Building Real-Time Bidding

Headshot of Rajeev Goel

In digital media, a new solution that promises a better mousetrap will typically draw two reactions from the industry. The ones who stand to benefit try to hype the trend, hoping to ride the wave. The old guards spread fear, uncertainty and doubt because the solution may eat at their market share.
Such is the case with real-time bidding, which became a very hot topic among online display advertising buyers and sellers in 2009, and is likely to dominate industry discussions in 2010.

Just 1 percent of all online display ads were bought on an RTB basis in 2009. That number will rise dramatically to 3 to 5 percent this year. Most of the conversation on the topic has centered on the benefits for advertisers and demand-side platforms. These entities are able to place a value on each unique ad impression, individually and in real time, using a judgment that takes into account proprietary data and technology. The result is better performing campaigns and greater advertiser ROI on those campaigns.

However, what are the benefits to impression sellers — the publishers? If buyers want real-time bidding, publishers should be thinking about real-time selling. There are some key areas to consider in real-time selling and their effect on the online publishing business model.

Revenue: There has been little, if any, publicly available data showing that publishers participating in RTB campaigns are seeing revenue lift. RTB is new and only a few companies have the infrastructure to facilitate those bids. In our early tests with select publishers and a dozen RTB buyers — roughly thousands of campaigns and billions of ad impressions — the impressions bought via RTB are monetized at CPM rates 60 percent (in some cases more) higher than impressions not monetized via RTB. This translates to better single impression value on inventory that is not sold by the direct sales force. The industry needs more volume to realize the overall sustained effectiveness for publishers with scale.

Brand control: The instantaneousness of RTB requires improvement on the granularity, timeliness and fidelity of publisher brand controls. Work flow must be set up to automatically update blocklists with new advertisers that can then be instantly communicated to RTB buyers in seconds or minutes rather than in months. Furthermore, the system allows for more premium buyers to get into the bidding game, willing to spend more for the right targeted customers.

User experience: Because RTB uses a range of contextual and audience targeting parameters in real time, the ad served is more precisely targeted, and therefore provides a better experience for the user. Additionally, because the number of times a user has seen an ad is taken into account, a wider variety of targeted ads are shown to avoid overexposure of a single brand. This can also mean more exposure to new advertisers for the publisher.

Reduced discrepancies, simplified ad operations: One of the biggest frustrations for publisher ad operations teams is dealing with discrepancies — ads priced differently from an agreed upon amount, ads not served where they are supposed to be, ads coming in through an ad network when it was originally blocked on another network. An RTB system allows publishers to know exactly where the ads come from and at what price. That cuts the amount of time spent on rectification hassles.

No ad network defaults equals speed: Frequently, when an ad network is called to show an ad, it either has none to show or chooses not to show one. This sets off a daisy-chain reaction where publishers rely on the next ad network among their partners to show an ad. What amplifies this is that sometimes multiple ad networks default, which stresses the ad-serving system and slows the page load. The flexibility of RTB allows only the demand side to make a bid if they have an ad to show, thereby avoiding the page load issue.

Rajeev Goal is the co-founder and CEO of PubMatic.
Publish date: January 11, 2010 © 2020 Adweek, LLC. - All Rights Reserved and NOT FOR REPRINT