Defragmenting Media With Real-Time Bidding

"Data Driven Thinking" is written by members of the media community and containing fresh ideas on the digital revolution in media.

Today's column is written by Zach Coelius, CEO of Triggit, an online advertising technology company.

Data Driven Thinking by Zach Coelius of TriggitIt would be hard not to notice that display media buying is changing dramatically.

Interesting new companies are popping up left and right, VCs are making significant bets, and the big boys- Google, Yahoo, the agency holding companies, and the old-line media giants- are making moves in the space.  Display advertising once thought to be an unmitigated disaster is now discussed on earnings calls and in boardrooms as the next hot opportunity for growth.

At the core, the changes we have been seeing in the space over the last year are centered on innovations in how we manage, allocate and price display inventory.  Transparent exchanges, audience data and real time bidding are significant structural developments that enable the entire industry to innovate and improve.  But while we were concentrating on improving, something even more important has happened.  The groundwork we have been laying is starting to get to such scale that it has the potential of solving a much bigger problem: media fragmentation.    To understand why this is such an important problem, let’s look at the issues fragmentation causes.

The advertising business was built on the ability to create compelling messages and deliver them to targeted audiences at scale. With the advent of digital media and the Internet, the foundation changed.  Audience attention is now fragmented across millions of websites reading, writing, watching, socializing and creating.  Gone are the days when NBC could deliver your commercial to 90% of the public and enable you to share your message.  In digital, the process of planning, RFPs, trafficking, tracking, auditing and paying when the audience is so scattered has become intensely manual, tedious and incredibly expensive. Very simply, the entire advertising industry formula is being broken as a result of media fragmentation and our inability to efficiently and effectively put our messages in front of the right audience at scale in digital media. This fragmentation is holding back billions of dollars currently spent offline from moving online, as it is nearly impossible to allocate the really big budgets in the status quo online.

Fear not, fragmentation’s days could be numbered.

As we have all focused over the past year on the developments in the exchange space and real-time bidding (RTB) as a way to do things better- better targeting, better tracking, better ads- RTB is slowly being accepted as a standard by our industry.    Because RTB is an open standard that anyone can adopt, the same network effects that made the Internet what it is today are driving this process of adoption. The virtuous cycle of more media buyers using RTB leading to more media sellers adopting it has begun.  With the industry goliath Google enthusiastically supporting RTB, it is hard to believe that this process will not continue to accelerate.   This cascade effect of widespread adoption has the potential to dramatically change our entire industry.

As transparent RTB becomes an industry standard, we no longer need to depend on one exchange or media provider being big enough to solve to the problems of media fragmentation and to be able to take the entire budget with sufficient reach and frequency.   Instead a demand-side platform (DSP) with RTB capabilities can now plug into all exchanges and media sources.  With this method of aggregating inventory, a media buyer can buy across millions of websites and billions of impressions with the click of a mouse and utilize a single system for buying, optimization, reporting and billing.  Using one platform eliminates the highly inefficient and non-scalable processes surrounding RFPs, IOs, spreadsheets, trafficking systems, de-duplication nightmares and attribution that we face in the status quo.  By making large-scale media buying possible through one source, the process suddenly becomes a hell of a lot simpler, cheaper, more scalable, more transparent and ultimately more effective.  We may have the chance to solve the media fragmentation problem caused by digital.

As we spend the next year working though all the bugs, buzz and BS that this platform shift is certain to throw in our faces, let’s remember that we could be on the path to something much bigger then simply making ads a little more targeted and budgets a little more effective.  If we can build a system that addresses the problems of media fragmentation there is a very real possibility that our industry could lead the way into the next generation of media buying.

Follow Zach Coelius (@zcoelius), Triggit (@triggit) and AdExchanger.com (@adexchanger) on Twitter.

9 Comments

  1. Zac,

    Great to get your leading edge perspective here. There's no question RTB insanely optimizes the workflow but I'm having a hard time getting my head around how the scale needed for it to be effective works with the real fragmentation that caused the inefficiency in first place. The fragmentation of people's interests and intent. Thoughts?

    Reply
  2. Happy New Years Jonathan, I hope things are going well on your end.

    My argument is simply that as RTB becomes an industry standard, every scale media company and media aggregator (ie networks like Adsense or pub side optimizers like AdMeld, Pubmatic, Yeildbuild, etc) will offer it. Because RTB is a standard, that makes it easy for demand side platforms to plug into all the providers and provide unified buying power across a large percentage of the web and eventually video, DOOH, mobile and all other digital media. You can think of RTB as functionally like the connection points that tie it all together. I think that because RTB is open, and anyone can deploy it, that we will see a very rapid industry adoption as the virtuous cycle kicks in. Just think what would happen when RTB access is available for 50% or more of all digital media. At that scale things get really interesting.

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  3. Zach,

    You're unquestionably right. The serving performance and data capture alone will ensure everyone will plug into it -- not to mention the ad performance/ROAS benefits that can be delivered for really smart systems. I have the strong suspicion someone's going to get disintermediated in all of this, but I'm not yet sure who, why and what the consequences will be. Will be fun to watch over the next few years, won't it?

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  4. Oh yes, we are about to see a wild scramble as everyone figures out that their old business model is kaput... It will be a ton of fun this year.

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  5. Zach, I've read your RTB articles and coming from a technical background I think that presenting the concept alone doesn't qualify for a standard. In Internet terms, would be great to come up with RFC or similar for such process and get some kind of standard body to agree a protocol for connecting all these systems. After all there some APIs around (Rightmedia, Google Adwords API) plus many "client" systems which could benefit from a single standard. So that an Adops manager plugins yet another RTB/exchange service into his/her system with a few clicks and can start tapping into more inventory/advertisers.

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  6. Anton,
    I can't agree more. When I use the term standard I mean it in the loose sense that the industry generally understands what the format of an RTB call and response should be and it is pretty easy to integrate into multiple partners with RTB. That general understanding takes us a long way from where we were before with completely different proprietary apis like the ones you mentioned at Adwords and Right Media. I think that as the industry settles in with RTB over the next year we will certainly see a push for a standards body.

    Zach

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  7. Glad we agree Zach, so lets call it a paradigm shift 🙂 - essentially text was RTB from the beginning (at least for advertisers, though APIs are not readily compatible), so now its time of display and publishers. Who do you think will be first to come up with something uniform? Standards bodies move slowly, in industry IAB could lead, but I think they've lost power over years and not very up to speed on many developments. Commercial adoption with agencies and publishers seems to be the key, which leaves us pretty much with Doubleclick & Atlas, but not sure how much invested they are into RTB (though haven't followed them recently). On a similar note - do you know is there somewhere a list of platforms which support RTB and some kind of compatibility matrix?

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  8. Good questions Anton. I am not sure how standardization will happen officially. We are already seeing an unofficial process where everyone is copying Google and are making their systems the same in order to make it easier for DSPs like us to plug in. Thankfully the implementation is straight forward enough that I only know one small company that has a different enough RTB system to cause a problem. Everyone else is pretty much the same.

    Though you are wrong about text ads being RTB. One of the core elements to RTB is being able to know who the user is and to bid and target based off user data; text ads are not user targeted at all.

    John, when are you going to make a matrix like Anton is asking for? Maybe something like the GCA Savvian map?

    Reply

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