Martin Kelly, Co-founder & CEO of Infectious Media, delves into the beginnings of the data-driven advertising industry and how we arrived in the real-time world of optimised, dynamic advertising fuelled by insight.
The trading of media was a simple concept for offline media channels. High barriers to entry meant that buying TV, print, outdoor and radio advertising was reserved for a few large companies and consolidation of media channels over time made the number of relationships needed relatively small. Having standardised ad formats simplified the process further by creating an easily understandable trading commodity in which a creative agency could use a single execution across multiple properties. In the same way that a page could be comparatively priced and run in the times and the Guardian, a 30 second tv spot could be the same on TV and Sky.
From the inception of the internet, it was clear that it was going to be a transformative medium. Traditional media owners such as the national newspapers and magazine groups spread their presence online along with new media owners such as Yahoo! and MSN. Standard formats for banner ads emerged along with panel based planning tools and display seemed to be going the way of offline media until the industry realised that as the internet grew and anyone could start their own website with very little investment that there was a huge amount of supply and not enough demand.
It was at this point that the ad network came in to existence. Networks were greatly helped by the standardisation of ad formats that took place via the IAB, meaning that common formats could now be traded across multiple sites. The ad network aggregated supply from hundreds of smaller publishers giving them a way to monetise their inventory without the need for a sales force and gave media owners with a sales force a way to sell their own unsold inventory on a ‘blind’ basis. For the buyer in a fragmented supply side market it provided the opportunity to buy at scale from a single point which only a few of the largest media owners could manage alone. Over time, ad networks developed strong data capabilities and using their publisher base as a data source, built behavioural segments to increase performance, especially for direct response activity.
It was at the height of the ad network phenomenon in 2005 that Right Media was born as the first global ad exchange. The idea being that an ad exchange would be a marketplace for buyers to seamlessly connect with sellers to buy their inventory on an auction basis. However, the real technology innovation for the advertiser was the ability to set buying rules which pick only the ad impressions that matched the target buying criteria whilst rejecting those that didn’t.
This one-by-one audience targeting was revolutionary and had not been previously possible either in an online or offline environment. This innovation was widely adopted by ad networks initially who quickly saw the benefit of buying in this manner.
As the concept caught on, a large wave of consolidation occurred with Right Media being purchased by Yahoo, DoubleClick by Google (and more recently a significant stake being taken in AppNexus by Microsoft) that predated the arrival of Real Time Bidding (RTB) in early 2010. RTB furthered the initial ad exchange concept and created two new categories of business the Demand Side Platform (DSP) and Supply Side Platform (SSP), the purpose of which is to enable companies to trade in real time and plug in to each other to create a liquid market. Buyers using a DSP can now access many thousands of publishers via SSPs and buy in real time powered by algorithms that reference advertiser data to make decisions. Conversely publishers using an SSP can sell their inventory in real time and have access to a huge amount of buyers across the globe (many more than they can maintain through their physical sales team) with the ability to set rules that ensure they carry the brands that they want to and control pricing through floors.
RTB has two main benefits, the first of which is workflow related. Trading through a platform reduces the administrative and therefore cost burden that is associated with traditional buying techniques. The second benefit concerns performance. Through RTB an advertiser can now target the audience they want to at zero wastage rather than bulk buy on sites that might (or might not) contain the audience they are looking for. This technique is known as ‘audience buying’ and is further enhanced by the ability to dynamically generate creative executions in real time. Now every thousand impressions bought can be treated differently with a thousand uniquely customised adverts.
RTB has been widely adopted in the UK and indeed globally with more than 11.5bn impressions available each month in the UK alone and all major publishers selling some of their inventory in this manner alongside their traditional sales force. On the buy side, real time has been widely adopted by all demand side players, ad networks, agencies, specialist traders and even by brands themselves. Current estimates put RTB at a 10% share of the display market in the UK, with forecasts going as high as 50% of display share in the next 5 years.
