, advertisers should focus on performance as much as price. Lower costs are no longer RTB’s value proposition (although this can be a tremendous benefit). With improved targetability and data collection enabling greater insight for future efforts, the focus should shift from cost to performance and the overall value of the impressions.

3. Advertisers have been hearing how consumers have more control than ever before. In the RTB space, the control is shifting back to the advertiser and away from the publishers -- providing transparency, cost control, and access to targeting data with every impression you buy. The good news for you and your buying partner is that you are no longer at the mercy of publishers or ad networks.

4. RTB is not just for direct-response campaigns anymore. Technology continues to evolve to offer better data that allow advertisers to make smarter decisions with greater transparency and greater insights into your audiences and what will drive awareness. Data management platforms (DMPs) are just one tool that helps feed the process and move the needle toward better brand metrics.

5. RTB is now another tool in your toolbox. It should be thought of as an extension of what you are already doing with the ad networks, rather than a replacement to the current overall digital mix. Just like everything else, it should be applied with a test and learn approach.

While it's true that there are still hurdles to overcome, including inventory quality perceptions, the various layers of the supply chain that can add to cost, and the resistance from the publisher side, the opportunity exists for a tremendous upside. To clients weighing the options, I say, “Test the RTB waters!”