Real-time bidding (RTB) emerged in 2007 as data and inventory both became increasingly accessible. Today, data suppliers have empowered Media Buyers with granular audience information and at the same time, the marketplace for online inventory has never been more liquid. The result is vast pools of online inventory available to every kind of Media Buyer.
At this intersection of data and inventory, there has been an explosion of choice of where ads can run. With millions of sites accepting online ads, it’s too difficult for Media Buyers to buy the audience they want when buying directly from each individual site.
Real-time bidding helps Media Buyers find audiences at scale. This, in turn, helps drive performance by ensuring that an advertiser’s ad is seen by the audiences most likely to respond.
The importance of Exchanges
Ad Exchanges are technology platforms that facilitate automatic buying and selling of online inventory from multiple Ad Networks. When ad exchanges opened, they brought more liquidity to the marketplace for online inventory and 2007 was a pivotal year for Ad Exchanges. Three major exchanges were acquired that year: Yahoo! bought Right Media, Google bought DoubleClick and Microsoft bought AdECN.
These companies made vast pools of inventory available, which greatly improved the experience for many parties to transact with online ads. To help Advertisers take advantage of this new liquidity, new types of media buying intermediaries evolved; Demand-side Platforms (DSPs), Networks and Aggregators.
These companies could then access inventory within an RTB environment from multiple exchanges with no need to aggregate inventory through relationships with Publishers.
Ad Networks began to leverage Exchanges to supplement their existing inventory. In addition, other buying processes became available specialising in niche areas within the inventory ecosystem such as Audience Targeting and Retargeting. This has led to a more consolidated buying approach.
Before RTB, buying was time-consuming and inefficient for media companies. They needed a faster, more automated way to buy across exchanges. RTB has taken off for one simple reason - buyers see real benefits from it.
Interesting RTB facts:
1. It is estimated that Worldwide RTB spend will increase to $20.8 billion in the year 2017, increasing its share of online and mobile display advertising spend to 26%. (Source IDC).
2. "The economic upsides of RTB for advertisers, agencies, and publishers are enormous," says Karsten Weide, IDC's VP of Media and Entertainment. "That's why we expect more than 40% of total mobile and online display advertising to be RTB based in 2017." (Source IDC).
3. With 49% Annual Growth, RTB will account for 80% of U.S. Display Ad Spend by 2022. (Source IDC).
4. This rapid uptake of RTB can be seen in the track record of companies such as the DoubleClick Ad Exchange (ADX) whose RTB-sold inventory jumped from 8% to 68% in just under a year and a half. (Source Google).