Real time bidding (RTB) has become real time hype. Everyone is talking about it, everyone wants it. With unprecedented growth rates and more companies adopting the usage of these programmatic advertising techniques, it’s safe to say that you need to understand RTB whether you’re an advertiser, publisher or simply a marketer working with both parties.
Let's take a look on a Publisher view on Real-Time Bidding:
The following has been building up for months after seeing article after article of DSP execs saying that publishers are wrong and should open up their all their inventory to RTB while there’s little public pushback from the sell-side community. It’s like the Oil Industry telling the public that they should all go out and buy a brand new Hummer. It’s 100% in the DSP’s best interest for Publishers to open up their entire inventory to RTB and might not be in best interest of the publisher. Now I am not saying not to use exchanges, I am actually a huge advocate of them. RTB allows the publisher to show the right ad at the right time but RTB also allows us not to be rewarded for showing relevant ads. Publishers need to know how RTB can help or hurt their revenue streams.Tyler Fitch, The Sell-Sider
We can look at the problems of the RTB sphere that the publisher shows us:
As a sell-side operations executive, the main problems that Tyler has with RTB are as follows:
Another mistake that Tyler saw that publishers make with RTB is not accounting for impression loss or discrepancy. In his experience, about a 10% loss in impressions occurs per server hop. So if a publisher is running RTB through another 3rd party ad server and letting the DSP’s “cherry pick”, they lose a percentage of traffic on the first ad call, and another percentage if they pass the impression back. Throw in a SSP’s cut and you can be losing up to 25 to 40% before the first dollar is made.Tyler Fitch, The Sell-Sider
- Almost all DSP’s buy on a Dynamic CPM in a Second Price Auction. This feature is strictly-buy side focused as it always lets advertisers only pay 1 cent more than they have to, even though the impression might be worth much more to the advertiser. Buying through RTB allows the DSP to squeeze margins for themselves and/or their clients.
- RTB does NOT scale (yet). Having dynamically-bidded inventory in a supply heavy environment creates problems for the publisher. For example, let’s say that RTB buys 40% of my inventory, but in a second price auction there needs to be two bids to actually be beneficial to a publisher. So, in the end, the publisher only actually gains revenue from maybe 20+% of the total RTB bidded impressions because it has two or more competing bids. Not to mention that the other half of the RTB impressions with one bid takes the high performing impressions that would go to performance and traditional networks which lowers performance and drives down CPM’s. Eventually this gives the Dcpm buyers access to even cheaper inventory as prices are driven down.
So why does RTB matter? Let's take a look at the advantages of RTB from the side of “The Guardian”:
The introduction of RTB technology into the mobile ecosystem has helped address a number of challenges that both publishers and DSPs are faced with. Ad exchanges leverage RTB to address issues with scale, inefficiency, and control that plague both parties, so it is worth taking a moment to understand what it means and how it can apply to your digital marketing efforts. By aggregating and automating access to demand, RTB can address the inefficiency publishers are faced with by having to work with all of these partners directly. So a publisher can now access more than 100 DSPs through a single integration with an ad exchange or SSP.
Additionally, tools within ad exchanges allow a publisher to implement a set of business rules that automate who can access and purchase the inventory and at what price, providing added control for publishers .The Guardian
Now let's take a look at how Adoppler addresses the concerns raised above by the publishers:
- First Price vs Second Price. If you're a premium publisher, you are as valuable to the DSPs as their advertising budgets are of value for you. In the business world this means that you can leverage your inventory in negotiating terms with the media buyers. If you operate Adoppler to power your media sales, you can set it up to turn on First Price Auctions. In this case Adoppler will apply first price auction logic for all DSPs that bid on your inventory.
- RTB does scale. Price floor optimization has been the technique that publishers can and should use to optimize their revenue. Even in the presence of a single bid, the bid floor can help you sell the ad unit at the price you want. Of course, you should monitor the eCPM and fill-rate to make sure that you're not losing any opportunities. You may consider the following article on PubNation's blog on the topic: Price Floor Optimization in AdX. Moreover, our team is currently working on providing a better insight into how your inventory performs on various DSPs.
- Discrepancy problems are the real pain in the neck for the industry. However, in our experience it's the matter of choosing a single currency between all the players. With Adoppler, two main data sources for this are available:
- NURL (win notification) based revenue attribution.
- Impression-based revenue
Both options are available side-by-side in the reports and do not require any additional setup.
So overall, the situation now has improved greatly on the publisher side. Pubs with premium inventory have started gaining much more attention from the DSPs. And our product is publisher-facing in the first place because it aims at increasing ROI.