Real-time Bidding and Targeted Marketing

Stephen DeAngelis

May 27, 2014

In a post entitled “Behavioral Data and Targeted Marketing,” I discussed the fact that many marketers are still not taking advantage of the wealth of consumer data to which they are privy. Specifically, I discussed how such data could be used to enhance targeted marketing. As Ali Maadelat, president of The Lorenz Marketing Group, explained to Sara Angeles, “The simplest definition of ‘behavior marketing’ is targeting prospects based on their behavior. The more targeted your marketing efforts are, the more you resonate with prospects and the more likely that they will become customers. This is the power of behavior marketing. You target your marketing based on a prospect’s actions and behavior, because you are making assumptions about their needs based on their actions.” [“Is Behavior Marketing Right For Your Business?” Business News Daily, 27 August 2013] Anthony Iacovone, Founder & Chief Executive Officer of AdTheorent, thinks there is even something better than behavioral marketing — Real-time Bidding (RTB). [“The Death of Behavioral Targeting,” Huffington Post The Blog, 26 September 2013] Jack Marshall explains, “Real-time bidding refers to the buying and selling of online ad impressions through real-time auctions that occur in the time it takes a webpage to load. Those auctions are often facilitated by ad exchanges or supply-side platforms.” [“WTF is real-time bidding?Digiday, 17 February 2014]

 

So why does Iacovone believe that RTB is tolling the death knell for behavioral marketing? He ends up admitting that his headline is a bit of overstatement. RTB is simply a more refined extension of behavior targeting that takes place in the split second before a behavior is completed. He explains:

“Those of us who have been watching the surge in mobile devices in everyday life knew that the rise of real-time bidding (RTB) in mobile advertising was simply a matter of time. What is less obvious, but just as inevitable, is the evolution of the targeting tactics that drive mobile RTB. Advanced predictive modeling technologies significantly out-perform traditional behavioral targeting methods, unleashing the maximum value RTB for mobile. … In most cases, the targeting that powers mobile RTB is based on a user’s online behavior, or behavioral targeting (aka audience targeting). An advertiser might want to serve ads to someone who has visited the specific sites or content before, or to someone who has shown specific behaviors in their browsing that fit an audience profile predetermined as the target for the campaign. Though behavioral targeting may have been considered effective enough in the past, there are inherent limitations that are too fundamental to ignore any longer:

  • Targeting individuals who have done something that reveals their interests is not the whole story.
  • This data used to target your customer is narrow and often fragmented, which offers limited real advertising value.
  • Little or no correlation is made between the behavioral data collected and other conditions (i.e., location, time of day, weather, etc.).”

Targeted marketing benefits consumers by providing them with offers that suit their known preferences and lifestyles. RTB enhances those benefits by adding elements that make offers immediately pertinent. Liz Rutgersson agrees with Iacovone that the future of RTB is bright and she offers five predictions about what could happen in biddable display arena this year. [“5 Predictions About Real-Time Bidding in 2014,” Search Engine Watch, 16 December 2013] They are:

1. Rich Media Ads — Ad formats are becoming increasingly engaging and interactive. Dynamic creative allows advertisers to insert images and text based on combinations of variables, which isn’t just limited to e-commerce products. In 2014, expect travel and publishing advertisers to use dynamic capabilities more creatively to create highly targeted and flexible ad copy. In addition, the use of rich media and engagement ads will continue to grow. Engagement metrics will be optimizable, meaning advertisers are able to judge performance of ads even when users don’t leave the publisher’s website. This means publishers and advertisers share the benefits of engagement ads. Free products like Google Web Designer, which allows for free creation of rich media ads, will help advertisers create these ads quickly and efficiently. Expect more rich media and engagement formats which are easier to create and easily made dynamic.

2. Social Networks — The recent agreement between Google’s DoubleClick Bid Manager (DBM) and Facebook is a huge step forward in the alignment of social websites and biddable display. DBM advertisers will be able to reach first party and third party audience lists on Facebook and target them across devices. Expect more social networks to make their inventory available to exchanges in 2014.

3. Branding Metrics — Auditing the value of display campaigns has never been more important. Advertisers are becoming more aware of the optimization opportunities within biddable display and are understanding how direct conversions can be achieved through highly targeted and strategically run RTB campaigns. DSPs will strive to provide new metrics to prove the value not only of direct conversions from display campaigns, but also the impact of visibility of display ads on brand recognition and awareness. Expect more insights on viewability of ads and the impact on search to come in 2014.

4. Programmatic Video — DBM have recently created an option for in-stream video advertising via real-time bidding. This allows video ads to be served across a number of video exchanges, of course YouTube being the biggest. Expect the CPM bidding model to be refined to allow for cheaper and more direct conversion options from biddable video. The number of video exchanges continues to grow, and it’s in their best interest to make their inventory available in the biddable space. Note this isn’t limited to just DoubleClick; video via private auctions on premium inventory is being discussed by a range of DSPs and publishers. Expect expansion of biddable display throughout 2014.

5. Private Marketplace Deals — Similar to the addition of social networks allowing their inventory to be targeted via demand-side platforms like DBM, an increasing number of publishers will be using DSPs as a way to easily make their premium content available to a larger number of advertisers. This helps bridge the gap between reservation display and exchange buying, meaning that advertisers can reach premium content which may have previously been only available via direct reservation deals, and premium publishers still have a choice over the brands who have access to their highly valuable inventory. Expect even larger volumes of premium inventory to become available via auctions.

Bryan Bartlett, editor-in-chief of Chango, asserts, “RTB isn’t just another digital technology. It’s a fundamentally different way of thinking about advertising. … RTB moved advertising out of the realm of educated guesses and into the realm of a programmatic science.” [“What is RTB? Complete Guide to Understanding Real-Time Bidding, (Part I),” 31 October 2013] One potential downside to biddable display is that, like any auction, the participant willing to pay the most wins. The deeper a company’s pockets the more likely it is to dominate the auction. Ratko Vidakovic, who works for “a self-serve DSP,” claims, however, that even companies with small advertising budgets can benefit in the biddable display arena. [“5 Common Myths About Real-Time Bidding,” Marketing Land, 16 September 2013] He explains:

“RTB technology has without a doubt revolutionized the way a large chunk of display advertising is bought and sold. From a marketer’s perspective, display advertising can now produce results like never before. However, the power and efficiency of RTB was initially only available to big brands and agencies. As the industry has evolved, DSP vendors have evolved along with it, giving access to this world-class technology to advertisers of all sizes. Several vendors now offer buying platforms with very few barriers to entry. So from now on, when you think about RTB, know that it’s accessible to advertisers of practically any budget.”

Iacovone concludes, “Why would you ignore millions of mobile users who haven’t yet visited your site or displayed a specific behavior? Many of them may actually be prime for your campaign. Predictive targeting offers a way to find them, and you can’t afford to ignore it.” Marketing has changed forever and the more refined a target audience can become the greater the chances that the offer being made will be acted upon. We are entering the age of personalized marketing.