Over the course of the last three years ExchangeWire has witnessed real time bidding emerge from a technological unknown to an established method of media buying. We are now at a point where, although automated-led buying still has room for much more growth, the marketplace has started to mature.
We are not seeing the launch of a new start-up every day, attempting to solve an unnecessary problem within the ecosystem. We have seen publishers, ‘premium’ and otherwise, begin to invest, not only to understand the future dynamics of software-led buying, but also to try to gain competitive advantage. Some of the largest publishers globally have done this: Microsoft being one of the most prominent examples, selling real-time based homepage ad slots through its AppNexus-powered exchanges.
We have seen advertisers move large proportions of their non-guaranteed display buying directly into the exchange environment via their agency trading desks/preferred trading partners as well as indirectly, via the wider pool of now RTB-enabled ad networks. Some big advertisers have begun to explore in-housing some of this work, and now employ people responsible for putting together and coordinating various technology stacks.
If we had to pinpoint a particular point on Gartner’s trough of disillusionment, it could be argued that we are now somewhere between trough of disillusionment and the slope of enlightenment. The hype cycle is officially over. We’re no longer talking, we are doing — and we’re now starting to get over the inevitable crash that any hype cycle brings.
The marketplace, and all of its ecosystem participants, now have a firmer grasp on how to move forward and how to mature their approach and strategy, based on their specific needs, rather than following the latest craze popularised by trade publications. We are at the point of iteration and perfecting. This does not mean that the growth of spend through software solutions, like DSPs and guaranteed-buying platforms like Shiny Ads and isocket, will start to diminish. It just means we are now building on the layers of knowledge, insight and experience that have thus far been amassed.
So what is next?
How ad tech businesses are iterating and evolving
During the phase of hype, hyperbole, growth, and now, hopefully, maturity, the actual vendors in ad technology have also seen their own businesses evolve and iterate.
Jason Kelly, CEO of Sociomantic discusses the ways they have seen the market evolve:
“Though the ad exchange industry has grown tremendously in the past few years, our goal has remained largely the same: delivering dynamic, user-centric display campaigns that result in unmatched performance at massive scale.”
Although much growth has been witnessed over the past three years, it is unsurprising that the focus of businesses is still so closely aligned to the delivery of better performance for advertisers. As the market evolved, so too did the technology and opportunity for companies to continue to refine and improve.
Kelly expands on this point by outlining a more nuanced approach from his company, in terms of how it built its technology and strategy around data-driven buying:
“Sociomantic’s evolution has been driven by three major opportunities: 1) the global opportunity, scaling our technology and teams to support campaigns in more than 45 markets in less than three years; 2) the impression level opportunity, pushing performance to the next level with creatives that are individually customised based on advertiser-specific segmentation and optimisation logic; and, 3) the first-party data opportunity, helping advertisers understand the value of their data, and then capture,analyse,and apply that data in intelligent ways to improve performance and increase insights into their customers (eg, CRM, segmentation, smarter attribution modelling, buying for customer lifetime value, etc).”
Scaling technology, more advanced use of data and increased insights and personalisation on an individual user are not unique to specialists like Sociomantic and the way its business has evolved.
Quantcast is another business that is focused on scale and the ability to handle increasingly large data sets. Jag Duggal, Senior VP, Product Management gives more detail:
“Quantcast now participates in more than 10 billion daily auctions. Many original assumptions and hypothesis shared throughout the industry have turned out to be wrong. For example, the common practice of slicing the purchase funnel into data, optimisation, retargeting and prospecting makes it nearly impossible to create a coordinated set of targeting tactics. The increasingly complex nature of real-time advertising means advertisers require better tools to properly understand, view campaign success and optimise budgets. A significant portion of ad-tech development has focused on automation and optimisation, related to the delivery of individual impressions but industry participants also face significant complexity in aggregating, organising and reconciling campaign data to form a ‘single view of truth’ in order to make critical business decisions. Our acquisition of MakeGood earlier this month enables Quantcast to provide this, as well as greatly enhancing reporting and insights for our clients.”
The RTB boom also paved the way for a collection of smart and innovative trading specialists to emerge – companies that did not necessarily need to take on huge investment to replicate the plumbing being laid by the scaled infrastructure ad tech companies in the space.
Instead, they mostly bootstrapped and innovated through more advanced understanding of the detail. They built on top and around existing platforms like AppNexus, a vendor that has cleverly positioned itself as being the platform of choice for these specialists.
Companies like MediaIQ, Infectious Media and BannerConnect are good examples of how you need to continually innovate to stay relevant and competitive. They have developed renowned expertise in data analysis and sophisticated bidding capabilities. They’ve developed their own technology and data infrastructure around platforms like AppNexus, MediaMath, and IPONWEB in order to continue to scale and develop their end product.
