Is Real Time Bidding the Future of Advertising?

August 23, 2010

One of the hotter trends in the on-line advertising field is the rise of real time bidding (RTB). One journalist, Nick Saint, even went so far as to headline a recent RTB article “The Rise of Real Time Bidding is the Biggest on-Line Advertising Story of 2010.” How important is RTB and could it ever move beyond the web?

Real Time Bidding: 2010 Online Advertising Trend

Real Time Bidding – What is It?

Real time bidding combines web browsing behavior, sophisticated algorithms, and ad inventory platforms which make it relatively easy for advertisers to bid on specific audience profiles in real time.

Key players in the RTB space include AdMeld, Invite Media (recently purchased by Google), and AdSafe. Advertisers use platforms like MediaMath which combines all of the relevant data—who advertisers want to target, how much they’re willing to pay, etc.–to make buying on-line inventory simple and fast.

Real Time Bidding: Web Browsing & Behavior Analytics

The RTB Value Chain

Conceptually, RTB makes a lot of sense:  why buy inventory impressions when you can buy against a much more targeted audience? Everyone benefits:

  • Publishers can sell targeted inventory at higher prices
  • Advertisers are willing to pay a premium to get more targeted ad coverage
  • Middlemen supply the platforms and technology and benefit as well

Setting aside privacy issues, which the Wall Street Journal and others have reported on recently, RTB is a classic case of how marketers can operate in a more efficient manner with the right information and technology.

The RTB Value Chain: Linking Web Behavior & Publisher Demand

What’s Wrong with RTB

Sounds great, right? Currently, RTB is essentially focused on better targeting. And better targeting is important. In fact, past analyses using single source data from the TV world would suggest that better targeting based on buyer behavior instead of demographics can increase advertising effectiveness by +10% or more. But, there are important areas where RTB currently fall short:

  1. RTB doesn’t Consider the Contextual Power of Content – As I’ve written about in other posts, content—in this case web page content–makes a big difference in how your ad performs. If content providers had access to data showing how ads perform on brand recall, purchase intent, etc. in different content, this data could easily be factored into the RTB buying algorithms to yield a better advertising outcome.
  2. RTB doesn’t Focus on Business Impact – Why stop at better targeting? If the data existed, why not buy media based on actual impact—either brand equity improvements or volume and share growth? In the past, the industry got hung up on click-thru rates as a surrogate for impact—a bad decision. But, the general intent was a good one—to more closely link the impression to actual performance. In an ideal world, advertisers would buy inventory not just against a target, but against real business impact.
  3. RTB is only On-Line – On-line is important and getting more so every day. But, for some categories like CPG, TV remains the medium of choice for driving high levels of reach very quickly at relatively low cost. For RTB to really have an impact, it will need to migrate out of on-line and into the world of TV. As TV morphs into an increasingly “networked” on-demand form of entertainment, this is becoming more and more plausible—albeit still a ways in the future.

RTB—Where Next?

RTB is a great concept and its beginning to come to life on-line. The AdMeld CEO estimates that the 2010 RTB market will be approximately $1B, so this is no longer a niche phenomenon. But for perspective, this is still only 4% of estimated on-line ad spend, and just a tiny fraction of the $55.8B TV advertising market in the U.S.

Real Time Bidding: Small Percentage of Online Media Spend

All of the shortcomings outlined above aren’t meant to suggest that RTB is a bad idea. Far from it, I think it’s a huge advance forward and one that we should watch very carefully.

For RTB to realize its logical potential, it will need to increasingly measure brand impact and cross into other mediums like TV. But the potential is truly enormous—imagine being able to buy media in real-time based on how it actually builds your brand and your Marketing ROI.

Now that would be nirvana for any CMO or CEO—whether it’s the biggest advertising story this year or any other year.

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The 2010 Marketing Landscape – Social Media & Business Predictions for Marketers

March 1, 2010

Marketing is in a state of change perhaps unmatched since the invention of TV advertising and brand management. As marketers consider how to better utilize the social web to build their brand in this rapidly changing environment, one good read is “17 Visionaries Predict Social Business Impact on the Enterprise.” At the start of 2010, Christopher Rollyson asked his colleagues, including me, from the LinkedIn Group CSRA Innovation Group to contribute their thoughts to this “crystal ball” gazing initiative.   

