The Future of Real Time Bidding

Martin Kelly, CEO and Co-founder, Infectious Media, explains why the future of real-time bidding lies with improving the advertising experience, not just the buying process

Since its emergence in 2010, Real Time Bidding (RTB) has been one of the most over-hyped technologies in advertising. I wrote an article recently where I talked about RTB actually being a huge disappointment and this struck a chord with a number of advertisers that we’ve spoken with who can’t see what all the fuss is about. These advertisers are generally seeing RTB as just another line on their usual media plan, shuffling money from one supplier to another with very little benefit to them.

And, this is the main issue with RTB/ programmatic trading in 2013, we fundamentally don’t know what to do with it yet. We’ve witnessed the creation of an amazing infrastructure that has the ability to deliver so much and yet to-date has delivered little for advertisers beyond making it easier and potentially cheaper to do exactly what they have been doing since the late 1990’s when display advertising was born.

So what’s next, what can we expect and what do we need to do? Firstly, education is key, not only for advertisers but also for the people that create and implement campaigns on their behalf. Instead of thinking of RTB as a method of doing the same thing slightly better, we need to look at what the technology enables us to do. To be clear, the endgame is about making the advertising experience, rather than the buying process, better. When we get there we’ll start to see a real shift plus excitement from advertisers. Two technologies stand out for us as areas that are going to be key to facilitate this shift, the widespread adoption of the Data Management Platform (DMP) and dynamic creative technologies.

It seems obvious but what makes the real-time space conceptually better is that we can use actual audience data to make buying decisions rather than using panels (TGI, ComScore etc.). This is great in theory but in practice getting data is difficult. Third party data has proved itself unreliable and a red herring. Ultimately the real change, and competitive advantage for the advertiser, comes from unlocking the value of their own first party data. Again, great in theory but in practice it can take up to six months to even get a pixel on an advertiser’s site! DMP’s are platforms that allow advertisers to take control of their own data assets, storing them somewhere that’s secure and giving the flexibility to analyse and cut segments, and finally linking this to the real-time buying space to action those audiences.

‘What does a real-time advert look like?’ This is a question I was asked recently by a big advertiser and it summed up one of the most fundamental current problems we have as an industry. We have all this amazing technology that allows us to pinpoint our audience and bid solely for them and yet we generally show them the same ad we show everyone else. This goes back to educating everyone in the industry, we’re so used to not being able to target media buys very well that we’ve become accustomed to producing creative that has to appeal to millions of people. So when the opportunity comes to target smaller audiences more precisely our existing ways of working are not sufficient. Think about search advertising, when the ability was introduced to build ad copy dynamically, the increase in response rates was dramatic compared to when generic copy was used. When we target an audience because they live in Manchester or it’s a sunny day, or because they have been to our site, then let’s personalise the creative based on that, the technology is there to do it, it just needs our planning processes and creative agencies to catch up.

There’s been a dramatic shift over the last two and a half years and there is nobody left denying that RTB/programmatic trading is the future. However, if we’re really going to fulfil the potential on offer then we need to change the most analogue function, how we are thinking about it.

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.

Infographic: Real-Time Bidding Year Review Europe

Our team of experts have put together a RTB Year Review Infographic. It includes key market trends from 2012, insights from our in-house experts and predictions for 2013 – all in a easily digestible format.

Scroll down below to view our Infographic:

The Facebook Exchange is RTB on Overdrive

Chris Stark, Product Director at Infectious Media, explains why Facebook’s recent launch of Facebook Exchange (FBX) is a massive opportunity which marketers should capitilise on.

For marketers, the Facebook advertising proposition is increasingly compelling. The site boasts 1B users globally which includes almost 65% of the UK online population. As a site built by users rather than publishers, Facebook is a rich source of consumer data. And because pages are designed individually for each user there is rarely a clash of ads, making Facebook a great brand-safe outlet.

Facebook launched its Ads Marketplace a few years ago to provide a channel that leverages its immense store of users profile data. Aimed at increasing activity within the Facebook environment, this display advertising gives marketers extremely precise targeting options. In combination with the personal connections that Facebook enables, marketers can raise awareness and keep their fan base engaged.

However Facebook Marketplace lacks the ability to reach the bottom of the sales funnel. So by supplying the same inventory via an open exchange model, Facebook’s recent launch of Facebook Exchange (FBX) is a massive opportunity for marketers with retargeting strategies. FBX does not make its own data available, but crucially it allows buyers to utilise their 1st and 3rd party data sets and bid optimisation technology to participate in the inventory auction.

Facebook is different from other inventory sources because its inventory is ‘always on’, with users accessing it regularly throughout the day. In contrast, other RTB inventory is often weighted towards the evening. As a result, any activity requiring high frequency touch points will benefit from being run on FBX; for example, basic retargeting, creative and message testing, and ‘bench testing’ 1st party segments.

With Facebook adverts there are no viewablity issues, even though the ad-size (100×72) is smaller than IAB standard ads, they are always visible on the page. Incompatibility is not a problem because the site provides a high standard of consistency and appropriateness to the user. For the marketer, this means that a larger proportion of ad spend is focused on media costs, and not on site qualification or viewability metrics. The reduced ‘overhead’ means better ROI for simple retargeting.

