Is Real-Time Bidding An Issue For CMOs?

Stefan Beckmann, Country Manager DACH at Infectious Media gives his take on whether RTB is an issue for CMOs.

It’s likely that your advertising budget has changed shape in the last few years, with more going online due to a new way of buying. As a CMO you may not be excited by the underlying technology, but the efficiencies of real-time bidding (RTB) could answer one of the perpetual marketing challenges–how to do more with less.

Online display spending keeps growing and RTB is fuelling this growth. This is seen in media agency Zenith’s September figures, which forecast Internet advertising to grow by 15.1% in 2013, with display advertising the fastest-growing category at 20%. The IDC’s recent “Real -Time Bidding 2011-2016” white paper shows RTB’s part in this, with RTB increasing its share of total display advertising spending from 5% to 20%, between 2011 and 2016.

The momentum can also be seen in leading advertisers moving spend into RTB. Matthew Turner, BSkyB director of online sales and marketing, said at a UK IAB event in May, “Sky is putting 35% of its display budget through RTB, and there is no reason it won’t be 50% by 2013.” At another event Bob Arnold, associate director for global digital strategy for Kellogg Company, said its shift to programmatic and RTB buying improved ROI by a factor of five.

In our own quarterly report into the trends in Europe, we have seen the marketplace developing. In the UK after price increases last year, prices have been stable in 2012, with inventory growth from the opening of a number of private marketplaces; France has witnessed increased inventory liquidity with the opening of premium inventory source LaPlaceMedia, and the announcement of new ad exchanges from eBay, Facebook and Orange; and in Germany an increase in inventory liquidity has been predicted from the increasing demand.

This growth is based on RTB’s ability to show the right person the right message at the right time. At its simplest, RTB is the most effective way of placing display ads online. It offers marketers the opportunity to bid for ads one by one (or impression by impression) instead of by the thousand, allowing total control over when an ad appears, the creative message, and what price is paid. By using this technology, advertisers can truly have a one-to-one dialogue with consumers.

The initial step in serving an advert is the “impression level decisioning”. When a user clicks onto a new Web page that includes an available ad slot, the publisher sends out a call for bids. Advertisers then place bids based upon the value they see in that individual impression. If your bid is the highest, you win and your ad is placed. It is this ability to say yes or no to an individual impression that eliminates waste. All this is done in less time than it takes to blink an eye.

Impression-level valuation means prospects, customers and basket abandoners can all be valued individually. You may choose to pay a premium price for someone who has visited your Web site, searched for a product and then left without converting to a sale; or indeed for someone who mirrors an existing customer, whereas a cold prospect may be less interesting to you and therefore engender a lower valuation.

A key benefit in RTB is the ability to serve “real-time creatives.” This allows you to customise the ad displayed for every viewer. Using data captured through Web site cookies and data points (such as weather feeds and geographical location), creatives can be built in real-time, customized by impression with a message automatically altered to suit the viewer.

As the campaign rolls out, the technology is constantly learning and using that learning to improve the next set of decisioning, valuation and creative decisions. It is a virtuous cycle in which variables are constantly optimized and campaign efficiency improved.

However, for this all to work RTB relies on data; the better the data is able to describe your target, the more effective your advertising. No one would dispute that the data they hold in-house from CRM systems, their own Web sites etc is the most valuable data they own. So using your own data can translate to a sustainable competitive advantage. RTB-enabled advertising becomes a CMO issue when we look to use this first-party data, in conjunction with other data sources, to create unique target segments based on attributes unavailable to competitors. Increasingly advertisers are looking at how to integrate insights from the data they wholly control to improve targeting and generate unprecedented results. For advertisers with large volumes of data, the search is on for partners who can create bespoke data integrations that protect customer data while unlocking insights to power advertising for all marketing objectives; be that customer acquisition; retention or up-sell.

