Peter Randazzo is Chief Technology Officer of iCrossing, a global, digital marketing agency.
Perhaps no single technology has as much potential to disrupt the advertising ecosystem of online publishing as Real Time Bidding (RTB). For an imperfect but simple 30 second visual primer on what RTB does, click here. There is a shift happening and the surge of inventory that flooded onto exchanges in 2011 attests to it. As Demand Side Platforms (DSP) became ever more an executional tool of choice for many advertisers, the supply side has been pushed to follow suit and make their inventory available through marketplaces. Thus, the tried and true world of direct and network sales is threatened with disruption and the potential commoditization of inventory.
For small publishers, the advent of real-time, exchange-based marketplaces has been nothing but good. In many cases, it allows their impressions to compete on a level playing field against much more established titles, fueled by the individualized audience and interest information readily available through online data providers.
Large publishers, however, should be concerned that the growing importance and availability of targeting data on RTB platforms separates the importance of context from determining the value of the impression. In other words, if you can know what a person wants specifically, it matters less where you serve the display ad because you do not have to infer quite so much about them from where they are.
The impression transparency inherent in RTB environments causes some in the industry to fear that their use will cause CPMs to begin a “Race to the Bottom” as inventory becomes commoditized. Others think it a natural progression towards efficiency, especially for impressions that will always generate less demand such as those for remnant inventory. The Rubicon Project recently published a study that concurs with the latter and this study from Ignition One offers evidence for the former. Obviously, the jury is still out.
So, if you represent a large publisher, what are you to think about the potential role of RTB in your organization? Is it friend or foe? There is no “one size fits all” answer to this question, but I do have some considered advice on an approach to find your own:
- RTB has its place. The demand for fluid remnant inventory has shifted to DSP platforms, as advertisers require the efficiency and transparency inherent in a marketplace. The economics of that cannot be ignored. It cannot be employed blindly either.
- Content \ context are still king. Advertisers still care a great deal about the quality of their impressions. Premium inventory rates in direct and network channels will continue to be defendable, especially for large publishers. Explore private exchanges for unsold inventory as they offer way of ensuring that your valuable content \ context stays glued to each impression in RTB environments.
- Embrace, leverage and protect your audience data. As in all marketplaces, information is leverage and power. Pole position in the “Race to the Bottom” is occupied by those who lack this fundamental understanding. Ensure someone brilliant in your organization is charged with helping you leverage your data safely and appropriately. Consider DMP technologies that allow you to safely overlay your 1st party data onto your private exchange and throttle the information you leak to your partners. No one should know more about the value of your audience than you do.
The take away, I hope, is simple. Real Time Bidding is here and it can be disruptive. Be smart about your data and use RTB well for the type and size of publisher you are to succeed.