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Real-Time Bids Build Brands

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In a quest to capture the most eyeballs online and get a leg up on their competitors, a growing number of advertisers are using programmatic buying. Defined as the automation of buying and selling of desktop display ads, mobile ads, videos, Facebook ads, and other ads, programmatic buying comprises automated booking, analysis, and optimization of online ad campaigns.

Programmatic buying uses real-time bidding (RTB) and non-real-time methods to buy ad space. Using RTB, publishers (i.e., websites) auction off available ad inventory in real time using an ad exchange. Marketers use those exchanges to bid in real time on a per-impression basis, or based on the impression’s value to their respective campaign.

According to eMarketer, programmatic buying and RTB are hot and getting hotter. In its recent Advertisers Continue Rapid Adoption of Programmatic Buying report, the research firm says advertisers are spending more than expected on RTB, accounting for a significant share of all display ad spending in the U.S. in 2013—19 percent of sales, or $3.37 billion. And eMarketer projects that RTB digital display ad spending in the U.S. will grow to account for 29 percent of all U.S. digital display ad spending by 2017, or $9.03 billion.

Ratko Vidakovic, director of marketing at the Toronto-based self-service advertising platform SiteScout, says direct response marketers are well positioned to take advantage of RTB as part of their overall programmatic ad buying strategies. In most cases, he says, marketers use RTB to raise brand awareness and hit specific DR performance goals (tracking cost per acquisition, for example). “From what we’ve seen through working with direct response marketers,” he says, “RTB helps them achieve and surpass these goals.”

A relatively new way to apply display media online, RTB relies on ad inventory being sold in bulk via CPM. Ad views are auctioned in real time to the highest bidder before a webpage loads on a consumer’s desktop, laptop, or mobile phone. The concept introduces a new level of pricing efficiency for direct response marketers in terms of targeting, workflow, and performance, Vidakovic says. Because each impression is auctioned individually, advertisers can target specific audiences.

“Traditionally in the online space, advertisers have gone after audiences indirectly by going to publishers that index towards a certain demographic,” Vidakovic says. A marketer that knows its target audience watches ESPN frequently, for example, would select ESPN.com for display advertising. “That’s the old, inventory-centric way of looking at media buying,” he says. “RTB is a new paradigm that allows advertisers to target audiences based on specific characteristics and behaviors. It’s an audience-centric approach.”

Driven by numbers and accountability, DR marketers will also be attracted to the data-driven, statistical nature of RTB. “There’s a lot of transparency in terms of data,” Vidakovic says, “and the opportunity to dig through that data and really optimize campaigns.” He advises marketers to evaluate different programmatic media buying platforms (also known as DSPs or demand-side platforms) before selecting one. “Find a DSP partner that provides visibility and transparency into where the ads are showing up.”

Delivery—or the guarantee that you’ll get the desired volume of impressions—can be another challenging area for marketers using RTB in the open-auction environment. “It can be a very dynamic situation, with no guarantees that you’ll win the entire ad inventory that you bid on,” warns Vidakovic. He advises firms to avoid the problem by either bidding higher by default or negotiating private marketplace deals with publishers via RTB.

As eMarketer’s numbers indicate, RTB’s strength in the online advertising space is on track to grow in the near future. “At this point, it’s still a relatively unexploited market that presents a solid opportunity for marketers,” Vidakovic says. “And it’s growing exponentially, thanks to the efficiency, pricing, targeting, and performance that advertisers are getting out of it.

 

Tim Hawthorne is the founder and CEO of Hawthorne Direct, a full-service brand response agency based in Los Angeles and Iowa. He can be reached at (641) 472-3800 or via email at tim.hawthorne@hawthornedirect.com.