Real-Time Bidding: New era of Digital Advertising

New technologies have introduced a variety of challenges to advertising companies. RTB, or real-time bidding, addresses many of these challenges by providing a direct and flexible method of matching consumers to appropriate advertising content. It offers several key benefits to the buy and sell sides.

Real-time bidding (RTB) will be a significant factor in fulfilling the promise of online digital advertising, which has been on the limit of dramatic changes for many years.

RTB, as defined by Parks Associates, describes the automated process of buying and selling online display advertising in real time, and it incorporates enhanced solutions in targeting algorithms and data analytics in order to deliver better targeting, greater control and more granular campaigns.

Given these strong benefits to ad buyers and sellers, RTB is starting to claim more revenues in the online advertising industry, and by 2017, it will account for 34 percent of all online display ad revenues.

Challenges in Online Advertising

Several industry factors will drive this shift to RTB. New technologies have introduced a variety of challenges to advertising companies. Consumers can skip commercials or go completely "over-the-top" in their video viewing, and they are now using multiple screens to consume content. Parks Associates consumer research reports over one-half of U.S. broadband households have a smartphone and nearly one-third have a tablet. All these extra screens make it more difficult to follow consumers and necessitate detailed tracking solutions.

These types of tracking solutions raise privacy concerns, often cited by advocacy groups, which could lead to customer rejection of the online advertising industry as a whole. However, Parks Associates' report Advertising Strategies on Connected TVs finds 45 percent of U.S. consumers are comfortable with targeted ads based on their TV-viewing habits. Over one-third are comfortable with targeted ads based on their online browsing habits, according to the report Monetization of Multiscreen Video: Content Owner Strategies.

While there are and always will be some consumer segments unwilling to share any details of their buying and browsing habits, many consumers are willing to provide personal details in exchange for something of value.

The more significant challenge has been in matching consumers with the appropriate content and, in some cases, matching consumers with any content. For the past 10 years, companies looking to buy and place online ads on a large scale typically have purchased blocks of ads, usually in groups of 1,000, through ad networks. Agencies pay these ad networks a CPM-based rate to reach audience segments with the understanding that a portion of the online ads will not reach intended consumer targets. The industry considers ad networks as "blind-buys": Buyers do not have full control over ad placement; so as a result, ads can appear on any website located in the network.

RTB addresses many of these challenges by providing a direct and flexible method of matching consumers to appropriate advertising content.

How Does RTB Work?

RTB is a data-driven buying model through which ad agencies place auction-based bids for individual ad impressions. This process takes place in milliseconds, allowing agencies to adjust their strategies almost immediately based on the performance of individual sites and ad impressions.

When a user visits a website, in addition to serving up HTML code, the Web server delivers an ad tag to an ad server, which ultimately sends the user's cookie ID to an SSP (supply-side platform) or ad exchange to be auctioned using RTB APIs. Buyers use that ID data to value the ad impression and set their bids. In an RTB environment, ad buyers analyze multiple variables of an ad impression, such as demographics, geography, and publisher attributes. The ad exchange determines the winner, and then the information flow goes back to the ad server to deliver the ad to the user's browser. This entire process is done automatically, in real time.

Below are a few examples to illustrate the meaning of RTB and its benefits beyond the standard targeting parameters (Geo Target, Gender, Age, Category, Demographic, etc.). Let’s say we want to set a maximum bid price for display ads in a campaign (bid = $1 DCPM). We can set the system to change the bids according to a set of rules, and all in real time (50 milliseconds before the ad loads)!

For example:

• If your ad appears below the fold - bid 0.25c
• If the user is seeing the ad for the first time – bid $1
• If the user saw the ad 3 times this week – bid $0.5
• If the user saw the ad 5 times this week – bid $0.1
• If the user saw the ad 7 times this week – don’t bid
• If the user visited your site in the past (retargeted user) – bid $3
• If the user visited your site and left at the checkout – bid $5 (and show him an ad with a discount!)
• If the user usually visits sites similar to yours – bid $2

RTB offers several key benefits to the buy and sell sides.

Core Benefits of RTB

Ad Buyers - Ad Agencies	Ad Sellers - Online Publishers
Accurate audience targeting Campaign control and transparency Improved return-on-advertising spend (ROAS)	Greater yield optimization Higher value of inventory Incremental revenues for display ads sold outside of direct relationships with buyers

While there are several paths for agencies to take when employing RTB, most use a media buying desk (MBD) that relies on demand-side platform (DSP) technology to access and bid on RTB ad impressions. An MBD is a buy-side platform that consolidates the process of planning, buying, serving and reporting online media campaigns, typically leveraging the technology offered by DSPs. Agencies also compile proprietary audience intelligence profiles through their MBDs, which integrate with third-party DSPs. DSPs connect ad inventory to agencies and measure a campaign's efficacy against its goals.

