The B2Bnn primer on RTB advertising and its future

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Over the past few years, real-time bidding (RTB) has become a leading force in ad-tech and programmatic marketing, transforming online advertising as more and more companies invest in the RTB space.

First, a definition: RTB is the buying and selling of online ad impressions in real-time auctions that take place faster than the blink of an eye—the bidding and serving of ads typically occurs in about 100 milliseconds. RTB is a method of serving targeted advertisements on a “per impression” basis, with prices set and ads sold almost instantly based on analysis of impression data which is then matched to an advertiser’s target audience.

RTB shouldn’t be confused with programmatic advertising. RTB is a type of programmatic, but not all programmatic advertising utilizes RTB.

According to eMarketer, RTB serves as the dominant transaction method of programmatic buying, accounting for more than 90 percent of digital ad dollars in 2014. Also, RTB revenue will reach over $26 billion by year-end 2020, up from $8.7 billion this year.

RTB greatly increases efficiency, eliminating the need for ad buyers to hawk their spots to publishers and haggle over prices. Exchanges and other ad-tech allow buyers to access a previously unimaginable variety of ad inventory from an array of sites and zero in exclusively on the the most promising impressions. This valuable capability drastically reduces wasted impressions, as well as the need to rely upon expensive and often unreliable human ad buyers.

RTB also eliminates one of the biggest problems that has plagued traditional display advertising for decades, namely a lack of precise targeting in a system in which advertisers buy ad slots on publishers’ websites, handle creative, and pay a fixed CPM rate. This scattershot approach to marketing is fraught with waste and has been outmoded for years.

Why should I care about RTB?

The advantages for B2B marketers are numerous, and include less wasted impressions (which means less wasted money), greatly improved CTR, access to a wider range of websites, close targeting and easily alterable creative due to real-time ad exchange transactions.

Nii Ahene, chief operating officer at CPC Strategy, told B2B News Network that B2B marketers are all-in on RTB.

“Organizations that focus on account-based selling and marketing are already taking advantage of the targeting capabilities unlocked by RTB—IP blocks, CRM data and other first-party data,” said Ahene.

“Coupled with targeted messaging and offers that meet buyers where they are at the top of the funnel, RTB allows B2B advertisers to exist beyond the confines of their own web properties, across devices,” he added.

RTB tech is rapidly spreading from desktop to mobile, revolutionizing mobile advertising in ways that were all but unimaginable a decade ago. The level of precision targeting RTB allows is increasing CTR and conversions to get many B2B executives very excited.

But RTB faces a big climb…

Despite the reported advantages, RTB isn’t without its problems. Some publishers remain wary of the technology and understandably so, since auctions enable advertisers to pay less for their products.

“There may be a bit of a struggle as publishers may be hesitant to unlock certain portions of premium inventory or worry about controlling pricing and ironically, certain advertisers will be concerned with RTB marketing due to the fact that there’s not enough premium inventory,” Dustin O’Dell, mobile sales manager at AdTheorent, told CPC Strategy “However, in mobile it’s much less of an issue since there’s a less definitive line dividing premium and remnant inventory, which should make the transition easier.”

Take the implementation of price floors, which let publishers set eBay-style reserve prices that guarantee a minimum price that must be reached in order for an auction to be completed. Because the price floor can be tweaked on the fly, without the buyer’s knowledge, a buyer may wonder, “What’s to stop sellers from analyzing the bids coming in and raising the floor price selectively?”

Uncertainty fuels both confusion and caution around RTB. As we learn in this report, “Advertising space is sold through a bidding process, leaving advertisers uncertain as to whether they will secure inventory.”

Future outlook

So how will RTB marketing evolve in the coming years?

“There is no doubt that the ubiquity of real time bidding will only continue to grow over the next three to five years,” predicts Ahene. “I can see innovation in the space will be coming in three main flavors—data availability, desktop/mobile defragmentation, and ‘mainstreaming.’”

Ahene points out that “some of the biggest names in consumer profiling” have yet to embrace RTB. If key players in the B2C and B2B realms open even a portion of their data to use on third-party exchanges, it would boost advertising that utilizes buyer behavior to convert to purchases.

The continued rise of mobile also means marketers will have more options for effective and innovative campaigns, and ‘mainstreaming’ will level the playing field much as Google Adwords has done in the more traditional online marketing arena.

RTB will become the dominant medium in which all media will be bought and sold, PocketMath co-founder Casey Grooms predicted in an interview with CPC Strategy. “Ad networks will become a thing of the past and you’ll end up with guaranteed buys via programmatic and RTB.”

Industry leaders are “focusing on the move from targeting keywords and placements to targeting audiences,” notes Liz Rutgersson, head of RTB at Periscopix. “Expect programmatic buying products and services to pave the path for advertisers to achieve high returns which may not have been possible with traditional display.”

The prospects of higher returns and much greater efficiency mean RTB is all but certain to dominate online advertising, especially mobile ads, going forward.

Photo via Flickr user Direct Relief

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Brett Wilkins

Brett Wilkins

Brett Wilkins is Digital Journal's Editor-at-Large for U.S. news. Based in San Francisco, he is the editor and publisher of Moral Low Ground and is a Yahoo! Featured Political Contributor.