The impact on agencies
Agencies have been heavily involved in shaping the growth and roadmap of RTB and automated buying. When Search Marketing first emerged, it is fair to say the traditional agencies were slow to really develop credible expertise. They got quickly left behind at the hands of search specialists, a few of whom built great businesses that resulted in a number of sizeable exits.
In the case of RTB, however, agencies refused to repeat the mistakes made in the past. Everyone understands the investments and resources that the holding groups put into establishing their trading desks, and these early investments paid off. Today, these trading desks, globally, represent a significant percentage of overall investment; and it has been a much shorter (but still challenging) journey versus the search marketing scenario.
What everyone is perhaps more unaware of, however, is what lies beneath these trading desks. How have the individual agencies adapted and adjusted to this vastly disruptive force? How significant has it become?
For Starcom MediaVest Group, RTB has grown to become an increasingly large part of display investments, with further increases in growth on the horizon.
John Baylon says the growth will come from, “1) the continued détente in the attitude of publishers releasing RTB-enabled inventory to the market and, 2) the continued development and innovation in RTB technology solutions (eg. video/ mobile, customised bid algorithms)”.
Much of SMG’s RTB investment is enabled by VivaKi’s Audience on Demand and key to this success Baylon cites is, “the integration of AOD into our overall buying strategy, dovetailing and complimenting our more traditional direct managed buys, combined with working openly and collaboratively with publishers to help grow the business opportunity”.
Baylon makes the point that close integration between agency and trading desk is critical to leveraging its full benefits, and predicts that it will become an even more critical capability in delivering results for clients.
“RTB technology will continue to grow and become more sophisticated in its offering. It will continue to be part of a suite of tools we offer our clients to help deliver even greater effectiveness and efficiency in their communication (across both managed and programmatic buys).”
However, it won’t stop at desktop display, mobile or video. Baylon also sees mainstream media becoming biddable in the near future:
“Finally, we will see RTB-focused solutions becoming more prevalent in traditional media channels like TV, Radio and Outdoor. We are already witnessing this with Kinetic’s ‘SN Xchange’ offering – allowing for out-of-home ads to be served in real time to digital canvasses. We are already seeing video ads being served and traded on programmatic platforms, in real time, on Smart TV’s. Don’t be surprised if Sky’s AdSmart offering will be bought incorporating some form of a RTB mechanic, once Sky has got to grips with the commercial model. I say this with confidence. Why? Because RTB is already washing it’s face. It works. It enhances the overall buying strategy for clients. It is a smarter way to buy, a more efficient way to buy.“
It is clear, in the case of Starcom MediaVest Group, RTB-enabled buying has become a permanent fixture in the way the agency invests client budget, and as a result it has revolutionised traditional trading methods.
But looking beyond the impact of agencies from a trading perspective, it has also led to an increase in technical expertise. While the trading desks may hub a lot of spend, certain operating agencies have made conscious efforts not to outsource all intellectual value.
Robert Webster, Head of Technology at MediaCom, believes this is having a big impact on the agency’s business:
“The RTB world has matured rapidly in the last three years. You can see this most obviously in the way that agencies have had to change their planning and buying strategy and how RTB providers have innovated to differentiate themselves. Back in 2010, MediaCom was the first major buyer in the UK to centralise retargeting through one RTB provider, per exchange, per client, leading to huge savings. However, crucially, to allow for innovation we allowed other RTB players to compete and innovate on the prospecting side. This has led to a number of great innovations from RTB suppliers, such as lookalike targeting, utilisation of second- and third-party data, visibility targeting, contextual targeting and more. Overlaying all of this are more advanced optimisation techniques, which seem to split the market from those who prefer human-based insight leading optimisation to machine learning.“
Still, there clearly is a lot more to achieve
Despite the advancements made by some within the industry and the growth and percentage of spend that RTB has grown to command, there is still a feeling of missed opportunity among some senior figures in the space.
Martin Kelly, Co-founder of Infectious Media, believes the industry still has to realise the real value and possibilities of RTB:
“In many ways, I’m not sure the industry has moved on that much in the way that RTB is being utilised. The immediate set of benefits that were jumped on were all based around workflow and control. For publishers and agents (ad networks, agencies and specialists) this is transformative, as the operational aspect of planning and buying media is much easier, and friction in the process is being removed. However, we still haven’t seen the conversation move on to what the actual benefits of RTB are to a marketer. The picture is so incomplete at the moment, for marketers, and I’m not surprised they are confused. Off-the-shelf platforms are an access layer that simply give you the ability to buy, and for us, have two really major flaws that are holding things back: the broken relationship with real-time creative technology and their limited scope to utilise first-party advertiser data beyond placing a pixel on a page for retargeting.”
We cannot underestimated the impact RTB has had on the industry as a whole. Over the next 12-24 months, we will begin to see innovative companies pulling away from the rest of the pack. The time for riding the wave of RTB hype is effectively over: the successful companies in this space will innovate, iterate and evolve the existing model of real-time buying and trading. This could arguably be the most exciting phase of the RTB growth journey.