Real-Time Advertising
I attended the excellent AdMeld RTB (real time bidding) conference today. The conference focused on the rapid movement of online ad inventory to real time bidding platforms.
For some time now I’ve been concerned that the glut of advertising inventory available on the web would drive the value of most of that massive long tail of impressions towards $0.
While there is certainly a degradation of value taking place given hugely increased supply, user data is fundamentally improving this problem by providing the ability to target at the user level (vs. impression) and thereby significantly increasing value.
The online ‘non-search’ ad space is (finally) starting to look more and more like an efficient market, where almost every piece of inventory has value to some advertiser because of the specific user it touches, the data on that user and how/when/where it touches that user.
The equation —> Real time inventory + Data = Value.
The key remaining question however is price — what is each impression worth at the end of the day?
Current real-time exchange impression value is certainly depressed versus artificial rate card CPMs, but largely higher than traditional run of network/remnant rates. Eventually though, this exchange inventory will likely increase in value as more and more useful data is appended.
How much more value? And what does the composition of this market look like when it all shakes out? Too early to tell definitively.
What’s clear though is that RTB is the future of online direct marketing beyond search.
A representative from eBay said today at the conference that real-time exchanges currently provide the best ROI of any platform across the board for them, and they are increasingly moving dollars to RTB from search. This may be somewhat of a function of the artificially low-priced available inventory, but it is still incredible given where the market is starting from.
Branding dollars are increasingly moving to these platforms as well, as buyers continue to push for buying all types of media through this more efficient methodology. To combat this, many publishers are now adding pricing floors for ‘premium’ inventory moving through exchanges to create scarcity value. This feels like it will work for very unique inventory and audiences. Although I’m not sure how sustainable it is for how much inventory over time. It will certainly be interesting to watch and likely have massive impact on publisher top-lines.
What is clear is that a lot more inventory is heading to RTB platforms. The shift from search will drive prices up for this display inventory, and prices will stabilize at some point much higher than today but perhaps less than historically achieved through direct sales. And certainly advertising dollars will be more efficiently distributed across the web vs. concentrated in a few sites.
This is a fascinating market just beginning to unfold in front of us. I’m curious to hear your thoughts and perspectives.