2010 Web 2.0 Predictions

What were some of the predictions from the group on the impact of web 2.0 on the future of Marketing?   

Marketing — More Real Time and More ROI

  • Marketing Will Become More “Real Time” —  My prediction  focused on a seismic shift in Marketing, with  marketers beginning to view  social networks as a significant marketing contact point with broad implications for how marketing is managed and measured. Dri­ven by dig­i­tal and Web 2.0, Mar­ket­ing will increasingly move from an annual marketing planning exercise focused on one-way communication, to a real-time, dynamically planned function focused on interacting with and responding to consumers in real-time. Mar­ket­ing effec­tive­ness will increas­ingly be mea­sured in real-time, and adjust­ments will be made “on the fly,” based on brand equity and ROI met­rics.
  • “Earned Media” Will Become More Measurable — And More Relatable to Paid Media —  The “greater focus for most com­pa­nies will be on demand creation through use of social media & Web 2.0 tech­nolo­gies,” according to Rob Peters.  Marketers will increasingly focus on the creation of “Earned Media,” and will build their measurement capabilities to better understand factors of success. As well, Marketers will increasingly think of media in a more holistic “Blended Media” framework, e.g. the mix of traditional paid TV, Web, etc. and earned media such as Twitter, blogs, organic search and such. This is important since TV viewership continues to increase, and TV advertising seems to work about as well as ever. Understanding the relationship and interaction of paid and earned media will continue to evolve and become more sophisticated in 2010.

Social Networks Will Become Increasingly…

  • More Able to Drive Relationship Marketing — Christopher Rollyson affirmed the increasingly important role of global social networks in “discovering, building and maintaining relationships.” Network theory shows that the more people who are in a network, the more powerful it becomes for all members. As social networks continue to grow and combine in new forms, this network effect will only increase the potential impact of social networks. And continued social media technical innovation will accelerate brands ability to build new and more interactive relationships with their customers.
  • More Cost Effective — On the topic of the growth of social networks, Suzy Tonini points out that Web 2.0’s “reach and cost-effectiveness have been a huge plus” in the midst of the recession. While not free, social media will continue to offer the potential to drive improved results at lower cost. The key will be for brands to understand what aspects of earned and paid media drive word-of-mouth, viral marketing and create a long tail of positive brand impressions on the web that continue to build the brand long after the initial effort is finished.
  • More Mobile with Greater Ability to Share Trust Based Information — Recommendations from people you know is consistently rated by consumers as a top marketing contact point. The continued adoption of Facebook Connect will drive this to a new level as consumers can increasingly log in to their favorite sites with their Facebook ID, and then access their social networks opinions and recommendations as they traverse the web. 
  • More Location Aware — Alvin Chin poses that “location-aware” geo-social networks will allow the recording of “social interactions in real life.” This will allow Marketers to increasingly “map” consumer engagement by geographic location, serve up relevant content, and interact in novel and interesting ways.

Geo-Social Networks Take Twitter and Facebook to the Next Level

Will the Predictions Become Realities in 2010?

Not every prediction comes true. Social media pundits predicted the death of TV and there’s just no evidence yet that it’s dying. That said, there’s no question that web 2.0 and social media will only expand in 2010.

Any marketer who questions the likelihood that these predictions about information sharing, the expansion of social networks, and brand building should consider the advent of Google Buzz. With the ability to share status updates to selected groups, interact with others via location-based software, and find answers via mobile search engines, Google Buzz takes the offerings of social media players like Facebook, Twitter, and Foursquare to the next level. And that’s one digital phenomena that started out as a prediction.   

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5 Ways Google Sidewiki Could Change Your Marketing

October 14, 2009

In case you didn’t notice, Google recently launched an interesting, and potentially disruptive new product called Sidewiki. Currently for Firefox and Microsoft Explorer, Sidewiki allows anyone to post comments on any webpage, anytime.

Sidewiki -- Making Every Webpage Social ?