Is RTB applicable to your advertising objectives? If you have an online advertising budget, your agency is probably already allocating some of it to RTB buying. For some advertisers, this is where it will stop. If your use of data is limited, the benefits of RTB will be based on cost efficiencies gained from optimizing spend against previous campaign activities, and workflow benefits for the agency around creative delivery and budget management. In this case your team is probably doing all you need it to, monitoring results and allocating spend to the partner best able to deliver efficiencies. But if your business holds data at any volume, be it on your customers, members or Web site visitors, the value RTB can deliver to your business is significantly increased, and the question becomes who can help you leverage your data to drive wider business success. A partner needs to be technically adept at integrating multiple data sources and manipulating “big data” to generate insight; have people with the right skill set, able to act on that insight for advertising campaigns that deliver results against business-led marketing objectives; and give your team transparency and control.

So is RTB a CMO issue? Perhaps the question is more “are you a data-driven CMO?” and if so, shouldn’t your advertising be data driven too?

Will Viewability Change the French Display Market?

Sylvain Deffay, Country Manager, France at Infectious Media gives his take on the impact of viewability on the French Display Market

As 2013 kicked off with the e-marketing conference in Paris, it seems that the importance of measuring online advertising viewability has impacted the French programmatic market. I was presenting along with several of my peers on the possibilities of viewability and where the technology is going, whilst Alenty presented jointly with AppNexus about their latest viewability app.

To date, viewability has been associated more with branding campaigns than performance, for obvious reasons. However, by ignoring viewability measurement in performance marketing, we are implying that the click remains the best measurement, and not the impression. It is time for us in France, with such a strong performance market, to explain and promote the efficiency of seen impressions in generating conversions, even without a click.

A measure of viewability can help us do this, and could not be more timely with the latest reports showing that, on average, anywhere from 30-50% of impressions are not viewed in standard run-of-network campaigns. The good news is we are now in a position to filter the real from the fake post impression conversions. Firstly, there is no need to account for post impression on unseen banners. Through comparing the uplift in conversions based on accumulated view-time, instead of just the usual frequency metric, each advertiser, and its trading desk, can now define which of the tracked post-impression conversions can be really considered as genuine conversions. This can be a great interim strategy to eliminate accounting for unseen impressions.

As viewability drives smarter measurement of performance, it entails a smarter buy from the trading desk. Many of us in France can now effectively measure the average viewability of adverts for campaigns, but only after the fact (a posteriori). Doing this takes a lot of manual work, however. By accumulating experience, site by site, publisher by publisher, the number of non-viewable impressions can be minimised when carefully selecting inventory sources. This will give campaigns marginally higher viewability, but has the related effect of excluding whole domains from a campaign, drastically narrowing available inventory and limiting targeting options.

The best value of measurement tools will come when you can automatically optimise campaigns to the predicted viewability of every single impression in real time. True automation will only come when this is integrated into the DSP, resulting in no effort from the trading desk to buy on viewability metrics.

The strength and scale of the performance offering in France has led many advertisers to view programmatic display buying through the lens of “last click wins”, with little room for the viewablity agenda. Viewability data offers the opportunity though, to not only to align with offline media measurement (characterised as eyeballs-on-ads), but also to provide more effective performance advertising campaigns, where all adverts can have a measured impact on conversion.

Whilst viewability data helps us all validate the effectiveness of our advertising campaigns, it also carries with it a groundswell that should change our industry in the long term.

Striking the Consent Balance

Rachael Morris is an Account Analyst at Infectious Media working on campaigns for clients in the telecommunications, technology, retail and travel sectors. In her day-to-day role, Rachael analyses large amounts of data and ensures campaigns meet their targets. Here she discusses issues around data privacy, recently brought into focus by the EU ePrivacy directive.

Images of Big Brother spring easily into the minds of a generation brought up on endless dystopia novels. We feel surrounded by governments whose desire to know all about their people is exceeded only by their fiendish organisation and ability to sift through reams of data almost instantaneously. Stories of leaked data abound*, growing ever more worrying as we realise just how much information we routinely put out into the world. And, much as we might like to say otherwise, this isn’t entirely unjustified: 90% of people have shared information with at least one site**. There is a lot of information out there about all of us. On the other hand, the sheer volume of data floating around is one of the very things that makes this sort of nightmare scenario so unlikely – the difficulty already involved in getting meaningful information about any given individual is only increased by the amount of noise that is now out there. Equally important is the fact that none of the information being made available is personally identifiable. It sounds like a small point, but the difference between the knowledge that Susie Johnstone was recently looking at flights to Italy and bought a bikini and the knowledge that computer 856076815463 did the same is huge.

