What's making this possible is the growing use of massive data volume (also called big data) to optimise and personalise campaigns in real time.
Advertisers' data is now being intertwined with display ad management - they are finally coming together, after years of running untargeted campaigns that resulted in many wasted banners.
I promise to dive deep into big data in a future post (meanwhile, you can read about how best to use first party data in my previous post). Today, the spotlight is on real time.
In a fast-paced, real-time world, advertisers must act fast. A timely message can make all the difference.
To better understand the dramatic ramifications of real-time online advertising, we'll focus on its three pillars in a 3-part series: bidding, dynamic creative (content) and messaging.
Real-Time Bidding (RTB)
Although RTB is still in its infancy, much has already been written about this latest disruptive technology.
Here is a brief summation: RTB is a method of automatically selling and buying online display advertising in real time on a per-impression basis. The sheer scope is mindboggling, with billions of such auctions carried out every day on multiple ad exchanges.
RTB is rapidly growing. According to a recent Pubmatic & IDC Survey, RTB spend doubled in 2011 and is predicted to double again in 2012. By 2015 it will amount to $6.4 billion, when 27% of media in the US will be bought via RTB (up from 10% in 2011), while in the UK, 25% is projected (up from 6% 2011).
Why should advertisers buy RTB media?
Optimisation
With nearly infinite granularity in audience segmentation, RTB enables advertisers to pay the right price for each and every banner. The end result: uplift in ROI.
Efficient real-estate management
As the emphasis is shifting from buying placements to buying single users/segments, RTB also works well on the long tail of sites. Why pay a premium price to appear on a large publisher's site when a small one is just as capable of generating a conversion?
Driving acquisition and conversion
As a cost-effective targeted mechanism, RTB enables not only lower funnel activity – driving conversions by serving personalised, direct response banners, but also upper funnel activity – generating intent and driving acquisition.
Until recently, upper funnel activity has been untargeted, producing many wasted banners and diminishing ROI. With RTB, advertisers can propel acquisition by targeting specific users on a per-impression basis.
User valuation key factor in RTB
In order to fully leverage RTB granularity, an advertiser – directly or through its service provider – must be able to intelligently translate data into accurate user valuations, which in turn translate into optimised bidding prices.
To illustrate this, imagine that a Premier League team has just won the Champions League (naming it and some of you may never forgive me...). With RTB, retailers that sell football merchandise can strike the iron while it's hot by launching an immediate cost-effective campaign.
To understand how this process works, let's look at the profiles of two users:
- User 1 regularly visits the winning club's website and other football sites. He has often been to the advertiser's site where he loves to buy his team's merchandise. His average basket has constantly grown over time.
- User 2 has been to the advertiser's site once, browsed through several team shirts product pages but never bought anything.
This information is crucial in the real time bidding process. With it, every unique segment can be assigned a predictive buying value. In this case, user 1 clearly belongs to a high margin segment and would therefore be given a much higher predictive buying value than user 2. This value determines the price an advertiser should bid for a given impression.
Taking it forward
RTB can significantly enhance your display campaigns. But optimising the integration of RTB and big data is extremely complex. Before making a decision on whether to do this in-house, via an agency or via a service provider, consider the following:
Skills set
To optimise the use RTB media requires a highly skilled team of engineers who are experts in data analysis and advanced algorithms.
Inventory volume
To get the reach you are looking for, you need to work with multiple, leading RTB exchanges (such as Double Click, Rubicon or Appnexus).
However, since most RTB exchanges do not speak the same language, the process of unification into a single platform is highly complex.
Infrastructure
Handling the enormous amount of data generated from multiple RTB exchanges requires advanced technology. It is very costly to operate multiple servers which are required to handle such a load.
Incorporating first party data
Utilising this goldmine of unique and untapped data locked in merchants' internal systems can give your campaign the edge it needs. It truly is cutting-edge, 2012 technology that very few companies have mastered.
To sum up…
RTB is bound to make more and more of an impact. To excel in online marketing, advertisers should embrace the possibilities of real time, starting with buying media in an efficient and transparent method – the first crucial step in 2012 campaign management.
Stay tuned for part II of the Real-Time World: Dynamic Personalised Creative
Benny Arbel is CEO at myThings and a guest blogger on Econsultancy.
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