So how does this work in real life? For e-retailers FBX allows for rapid re-acquisition. Many customers do not complete a purchase after visiting an e-retailer site; they may abandon their cart, get distracted, or stop their product research. The objective here is to get their attention, remind them of the purchase intent, and encourage them to complete the transaction. But e-retailers face cutting through an excess of online noise, in a limited amount of time, to reach these customers effectively.

The question is how long does the purchase interest last after the site visit? Two days? Five? The best retargeting campaign is one that can reconnect within hours. A good percentage of customers will be on Facebook for a few hours each day, so can be reached while they are still considering the purchase. So for e-retailers, marketing through Facebook Exchange allows for site visitors to be re-acquired faster than ever before.

For hotel chains, people become prospects the moment they begin to plan a trip. This planning is often motivated by reading about holidays or seeing friends posting pictures of travel abroad on Facebook. The benefit of FBX is you can apply external data sources to decide on the best time to serve travel ads. For example, we apply weather data to capitalise on a user’s increased desire to travel when it’s raining or cold.

There is also a real benefit in this industry, in running hundreds of small, sophisticated tests of pricing and travel packages in combination with the external data. Not only can you find the right customers, but the right messaging and the right opportunity as well. There are rarely simple combinations of creative and data that work all the time, the scale of FBX allows for the speedy optimisation of campaigns, minimising the cost of acquiring new customers.

Infectious Media has many years’ experience working with Facebook, serving sophisticated awareness-building adverts on the Facebook Marketplace via our own integrated tool, Impression Desk Social. We use this experience to maximise the benefit that can be gained through the Facebook Exchange, combining detailed knowledge of your customers, our robust optimisation and analytical techniques, and creative that can adapt to engage the audience in the most effective way.

Our integrated approach of FBX, Facebook Marketplace and non-Facebook RTB, offers a ‘whole that is greater than the sum of its parts’. We define and test your target audience with Facebook Marketplace advertising. We then drive them at scale to your site using larger ad formats on external RTB inventory. This audience is then retargeted when they go back to Facebook via FBX, well within the effectiveness window, and with a message optimised to their interests. As the system learns, it becomes more effective, optimising over time to produce better and better ROIs.

A common mistake is to think of Facebook advertising as similar to social media marketing. It is more accurate to think of Facebook advertising as a vast source of inventory and data, allowing the benefits of scale and consistency to be brought to bear to meet advertiser goals, making it one of the most effective advertising channels.

Measuring Brand Activity through RTB

Harley Norrgren studied Statistics at University College London and after a two year tenure is currently heading up Infectious Media’s Analytics Team. Being with Infectious throughout their entire working relationship with RTB he’s had the opportunity to watch the space develop since the start of RTB’s European adoption.

If you’re spending large portions of your media budget on brand activity, you’ll want to ensure that you’re getting the best performance for your money, yet the effect of brand activity is typically hard to measure as it poses a few difficult questions to advertisers:

• What metrics can we use for measuring brand engagement?
• How can we get access to user level data from predominantly offline channels?
• How can we integrate cross-channel data to get a full picture of the effect of our branding spend?

It is our proposition that buying via RTB on Ad Exchanges makes brand advertising measurable and increases the accuracy of any direct response path to conversion analysis and attribution modelling. We currently create bespoke branding metrics (in conjunction with our data partners) and marginal attribution models, which help to give advertisers better insight into the effect of their brand spend and facilitate optimisation towards branding goals. These bespoke metrics are called ‘Brand Units’, and are a standardised unit of any combination of different brand measurements, such as exposure time or brand related search uplift, which can either be a proxy for conversion or reflect other incomplete path brand objectives.

Exchange generated impression level data feeds provide unique opportunities for data providers to integrate their data with unprecedented granularity. We are currently working with data partners to provide us with impression level exposure time metrics, enabling us to optimise towards advertising face time and to buy display in terms of view duration rather than per impression. The combination of engagement, search uplift and on-site activity density means that we can measure brand effect on a per user basis, rather than resorting to surveys, and optimise campaigns against these metrics in real time.

The unique user level insights generated from brand activity can be coupled with post brand engagement and ultimately conversion/post-conversion activities, allowing us to fit brand activity directly into the conversion path, as well as attribution models, providing advertisers with more insight about the path to conversion than was ever available before from a single channel.

One of the main considerations about running brand activity through exchanges is the perceived ‘remnant’ status of most inventory available. It’s important to remember that just because an impression is remnant, it doesn’t mean it’s of poor quality. Through the use of ad exposure times we can identify and optimise towards the best value Cost per Face Time inventory sources, giving advertisers more clarity and better value than direct buying could. Furthermore, the presence of private exchanges and the market wide increasing adoption of ad exchanges means that more and more ‘premium’ inventory is made available every day. Via exchange buying, adverts can be purchased on premium inventory on a per-impression basis and made measurable enough to get a stronger indication of the real value of each advert shown.