Interestingly, the more people know about how the information about them is collected and what it is used for, the happier they are about it – after hearing details about behavioural advertising, 74% of consumers felt more comfortable with their data being used**. This kind of data and the ability to tailor the advertising served to someone’s needs and wants is what differentiates digital advertising from other forms, so it is vital that we reach some kind of consensus on what is and isn’t acceptable. The only way to do this is going to be opening a dialogue with consumers, asking their opinions and ascertaining exactly where their limits lie as well as making as much information as possible freely and easily available. Until consumers feel comfortable with the information we hold about them and how it is used, we will not be able to move forward and exploit the full potential of online advertising.

The recent EU ePrivacy directive heralds a change in the industry’s attitude to privacy. The requirement to obtain informed consent for all non-essential cookies will force advertisers into clear disclosure of the implications of a visit to their website. The difficulty lies in striking the appropriate balance – we do not want to adhere to the regulations at the expense of user experience. Over the next year, we will all need to work to reach a consensus on acceptable forms of consent, which best achieve this balance. As members of the IAB, Infectious Media is actively involved in policy development and best practice data usage in advertising, and we see this as a real opportunity for positive change.

*http://www.guardian.co.uk/technology/2011/apr/27/playstation-users-identity-theft-data-leak

** Statistics from IAB’s September 2009 study, in partnership with Olswang.

The Third Channel

There’s something happening at Facebook.  Almost under the radar it seems that they have established one of the strongest online advertising platforms available which is disrupting the established digital media buying landscape.  A simplistic view of digital media buying is that there are two very clear disciplines, ‘search’ and ‘display.’  Search is 100% platform traded whilst a growing portion of display is now starting to be platform traded via real time bidding (RTB).  This certainly seems very neat and Google have been in pole position to offer an over arching digital advertising management platform, the acquisition of Invite Media being the latest display addition to the existing, ubiquitous Adwords search platform.

However somewhere in the middle of this neatly bisected landscape, Facebook have started to build their own advertising empire, ignoring this equilibrium, and fast creating what would appear to be a completely new channel. In 2008 this quiet revolution started with the release of their self service buying interface for ASU’s (Facebook’s proprietary ad unit) and to complement this came a buying API on which they have allowed a limited number of third parties to build out campaign management tools.  At the start of this year, the walled garden approach started to pick up pace with the removal of all third party banner advertising and the under reported but very significant release of the Facebook conversion pixel.  Add to this an unwillingness to accept third party view tracking (at least for self service buyers) and the platform becomes a hybrid of the existing search and display models that are already prevalent but powered by Facebook using micro-targeted demographic and interest data.  Walled advertising gardens are the preserve of the audience or perhaps more crucially the data rich, and Facebook has both in abundance.

Rumour has it that their standard ‘banner’ CPM’s were incredibly poor with response rates for advertisers to match.  With the new system, advertisers now have the opportunity to tap in to the vast (and bettered only by Google) data treasure trove that Facebook holds on its users and create highly targeted campaigns.  Our experience of advertising on Facebook via their self serve platform is that it performs incredibly well for advertisers and justifies the ‘channel’ label with an emerging trend (in the UK at least) being Facebook specific pitches separated out from the rest of digital media buying.   Revenues are growing exponentially as well, up to $700m in 2009 and predicted to be over $1bn in 2010.  It’s safe to say that with this type of revenue and growth that banner advertising will not be returning to Facebook any time soon and they will push on with new ways to mine user data for advertising purposes all within the confines of Facebook.

So an interesting dynamic is emerging with Paid search, RTB traded display and now Facebook all having bespoke buying systems that are needed to operate them.   A couple of platform companies from both the search and display space backed up by large amounts of VC money are trying to solve these interoperability problems with the vision being a universal buying platform.  However, the further down the walled garden route Google and Facebook go, the more difficult it will be for this to become a reality as data is not portable between these environments.

From a media buyers perspective this is frustrating, but then it’s only from this side of the fence that interoperability make sense.  After all, would you share your data, if you were sitting on the monopolisitic advertising goldmine that both Google and Facebook are or would you keep it behind closed doors? It’s a smart play and the early signs are that Facebook could well be here to stay as a channel in its own right.