Exchanges create transactional efficiency. When Jonah Goodhart and his brother funded the launch of Right Media, the first ad exchange, that was their sole intent: to create efficiency. But exchanges quickly became second class - places to unload inventory that couldn't be sold directly. That wasn't the initial plan, says Jonah, now CEO of Moat.
This week I spoke with Peter Minnium, head of brand initiatives for the IAB. Peter's the driving force (and the heart) behind the Rising Stars and is understandably bullish about bringing brands online. He's also surprisingly optimistic about RTB.
It's been almost 10 years since the ad exchanges that would really make an impact on digital advertising were formed. AdECN, among others, pioneered an online advertising market that drew comparisons to the financial markets. Now, a decade onward, the association between the two industries has taken on deeper connections. Whether the association draws similarities or differences, there are plenty of points that can enable us online ad players to learn from the financial guys.
Since real-time bidding (RTB) had its big break a few years ago, inventory sources, audience data and creative opportunities have all expanded. This evolution has continued into 2013 with the rise of the Facebook Exchange (FBX), discussions around private exchanges, and healthy projections that point to 59% growth in RTB spend by 2016. Here are four of the most pressing questions facing RTB today:
Anthony Katsur, CEO of Maxifier, believes that in order to attract and keep brands online, we have to beat TV. Digital channels have formidable reach and scale, rich engaging ad units, and better pricing and attribution models than television. What we don't have is the ease of use that media buying in that channel offers.
The rise of real-time bidding in recent years should come as no surprise to anyone familiar with the technology. Real-time bidding works because it allows the advertiser to cherry-pick a potential customer out of a pool of hundreds of millions. Once you have this tool at your disposal, the old way of serving display ads - buying a site's entire audience and hoping for the best - just doesn't make a whole lot of sense anymore.
Conventional wisdom holds that using third-party data for ad targeting is not effective, especially for direct-response-oriented campaigns; that despite all the fanfare about audience-based buying, micro-segmentation and intent-based-targeting, third-party data just doesn't live up to the promise. The reasons offered by doubters are varied - the data are too expensive, the data are bogus, inventory is all that matters, and so on - but the conclusion drawn is always the same: third-party data doesn't work.
If you're planning to launch a premium display marketplace, audience targeting and insights are going to be a critical element. Insights are always important, of course, but when you're investing in oversized rich-media advertising units and targeting particular audience segments among affluent consumers, you'll want to be confident that the ads are reaching the right folks. Ads like the IAB portrait are already expensive to create, and they cost more to place. Data that helps advertisers hit their mark and prove success will also fuel their desire to continue to invest in online display at scale.