If you follow the display advertising industry at all, theres a decent chance youve heard a thing or two about real-time bidding (RTB). But, as with any exciting new technology, a lot of misinformation tends to creep into discussions of RTB and how to use it effectively. And with RTB poised to overtake site buys in the years ahead"eMarketer anticipates double-digit increases in RTB spending each year through 2017 " this seems like a good moment to step back and clear up a few things.
Perhaps the most important thing to understand about RTB is why its such a big deal. Before RTB, display marketers had to buy up a sites inventory in the hope of reaching the right users. RTB revolutionized display advertising by making it possible for advertisers to target display ads to the specific users who are most likely to purchase their products or services. To take the simplest example, rather than paying a huge sum of money to run ads across The New York Times, Zappos.com is able to serve ads only to those nytimes.com users who have already looked at a pair of shoes on Zappos.
To get started with RTB, the advertiser needs to work with a DSP (Demand Side Platform). The DSP allows the advertiser to bid (in real time, via an algorithm) for impressions in an ad exchange. The impressions are available on a wide range of sites and sold via a SSP (Supply Side Platform). The big question for the advertiser, then (be it an agency or a brand), is how to choose a DSP, and the answer, in most cases, will come down to which DSP has the most third-party data, the most access (can they serve ads on Facebooks FBX exchange?) and the most technical know-how.
Technical know-how is increasingly important because the RTB sector is evolving rapidly. The Zappos example mentioned above is known as Site Retargeting because Zappos is targeting a user who has already visited its site. But some DSPs, including my company, Chango, now use far more data that makes it possible to take retargeting in entirely new directions. With data on user search terms, for example, a DSP can target display ads in much the same way that search engines deliver text ads next to search results.
But if RTB is a breakthrough technology, that doesn't mean there haven't been some growing pains in the industry. One problem some agencies and brands now face with RTB is that they rely on too many vendors. Its easy to make this mistake because the ROI from each vendor might look pretty good. But often these vendors will end up bidding for the same users. In other words, the advertiser ends up driving up the price of its own impressions.
Other times the problem is that the DSP is failing to do a good job of frequency capping. This can leave users feeling as though theyre being stalked by a brand as they browse from site to site. And then theres still the problem of how to measure your RTB campaign. A common mistake is to look only at clicks, which actually reveal very little about the success of a given campaign. An additional metric, known as view-through attribution, allows the advertiser to track conversions based on whether a user was exposed to an ad. And view-through, when used properly, turns out to be a much better measure of a campaign's success.
None of this means you should avoid or abandon RTB. Simply put, RTB works. Thats why the sector is growing so quickly. Just make sure you choose your vendor carefully. Sure, RTB, is about great technology. But, as with all industries, the people you work with will ultimately make the difference.