Real-Time Myth-Busting

Sep 3rd, 2014 | By | Category: Ad Operations

There are many myths and misconceptions surrounding the concept of real-time bidding. Here are five explanations of common misunderstandings to help marketers embrace the new technology.

Real-time bidding (RTB) is still relatively new to the digital marketing industry. Below I discuss five common misconceptions about RTB in order to guide advertisers toward appropriate expectations.

Myth 1: Programmatic = RTB

The terms programmatic and real-time bidding (RTB) are sometimes referred to interchangeably, but they shouldn’t be. There are key differences between the two ways of advertising. RTB is used to describe exchange buying systematic basis, whereas programmatic is a more all-encompassing term for buying display inventory on both exchanges and within the private marketplace. In simplified terms: RTB = exchange buying on an impression basis, programmatic = RTB + private marketplace and preferred deals bought using technology and audience data.

Myth 2: RTB Campaigns Need Algorithms

Many demand-side platforms (DSPs) and trading desks talk about the algorithmic approach being the key to campaign success with RTB. They will also undoubtedly claim their algorithm is the best. Using tools and systems to make decisions on campaign changes can be useful and efficient, but when applied without a human touch, long-term success just isn’t feasible. In fact, changing the focus from an algorithmic approach to human manual optimisation means campaigns have the best chance for long-term improvement and success. Don’t be fooled, it’s not an easy or quick undertaking, but investing in analysts and strategists who use their brains with tech gives advertisers the ability to avoid the inevitable performance plateau faced by an algorithm-only approach.

Myth 3: Exchange Inventory Is Poor Quality

There may have been a time when publishers only passed undesirable inventory onto exchanges, but this is no longer the norm. Publishers have recognized the need to provide quality inventory as advertisers have become savvier. Measurement metrics like viewability have also led to the need for more transparency in ad placement and quality. High-quality sites for performance-driven campaigns are often not the biggest or most-read news sites. Niche blogs and content-specific websites are often the best performing placements for driving direct conversions.

Myth 4: CPMs Costs Need to Be Bundled

If CPM costs for exchange inventory are higher than a dollar or two, there is most likely a mark-up being added to the CPM by the agency running the campaigns. Advertisers need to demand transparency and understand exactly what proportion of their spend is going to media and audience data costs, and what is going to the agency. Luckily, this isn’t the case across the board, but there are still many agencies who treat RTB like a traditional media booking channel and mark up inventory by 10, 20, or sometimes even 100 times to make ridiculous margins. It’s the job of advertisers to demand transparency on CPM costs.

Myth 5: Impressions Are King

The great thing about RTB is that inventory is purchased on an impression-by-impression basis, meaning that spend can be adjusted and optimized to result in a fantastic return on investment (ROI) to the advertiser. This means that the old-school mentality of only reporting on metrics like impressions and clicks is extremely outdated and an inappropriate measurement for real-time bidding campaigns. True performance metrics like conversions, cost per acquisition, and ROI can and should be what direct response advertisers are considering when judging the success of their RTB campaigns.

Real-time bidding is still in its infancy, and luckily the knowledge of what is available and what can be achieved with an expertly run RTB campaign is spreading. The future of RTB is bright as advertisers discover its potential, and understand the truth behind the industry myths!


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