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How to make real-time bidding work for video advertising

By Dave Randall

February 5, 2013 | 5 min read

“Race To The Bottom” is a phrase that’s been thrown around a lot in the world of video real-time bidding (RTB). Publishers are understandably protective of their impressions as they seek to maximise revenue potential. Allocating portions of inventory into an exchange, or making impressions available on a bidded basis, is a step that many have been reluctant to take in the online video world. But why? My concern is that this is an irrational and unfounded fear based on a harsh education in a different market.

Dave Randall

For some context here, let’s look at RTB in the display world. The introduction of social media, the increasing variety of devices now available to view adverts online and the ability to create ad placements as needed, have opened up a near infinite pool of display ad inventory. Publishers wanting to most effectively monetise this mammoth supply are selling bespoke creative solutions, brand advertising and direct response campaigns, while also attempting to maximise remaining revenues through network sales and increasingly through RTB via exchange sources.

With this in mind, the panic induced by thoughts of a similar race to the bottom for video RTB is understandable, but not necessarily justified. If companies can’t sell their display inventory, then the remaining impressions are naturally considered ‘lower value or cheap’. This is the hunting ground for performance players to buy up that space in the hope of finding conversions at a decent eCPA and the very nature of that process means the impressions have to be extremely cost effective to the buyer. This so called race to the bottom can begin as soon as remnant is sold to outside sources. In the past, Publishers have been satisfied with earning something (as opposed to nothing) from their remnant supply, but remain cautious. The problem is that content owners equate monetising their remnant impressions through RTB to low CPMs and to a cannabilisation in CPMs across the board.

This simply doesn’t have to be true and the Online Video market is in the perfect position to change that perception. The key reason is supply – or shall we say limited supply.

At Videology we are constantly on the hunt for good quality inventory and buy a substantial amount of it; increasingly on an RTB basis. However, the dynamic rates at which we procure this inventory are not necessarily cheaper than guaranteed CPMs. Video advertising is far more of a brand play within RTB so we have to be extremely careful where we run those ads and what inventory we buy. This comes at a cost.

It’s no secret that in 2012 demand outstripped supply for the most sought after inventory. This ‘top quality’ video supply market is somewhat constrained. Don’t get me wrong, there is a lot of video inventory available to buy at cheap rates. However, we choose not to buy it because it’s typically poor quality, long tail and user generated, thus protecting our brand advertisers from the risk of running ads in less than reputable spots.

We aren’t looking for cheap RTB impressions for an effective eCPA. We are looking for the right audience, regardless of the buying mechanism. When we buy RTB impressions the supply ethic is the same as for our guaranteed purchases. What is the content and environment? Is this right for the brand? Is this the right audience?

Buyers and sellers of video ad spots are realising quickly that good quality audiences are highly valued, just as those broad reach, lesser targeted campaigns are lower valued. The CPM rates should reflect that value. I’m happy to spend more money to obtain the right user for the campaign at hand via RTB, versus buying bulk impressions at lower cost that include the wrong target audience. Why spend less on an audience that is completely inappropriate to the brief, just to make more profit? That business model won’t last long.

Increasing bid rates on RTB and spending more money for the impression to win the exact audience, with quality inventory, is of the utmost importance. Optimising your RTB targeting parameters correctly will enable you to find great quality, professionally produced content that’s an excellent fit for advertiser brands, with limited waste. Of course, by optimising to this extent you are fighting for the finest inventory available and as a result, are paying a higher rate for the best-fit quality impression. But you will also reduce the overall volume of impressions required to find the audience - which translates into a lower eCPM for clients. If you can manage that, you’ll be in pole position in the RTB race to the top.

Dave Randall is senior publisher services manager at Videology


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