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The Rise of Programmatic Ad Buying Through Real-Time Bidding & Ad Networks

real-time bidding (image via ContentCrossRoads)

As an Ad Agency executive, I consistently run into potential clients who are looking to buy media in the display banner ad space. A majority of the potential clients I see are beginners when it comes to display or rich media, and the only thing they know about display ad buying is that they want to see their banner ads show up on both desktop and mobile devices, and they want to have the ads shown to their target audience. However, many of those potential clients either cannot afford the minimums required on the larger ad networks, or just don’t have the personnel to keep up with the creative changes necessary to be successful buying display ads through programmatic or real-time auction networks.

For those of you who don’t know, let’s answer the question “What is programmatic buying?”. The short answer is programmatic ad buying is a segment of ad buying that involves Real Time Bidding, otherwise known as RTB. Through the rise of Ad Exchanges, as well as, Supply and Demand Side platforms, advertisers are able to serve what they feel is the best display ad in real time to the right consumer according to the data. The Ad Exchange gives them the ability to buy the space indirectly through an auction, instead of directly through a publisher, which can save on price and gives them the ability to target users without having to have that direct relationship with each publisher.

According to a survey done by Digiday in conjunction with OpenX this past February an published on eMarketer, 70% of media buyers who responded said they were already doing some type of programmatic buying currently. 77% of those buyers said they planned on increasing their programmatic buys would increase within the next 12 months.

The increase in RTB advertising has a lot to do with Facebook’s FBX inventory, but can also be attributed to the complexities of the “new web” and the precision of the tools available. In the “new web” consumers are multitasking on multiple devices. For example, one consumer may be playing a game on their phone while researching hotels for an upcoming vacation. While another user is watching a YouTube video on their tablet, while checking Twitter on their Smartphone. As this landscape continues to evolve it is literally impossible for an advertiser to strike up a direct relationship with every publisher necessary to reach their intended consumer.

Still in its infancy, programmatic buying will soon be the standard. Through private exchanges like the FBX and Yahoo!’s Right Media Exchange, private mobile demand side platforms like momentM’s Velocity or standard desktop DSP’s like Google’s Invite Media, MediaMath, Datazu, Turn or X+1 advertisers are getting access to more publishers across more devices. The algorithmic capabilities of these companies are ever evolving, and as they begin to perfect the process of auctioned Real-Time Bidding for space across devices and publishers, advertisers will continue to see better ROI on their programmatic buying.

There is a flip side to all of this growth and technological advancement. Publishers themselves have to find ways to protect their brand, image and their pricing structure. As with everything else, we automate processes to make them more efficient. This efficiency is happening everywhere including on pricing. Publishers are going to have to find a unique balance of direct relationships with advertisers, and indirect relationships with advertisers through Exchanges in order to maintain some of their profitability and control on their brand.

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