These insights represent a large step forward for a communication goal which is generally hampered by industry standard attribution models. We hope that the unprecedented feasibility of marginal attribution models and access to user level data means that more opportunities can arise for branding activity to be bought on exchanges and start to drive a shift away from historically retargeting heavy DR budgets.

For more information please visit http://www.infectiousmedia.com/index.php?page=our-products

Measurement – The Elephant in the (Attribution) Room

Attribution is a massive issue right now and there are a number of innovative technology solutions that have been developed to give advertisers the ability to understand how different channels interact with each other. These solutions tend to focus on attributing value to impressions and clicks (interactions) further up the funnel and whilst this is a sensible step, it’s only half the story. It’s no good understanding that Display has a positive impact on Search without knowing how your activity can be altered to improve that impact. This has to start with measurement. We must delve deeper and assess whether these “interactions” were interactions at all.

Online was supposed to be easy. Actual, attributable intent and sales from advertising without having to spend the company’s pension fund on a piece of econometric analysis that you would neither understand nor trust. Last-click-wins gave us a benchmark to measure all our digital activity, allowing us to compare and contrast different channels and strategies in the same way.

But it was broken. Assuming that only the last click (or impression if no clicks were recorded) influenced a user to make a sale was not just wrong, it was misleading. Yet Display and Affiliate networks made huge sums building CPA businesses on this flawed methodology and when Search exploded on to the scene, no-one seemed to realise that Google had effectively stumbled upon the best exploitation of last-click-wins, using it to build the largest online advertising business in the world. Even now we have Criteo-style product retargeting and Affiliate voucher code sites that often snipe the last click like a seasoned eBay auction bidder, winning the best deals just before the timer runs out.

Times are changing, however. Marketers are now more savvy and are demanding a more accurate solution to the attribution problem. But before this can happen, we need to understand the complexities of online tracking a little more deeply.

When analysing online path to conversion data, you can typically find between 5 and 100 events that may or may not have influenced a customer before conversion. Since most adservers only record clicks and impressions, your conversion path will only include these metrics as events. Herein lies the first problem. Impressions are not ad views. In other words, just because your adserver has recorded an ad call, it doesn’t mean that the ad was actually served. Even if the ad was served, it maybe was not even seen, especially if served below the fold. In essence, although impressions appear more tangible, they are no more accountable than newspaper impacts.

The second problem is clicks. Clicks are seen as the only measure of engagement and intent online. But advertisers should be asking for more. Anyone who has done some click to page landing analysis will know you see anywhere from a 15% to 50% drop off. If your clickers aren’t even waiting until your landing page loads up, how engaged were they? Similarly, what about all the people that read the ad, maybe played with it a little, then returned to what they were doing before?

Clearly not all clicks/impressions are equal and on their own, do not provide us with enough information to form robust attribution models. Whilst you can create a model based on your current media activity, all it takes is some additional spend on some cheap, below the fold inventory or some incentivised click sites to skew attribution and devalue the sites that actually do generate true ROI. What is required is more information. Impressions need to be augmented with above / below the fold data, time and position on page and page context / quality. Clicks need to be supplanted by interactions and page landings. With these enhanced metrics we can begin to understand whether our adverts were indeed seen and how they engaged our target audience. Once we understand this, we can start to model it.

Luckily there are now many companies that can provide this data. The likes of AdXpose and Flashtalking can all provide interaction data and some of the impression tracking enhancements mentioned above. Page landings can already be recorded using existing pixel technology and many data companies such as Peer39 can provide page context. What stops us from running all these technologies across all campaigns now are the current incremental costs of such solutions as well as the technical difficulties in integrating this data with standard adserving data in one place.

Of course, having the capability to record this data is only half the story. Storing and analysing it at a time when most companies struggle to store and analyse their click and impression data is arguably a larger issue. Add to this the lack of statistical and analysis skills in most marketing departments, is it any wonder that marketers hide away from the problem and merely discuss the fact that last-click-wins needs to be improved but have no idea where to start?

Here is where RTB can help. RTB provides an environment that allows any company to exchange data with another, server to server, in order to better understand the impression being served. By providing the APIs to allow companies such as AdXpose, Peer39, etc. to integrate directly with DSPs and adexchanges, the integration problem goes away. Data can still be collected in two separate places but you have a common unique user id to match up the sets. Once integration is solved, costs can come down as more advertisers will take up the service introducing economies of scale.

This still leaves the data storage and analysis issue, but creating a fast and scalable storage and analysis infrastructure is not as difficult as it used to be. Companies such as Netezza and Greenplum can do it for you for a price. Alternatively, if you can afford the time to investigate and implement open-source platforms, solutions such as Hadoop and InfoBright can also work just as well.

2011 is going to be a year where these technologies combine to allow us to better understand all that our advertising is delivering. Soon there will be no excuse for marketers to stick with last-click-wins as we will be able to provide robust attribution models to support or oppose our hypotheses. When this happens, we will not only be able to better understand the value of events leading up to conversion, we will also open up the door to more branding activity being placed online.