Sidewiki -- Making Every Webpage Social ?

Web strategist Jeremiah Owyang, in a recent post, “Google’s Sidewiki Shifts Power to Consumers–Away From Corporate Websites,” writes about this development as part of a larger Google strategy to “envelop” the web with a stealth social web strategy to compete with Facebook and other social networks.

When the Entire Web Becomes Social

What’s even more interesting for me than Google’s social strategy though (although that’s obviously really important), are the Marketing implications of Sidewiki. What happens when every page of the entire web becomes social? Let’s start with your brand or corporate web site: It will become social whether you want it to or not.

Leading edge companies have enabled their web sites to be part of the “conversation,” by encouraging comments, user generated content, etc. and encouraging an on-going dialogue with consumers. However, many have not, and their corporate web sites are often bastions of protected spin and uni-directional marketing speak.

Sidewiki creates the opportunity for anyone to leave comments or content on any page at any time, right on the side of your website—whether you like it or not. Companies which have not, heretofore, been social, will be social by virtue of Sidewiki. To be clear, Sidewiki is almost nowhere to be found in action at the moment, but it’s now enabled and coming—and the only question is how fast and with what impact…

SideWiki -- 5 Ways It Could Impact Your Brand's Marketing

SideWiki -- 5 Ways It Could Impact Your Brand's Marketing

Implications for Marketers

Now’s the right time for CMO’s to be thinking about where Sidewiki might lead—as yet another conversational stream that invites participatory marketing and new angles for Marketers to compete on.

Defensive Marketing – At a minimum, Sidewiki raises the stakes for monitoring your website. It’s another conversational stream that needs to be monitored—or else. Brands which have elected not to participate in the social web will soon have to monitor their websites virtually 24/7 to understand comments and react in real time—even if they haven’t enabled anyone to comment. Imagine a comment right next to the United Airlines web site with a link to the now (in)famous YouTube “Broken Guitar” video…

Offensive Marketing – Sidewiki opens up some interesting possibilities for conversing with consumers. Your target consumers are going to your competitor’s web site and many others as well. What’s to prevent your brand from using Sidewiki to talk to them? A few possibilities:

  • Challenge Your Competition – In the future, if you don’t agree with competitors claims or want to challenge the efficacy of their product, why not use Sidewiki to point this out to consumers? Sidewiki enables you to comment on their website—right next to their web site—whether they want you to or not.
  • Participate in Sidewiki Conversations – Yet another opportunity is to participate in any side conversations on your site. Respond to comments, add your perspective, challenge untruths, and give a real “voice” to your brand that humanizes and differentiates it. Sidewiki will be another stream to leverage in your conversational marketing mix.
  • Market from Complementary Websites – Another potential opportunity is to identify brand websites or pages whose equity or products are complementary to yours. Offer suggestions, relevant content, or wikis that encourage complementary website visitors to visit your site or download a wiki and engage with your brand.
  • Direct Consumers to 3rd Party Content – Not every use of Sidewiki would need to direct consumers to your website. Instead, you could encourage target consumers to visit 3rd party sites which provide relevant content and perspective which you think they would be interested in—even if they’re still just prospects. Consumers appreciate and value brands that put their interests first.

And as I discussed in a previous blog post, “How the Future Social Web Will Transform Marketing,” Sidewiki will likely eventually also enable you to filter Sidewiki comments by people in your social graph–providing even more credence and power to this tool.

It should go without saying, but a  key to doing anything with Sidewiki is transparency. It has to be clear that your brand is the one engaging in conversation on Sidewiki.

Beyond this, the key point is this:  Sidewiki will give you another conversation based web channel to target and communicate with consumers, using any page on the web, at any time, to do so.

Is Sidewiki in Your Future?

Sidewiki is new and unproven. But so was Google search a few years ago. As was Facebook, Digg, etc. Need I go on? Sidewiki is another example of how the web continues to morph and evolve, particularly in the area of social media. These changes reinforce the need for Marketers to fully embrace the conversational opportunities on the web, and increasingly put companies which don’t on the defensive.

What other marketing opportunities do you see Sidewiki creating for brands in the future?

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