Real-time bidding: Why the programmatic advertising world is like a precocious child
The programmatic advertising world is very pleased with itself at the moment. It sits at the heart of the display advertising economy growing exponentially with every quarter. Every time I visit one of these companies, they have grown - more staff, more products, more team skiing trips.
Huge growth is predicted for real-time bidding
And let’s be honest, they have every right to be pleased with themselves. A recent IDC report noted that worldwide real time-bidded display advertising (RTB) spending will grow from $1.4 billion in 2011to $13.9billion in 2016. RTB's share of total display advertising spending will grow from 5% to 20% during the same time and RTB's share of indirect display ad sales will grow from 14% to 58%. So good news and triples all round then?
Well maybe not for everybody. Having been to several events for the automated trading world, two groups tend to be left out of the general back slapping: publishers and advertisers. It strikes me that the programmatic world is like an overly precocious child, congratulating itself on being born without recognising the rather important contribution of its parents.
Now I’m old enough to remember a time long ago when sales people used telephones to speak to marketers who booked advertising. Let me remind you of how it worked. They haggled over a price and the advertiser, if they wanted to buy, told the sales person what position in the mag they wanted. Somewhere the ad would have impact and be seen. If the sales person sold at too low a rate, that was their fault but at least they had the opportunity to sell at ratecard.
I don’t dispute that we now have a much more efficient advertising world. As publishers we are able to sell way more inventory than ever before. That’s good right? We sell the stuff nobody ever bought. Is that good for advertisers? I’d say that’s debatable. The row over buying unseen impressions continues.
And as publishers, we are forever being asked by the buy side community to open up more inventory to RTB. And by ‘more’ I mean the good stuff your sales teams like to sell at a decent rate, direct to clients or agencies in a creative and commercially beneficial way.
I’d hate to come across as a Canute type figure, attempting to turn back the tide of progress. Targeting audiences more effectively and in a more cost efficient way can only be a good thing. And if publishers are slow to understand the value of their own audience and the data they hold, it’s a harsh lesson they will learn.
I’m pretty sure that RTB will ultimately mature as an intelligent media buying protocol, and less as the current media arbitrage play. In an ideal world, RTB should develop as the industry's back-office. But until that happens, my plea is to the Exchanges, DSPs, SSPs et al, is to remember whose money funds this and whose space they are buying.
Andy Oakes is head of London operations for The Drum