Agencies know who they want to contact due to data management platforms (DMPs). DMPs provide audience intelligence across the entire digital ad ecosystem, not just the RTB ad market, containing info on variables such as purchase intentions, household demographics and behavioral patterns. DMPs collect, manage, and evaluate online user information obtained from multiple media sources to identify and create audience segments. They enable the delivery of the right ad unit to the right consumer on the most effective media channel.

The confluence of these elements boosts the overall value of the RTB process for all players, so much that on the supply side, publishers are beginning to release premium inventory to SSPs to capture larger shares of ad budgets processed in RTB markets.

Facebook and Ad Exchanges

In mid-2012, Facebook announced the expansion of its growing display ad business into the RTB marketplace, with several DSPs already testing the Facebook Exchange, or FBX. RTB-enabled ad exchanges aggregate ad impressions across many online channels and connect ad sellers to buyers. Primarily a sell-side service, ad exchanges provide ad inventory details, such as website type, ad unit size, and user geography to ad bidders (e.g., MBDs, DSPs, ad networks). They also manage the entire ad-auction process - receiving the bid, determining the winner and facilitating ad placement.

Within the FBX system, brand advertisers can target Facebook users based on their Web-browsing history, with ads displayed on a Facebook page based on third-party Web browsing habits. It matches users more closely with not just relevant content but with products where they have displayed purchase intention. For example, Facebook Exchange can serve up ads about cheap flights or local auto dealers to a user who has visited a travel site or the Ford home page.

FBX indicates Facebook is getting more aggressive in its advertising methods -- and is forging new ways to build revenues. According to comScore, the social network serves approximately one-third of U.S. display ad impressions, so the FBX could open up a large source of ad inventory to the RTB market.

Facebook is competing with other companies in the RTB market, notably Yahoo and Google, which have established their presence in the RTB market through a variety of acquisitions. Yahoo acquired Right Media in 2007, Rubicon Project purchased Fox Audience Network in 2010, and Google followed suit in 2011 with the acquisition of Admeld.

Growth of the RTB Market

Agency demand for cross-platform ad synergies will drive the development and adoption of RTB sell-side platforms for emerging media, particularly mobile, online video, and social media, but these markets will remain small, with growth contingent on the maturation of the online display RTB ad market. Even so, Parks Associates asserts this market will grow quickly. RTB is a complicated process, with unfamiliarity and a lack of industry knowledge as potential inhibitors, but even if they have any significant impact, they will serve only to slow growth, not stop it.

The advantages of the RTB process to ad buyers and sellers are simply too great to ignore. Ad spend will shift away from traditional online display advertising to the RTB ad market as buyers become more comfortable with the concept and realize benefits such as cost efficiencies, reduced ad waste, rapid scalability, and improved control and transparency. RTB revenues generated by online display ads in North America will reach US$1.6 billion in 2012 and $7 billion by 2017.

Source: ecommercetimes.com and adgorithms.com 

Ad exchange

Ad exchanges are technology platforms that facilitate bided buying and selling of online media advertising inventory from multiple ad networks. The approach is technology-driven as opposed to the historical approach of negotiating price on media inventory. 

This represents a field beyond ad networks as defined by the Interactive Advertising Bureau (IAB), and by advertising trade publications Advertising Age, iMediaConnection and ClickZ.

The major ad exchanges include AdECN, which is owned and was purchased by Microsoft in August, 2007 but may have recently been closed down, Right Media, which is owned and was purchased by Yahoo! in April 2007, ContextWeb's Exchange, the leading independent exchange, DoubleClick Ad Exchange, which is owned by DoubleClick, a Google subsidiary purchased in May 2007, QZedia, Adkaw, Adbrite and Zinc Exchange, an exchange selling guaranteed impression delivery on newspaper sites.

Ad exchanges can be useful to both buyers (advertisers and agencies) and sellers (online publishers) because of the efficiencies they provide.

Source: Wikipedia.org

Look at Pay-Per-Click Tools for Small Business

Managing online paid-search-term campaigns can be like water torture for a small-business owner: A slow drip of deadliness, choosing keywords and deciding what to pay for each on services like Google AdWords and Microsoft AdCenter.

For the uninitiated, paid-search campaigns involve advertisers paying a fee, usually based on clicks or views, to have their links placed high on search-engine results pages. They typically bid on keywords or keyword phrases. Users can find themselves guessing at the words those searching for your products or services might enter into Google, Bing, Yahoo or other search engine. All for the prospect of having your short bit of linked copy appear across the top and on the right side of a web-search results page.

Bigger companies often have help from pricey pay-per-click automation and management services and perhaps professional search marketers. But small and midsize businesses face a tougher task in finding affordable support for paid-search marketing. Programs exist, but none are easy in my view. Or even that is affordable. So to get a feel for the best choices in a tight market, below are the three lower-cost paid - search marketing tools.

