Monday, March 06, 2017

Real-time Bidding vs Traditional Buying

RTB is the automated process of buying and selling online display inventory in real time, incorporating enhanced targeting algorithms and data analytics for the purpose of delivering better targeting, greater control and more granular campaigns (RTB is very suitable for small business). Also, RTB inventory can only be accessed via Demand Side Platforms (DSP’s) which are online media exchanges or media network that help to connect sellers (publishers) and buyers (advertisers).

The increasing growth of RTB, which surpasses the popularity of traditional ways of buying and selling inventory, makes us wonder why RTB is so attractive for online advertisers.

Bulk Buying and Micro-Segmentation

Traditional online display marketing relies on buying the impressions in bulk, which lumps impressions from websites of all sorts, even unrelated ones, making it very hard for the advertisers to reach the targeted audience effectively. Also, the lack of transparency becomes a real nightmare for the advertisers with a niche product that needs to target a precise audience.

With RTB bidding, advertisers now can buy individual impressions on DSPs, which allows the micro-segmentation of the market through pre-selected categories and contextual keywords or desired placements, leading to more efficient targeting which benefits both publishers and advertisers, as well as providing a better offering for consumers and as a result, higher click-through rates and conversion rates.

Negotiations and Free Market

When it comes to buying inventory on traditional online display, negotiation skills are required. Also, the website placements and its prices are not dictated by the market forces but by the negotiation and the final offer the publishers are willing to offer.

In some areas, such as charity advertising, RTB allows the buyer to get premium placements on highly relevant pages. However, the publisher will usually charge extra money for this service.

RTB removes the negotiation process and connects publishers and advertisers directly across media exchange or media network, transforming online display buying into a free market where buyers pay for per impression, the price of which is determined by supply and demand. As a result, lower CPMs can be achieved through RTB.

However, it should not be forgotten that the power of negotiation can still be used when buying those guaranteed placements on premium relevant web pages.

Optimizing for desired KPIs

Optimizing on Traditional online display can be tricky, as advertisers have no control except for the number of impressions that are shown to visitors. All optimizing information is in the hands of the publisher.

The advent of RTB allows advertisers to optimize based on specific KPIs. For instance, underperforming placements can be excluded, and negative keywords that would threaten brand safety can be removed.

Does reporting matter?

Similar to optimization, reporting on the performance of the traditional online display is done by the publishers who have the right to provide advertisers (buyers) with as little or as much information as they consider appropriate.

With RTB, the advertisers can get as much information and analysis as they require. The vast majority of DSPs would allow the advertisers to report on the following:

cost per click
click-through rate
conversion volume (post click and post impression)
cost per action
conversion rate (impression and click)
video playbacks and duration
social media post likes and share

The knowledge of displays' performance allows the advertisers to optimize towards the right direction and plan for future action effectively.

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