Google 2012-09-09 | Google Adwords Consultant - Adwords Expert Chennai India - Kamal Chandran

Saturday, September 15, 2012

Real Time Bidding - The Future of Search Engine Marketing

Real-time bidding (RTB) emerged at the intersection of data liquidity and inventory liquidity. Today, third-party data suppliers have put the power of audience information in the hands of media buyers. At the same time, the marketplace for online inventory has never been more liquid. There are vast pools of online inventory available to every kind of media buyer, from small businesses running their first display campaigns to large agency trading desks buying on behalf of Fortune 500 advertisers.

At this intersection of data and inventory, there’s been an explosion of choice of where display ads can run. With millions of sites accepting display ads, it’s too difficult for media buyers to buy the audience they want when buying directly from each individual site. To buy an audience across even a small selection of a few dozen sites, a buyer would have to define the audience for the campaign individually with each site on the media plan. It’s operationally impossible to get the exact same audience targeting criteria setup with all these sites.

Real-time bidding helps media buyers find audiences at scale. This, in turn, helps drive performance by ensuring an advertiser’s ad is seen by the audiences most likely to respond. All media buyers can appreciate an enhanced ability to find audiences at scale, but how did real-time bidding emerge in the first place?

The Rise of Exchanges
When ad exchanges opened, they brought more liquidity to the marketplace for online inventory. 2007 was
a pivotal year for ad exchanges. Three major exchanges were acquired that year: Yahoo! bought Right Media
in April, Google bought DoubleClick in May and Microsoft bought AdECN in August. Each company quickly made vast pools of inventory available, which greatly improved the experience for many parties to transact in online display.

The Rise of Consolidated Buying
To help advertisers take advantage of this new liquidity, a new type of media buying intermediary quickly sprangup. These companies could access inventory from multiple exchanges with no need to aggregate inventory through relationships with publishers. Among these companies include the demand-side platforms (DSPs) who built their businesses on technology and services catering solely to the “demand-side” of the industry, the agencies and advertisers. As Figure 1 shows, 2007 was a banner year for DSPs too. Five of today’s DSPs were founded that year, including Invite Media, a company Google acquired in 2010.

DSPs weren’t the only companies to take advantage of the inventory exchanges made readily available. Ad
networks began to look to exchanges as a way to supplement their existing inventory. Plus, other types of
buying intermediaries began to specialize in niche businesses within the intersection of data liquidity and
inventory liquidity, such as retargeting and audience targeting specialists.

Before RTB, buying from multiple exchanges was time-consuming and inefficient for these companies. They
had to use a different system to access each exchange. And since a typical campaign would pull inventory
from more than one exchange, there was no easy way to achieve de-duplicated reach or to cap the number of
impressions that audiences would see from any given campaign. They needed a faster, more automated way
to buy across exchanges.

RTB Delivers Heretofore Unreachable Efficiency for Cross-Exchange Buyers

Now with large pools of liquid inventory and a robust ecosystem of buyers capable of accessing it, the market
was ripe for innovation. RTB was the missing piece. RTB was conceived as a workflow solution tied to new
opportunities in data-driven display advertising. Seeing the opportunity to grow the overall pie for online
advertising, exchanges began to develop real-time bidding APIs.

As Figure 2 shows, a surge of activity took place in 2009 and 2010, when many ad exchanges and supply-side platforms (SSPs) announced support for RTB.

Since RTB offered a solution for efficiently acquiring online ad inventory, it began an unstoppable pattern
of rapid growth. Cross-exchange buyers—DSPs, ad networks, agency trading desks and other media buying
intermediaries—were quick to take advantage of RTB. This rapid uptake of RTB can be seen in the track record of DoubleClick Ad Exchange (ADX). As Figure 3 shows, ADX inventory sold through RTB jumped from 8% in January 2010 to 68% in May 2011—a tremendous upswing in just under a year and a half.

RTB has taken off for one simple reason: Buyers see real benefits from it. For example, in a comparison of
ADX campaigns running in April and May of 2011 executed via RTB versus those executed through non-RTB mechanisms, RTB provided for a 19% savings on CPM rates and raised CTR performance by .06 percentage points, from .09% to .15% CTR.

In a recent survey by Google and Digiday, 47% of advertisers and agencies who responded said they intend
to spend more on digital advertising in 2011 because of the benefits of RTB.2 A full 88% of advertiser and
agency respondents plan to buy online display via RTB in 2011, up from 75% in 2010.3 Plus, among media
intermediaries (such as DSPs and ad networks), 29% expect their RTB volume will increase by 100% or more over last year; 19% believe it will go up by at least 200%.