Click Sweeper

What you get: A relatively deep, but affordable, pay-per-click bid-management tool. Click Sweeper, by Santa Clara, Calif.-based Varazo, supports Google, Yahoo and Microsoft accounts and offers a nice set of features to optimize your keywords. Four automated bidding strategies let users prioritize keyword bids based on cost, ad ranking, and number of conversions or return on investment. There are analytics tools that can increase the cost, and ways to manage actual ad copy and create performance alerts. You can also generate reports and graphs to track which keywords work and which don’t.

What you get: A great suite of Google AdWords campaign-building tools. Boston-based Word Stream offers a pay-per-click management platform that lets users easily build ad campaigns from scratch or fine-tune campaigns with some cool keyword analysis features.
What you get: A great suite of Google AdWords campaign-building tools. Boston-based Word Stream offers a pay-per-click management platform that lets users easily build ad campaigns from scratch or fine-tune campaigns with some cool keyword analysis features.
What you get: What amounts to an entry-level, top-end paid-search tool. If your business invests significant money in paid-search marketing, then Clickable is for you. You get a top-line PPC management tool that works with Google, Yahoo, Bing and even Facebook. It even -- for an additional $300 per month -- will assign an employee to help you design ad strategies -- that’s actually an affordable option, considering the cost of paid search.
What you get: What amounts to an entry-level, top-end paid-search tool. If your business invests significant money in paid-search marketing, then Clickable is for you. You get a top-line PPC management tool that works with Google, Yahoo, Bing and even Facebook. It even -- for an additional $300 per month -- will assign an employee to help you design ad strategies -- that’s actually an affordable option, considering the cost of paid search.
Source: www.entrepreneur.com

Why you might like it: It’s flexible. Overall we found that Click Sweeper strikes a good balance between automatic bidding and user control. You can let the tool do the bidding for you, or if you need to micromanage a few keywords, you can enter bids manually. There is a nice sense of direct control over your spend.

Why you might not like it: its complex. That’s partly due to the nature of the pay-per-click beast, but there are numerous menus, tabs and options to set for every keyword. So gearing up the service can feel as onerous as trying to manage your AdWords campaign with no help. Click Sweeper does offer a set of tutorial videos. They’re dry and watching them takes time, but they can get the job done.

What to do: If you are outgrowing Google’s Adwords tools, Click Sweeper is logical step. Just be sure you give yourself plenty of time and patience to figure it out.

Word Stream for PPC

Why you might like it: Ease of use. Word Stream simply shines at managing keywords. A long list of powerful keyword research tools helps you decide how to build your campaigns and write ad copy. And Word Stream does a nice job of suggesting new or related keywords, and recommending words to avoid. We especially liked the way the tool helps to effectively group keywords, one of the trickiest parts of search-engine marketing.

Why you might not like it: Simplistic keyword bid management. Word Stream does a good job of tracking how keywords perform, but users might miss the opportunity to assign complex rules and goals for bidding that are available in some other services. So you can waste money, unless you have a firm grasp of your bid strategy.

What to do: For ongoing paid-search-marketing efforts, Word stream makes a lot of sense. It offers a nice mix of cost and features for a more sophisticated pay-per-click marketing effort.

Clickable

Why you might like it: Clickable offers a powerful mix of features well suited to most small business needs. It generates daily bid recommendations based on revenue goals. Custom reports track and compare whatever data you’d like and turns it into a neatly branded presentation. The bulk keyword editing tool quickly manages your ad copy and campaigns simultaneously across different search engines, which can be handy for an advertising blitz. And social media gets its due: Facebook marketing tools also help your business break into what some are calling “F-Commerce.”

Why you might not like it: While Clickable may look affordable compared with sophisticated paid-search marketing, it isn't low cost. Expect to spend about $10,000 a year. And you still might feel constrained. Bottom line: Clickable may not be the best choice for smaller shops or those just wading into paid search marketing.

What to do: If you are looking for value over a full-service paid-search marketing agency, or if you feel comfortable running your own paid-search marketing internally, Clickable is an intriguing option. Just make sure you know the pay-per-click market, and have the money to invest. With up-front costs this steep, a return on investment might be tough to find.

Source: www.entrepreneur.com

Disadvantages of Pay Per Click (PPC) Advertising

Like with anything else in internet marketing pay-per-click advertising would have its own set of pros and cons.

Internet marketing is getting more and more competitive each and every day. Because of this reason, why a lot of marketers are finding various types of marketing campaigns for their products and services. Pay-per-click advertising is both easy and quick to put into operation. It also has the potential to be an extremely cost effective means of advertising, but only if approached with the right strategy and knowledge.

