Metric Man: The Rise of Real Time Bidding
It’s one of the most exciting times to be a marketer – it’s also one of the most challenging. With new technologies arriving every other week, it’s important for us as marketers to stay on top of trends and platforms as we try to reach consumers in the “right place”, at the “right time”, with the “right message”.
At the same time, all of these touch points need be measured to determine their effectiveness at improving your overall brand. Welcome to Metric Man - a new series dedicated to measurement, analytics and online advertising.
First up: real time bidding.
What Is Real Time Bidding (RTB)?
It allows marketers to buy ad space in “real-time” and on the fly, as opposed to the traditional method of buying all your ad impressions in bulk (hard to believe something that’s only been in existence for 15 years is considered traditional). But it’s true, the traditional method of serving ads is inefficient. Before RTB, purchasing ads meant reserving impressions by the thousands on websites and ad networks with only a vague idea of who would actually see your ad.
How Does RTB Work?
For this example, I’m going to use myself as the consumer. I’m a 26 year old male living in the Toronto area and I'm a sports enthusiast. Football season is approaching and over the last couple of weeks I’ve been doing research for my fantasy league. Today, I visited website xyz, which uses RTB to sell some of their ad inventory. As website xyz is loading, an auction is going on behind the scenes, where advertisers are bidding for the opportunity to serve their ad in this unique instance. The next step is what really sets RTB apart - because of data captured by third party cookies, the system now has an idea of my age, gender, geographic location and interests based on my browsing history.
The bidding war has come down to two advertisers: Advertiser A, a sports apparel company, and Advertiser B, a financial institution. Both have indicated interest in bidding on impressions for users belonging to my consumer profile. Advertiser A bids $1.25 while Advertiser B only bids $0.75. Advertiser B knows that, although I’m a valuable potential consumer, their most profitable consumers are males, aged 35-44 interested in automobiles, so they aren’t willing to bid as high to get an impression from someone with my consumer profile. The highest bid wins the auction, and Advertiser A’s ad is displayed on my web browser. All this takes place in roughly 15 milliseconds, and it occurs every time there is a call to load a new webpage.
What does this mean to advertisers?
RTB provides a new layer of control and transparency to its advertisers. As a marketer, I now have the ability to build consumer profiles based on variables like demographics, geographic location and interests, and then select how much I’m willing to pay for each impression based on how valuable the target consumer is to my business. This level of targeting allows for fewer wasted impressions, cost efficiencies and a greater ROI.
RTB has shown steady growth and is expected to continue at an accelerated rate over the next year or so. How and when will you be taking advantage?