As easy as it is there are still many online marketers who seem to give up at the first sign of difficulty without realizing the wonders of pay-per-click advertising. We hear the similar issue all the time from new marketers: “How come my click-through is not converting?”

As good as it seems pay-per-click advertising has its own set of disadvantages and drawbacks. Let us go over some of these things so that at least you have a better picture of pay-per-click advertising.

Easy

You might be thinking that being an easy strategy should not be a disadvantage. There are two sides to this, yes, it is true that pay-per-click advertising is easy to get going, however it does not mean that success is on your side right away.

Before you fall into pay-per-click advertising you have to do careful keywords research to ensure you are not going to be part of an overflowing market. A sorry excuse for a copy will surely affect your ad’s ranking which means you are spending unnecessarily.

Click fraud

To explain this in non-technical language, click fraud happens when your competitors click on your advertisements because eating up your budget. Click fraud in per-pay-click advertising can be done by an actual person or it could be done by a program that is designed to click on ads without detection.

Be sure that you check the conversion rate of your pay-per-click with each search engine that you use. After getting this information drop whatever it is that is not doing well and save some money in the process.

Do not go thinking that since Google is the biggest search engine right now that you should only use that. It sure is big but together with that, there is a lot of competition. You stand a better chance of getting conversions if you use small pay-per-click programs, and not to mention it is less expensive.

Poor keyword research

What are your prospects doing to find products like yours? Do you know what they are typing in that search box? If you are guessing as to what that is then you are costing your business unnecessary expense.

A well-researched keyword phrase will clearly show what the main purpose of the search is. So when you think you have found a keyword, ask yourself, “What problem is this person trying to solve? What are his issues?” If you are not able to answer those then what you have is too general so you have to research again otherwise you are going to lose money.

If you are just starting out you might want to try out Google Adwords because that is for free and it can help by providing you an amazing range of information that will help you zero in on inexpensive, targeted keywords that will bring in people with a problem that your product can solve.

Scatter gun Ads

Every advertisement that you think of should be based on one keyword phrase that is relevant to one specific problem. Using an advertisement that is too general might result to clicks that are not valid. What do I mean? Someone might click it but in reality, these people are actually looking something entirely different.

In writing your advertisements make sure that you do it right, spend some time on it. Write as if you are the one with problems that needs resolution. Use your keyword in the header and try to integrate it to the body of the advertisement. In the body of your advertisement, be sure to mention the product benefits instead of just mentioning the features.

Unrelated landing page

People click on your advertisement because they want to know if you can solve their problems, so if you link unrelated landing pages and prospects see it is a different thing then they will for sure close that window and never click on your advertisement ever again.

If your prospects click, on an advertisement, that sells handbags and then they are taken to a landing page with all sorts of other products, or they have to figure out how to navigate to get to the handbags section then chances are you have lost a sale.

Click-through cost money and conversions keep you in business

So be sure that you make the most out of each click you receive. The conversion of each click is what keeps your business going.

Continuous work

If your advertisement is not working, test other advertisements against it by modifying some elements and running them against each other. Think of your original ad the control ad, change the headline, and see if the new ads yield better results. Keep doing this until you get the results that you want.

Source: internethomebasedbusiness.startup-internetbusiness.com

PPC - Pay per click

Pay per click (also called Cost per click) is an Internet advertising model used to direct traffic to websites, where advertisers pay the publisher (typically a website owner) when the ad is clicked. With search engines, advertisers typically bid on keyword phrases relevant to their target market.

Content sites commonly charge a fixed price per click rather than use a bidding system. PPC "display" advertisements are shown on web sites or search engine results with related content that have agreed to show ads. This approach differs from the "pay per impression" methods used in television and newspaper advertising.

In contrast to the generalized portal, which seeks to drive a high volume of traffic to one site, PPC implements the so-called affiliate model that provides purchase opportunities wherever people may be surfing. It does this by offering financial incentives (in the form of a percentage of revenue) to affiliated partner sites.

The affiliates provide purchase-point click-through to the merchant. It is a pay-for-performance model: If an affiliate does not generate sales, it represents no cost to the merchant. Variations include banner exchange, pay-per-click, and revenue sharing programs.

Websites that utilize PPC ads will display an advertisement when a keyword query matches an advertiser's keyword list, or when a content site displays relevant content. Such advertisements are called sponsored links or sponsored ads, and appear adjacent to or above organic results on search engine results pages, or anywhere a web developer chooses on a content site.

Among PPC providers, Google AdWords, Yahoo! Search Marketing, and Microsoft adCenter are the three largest network operators, and all three operate under a bid-based model.

The PPC advertising model is open to abuse through click fraud, although Google and others have implemented automated systems to guard against abusive clicks by competitors or corrupt web developers.

Source: en.wikipedia.org