Tag Archive for RTB

Digital Advertising Predictions for 2015

The marketing department at Signal asked several people at the company to make digital advertising predictions for 2015. With their blessing, I’m publishing my predictions right here. I also added a couple of additional topics at the bottom.

Advertising Predictions - 2015

The Ecosystem

2015 will be a big year for IPOs and consolidation. Startups will form in nascent categories, but not so much in established ones. Luma will produce a new set of Lumascapes to accommodate the rise of new categories. This is hardly a shocking prediction.

Cross-Channel

Cross-channel will be the rule in 2015. Companies with a single channel solution will be the exception (and the Dodo).

Programmatic

We’ll see the rise of the Meta-DSP where Agency systems will be plugging into DSP stacks via APIs. Smarter systems will be able to segment users across DSP buying systems and regain control of Frequency and Reach.

Native advertising

Native Normalization: Native ads will begin to follow responsive design techniques. “Standardized Native Ads” will become the biggest oxymoron of 2015. Native ad specifications are already working their way into the OpenRTB API Specification. The road to standardization is very short from that point on. Read more

Alternative to the CPM

Online advertising transactions are all CPM based. You might think my wild assertion is out of line. You might think you’re buying ads on a CPC or a CPA basis. But when a publisher is looking to sell ad inventory, they’re thinking about the CPM. “How many dollars can I get for every thousand ad views?” And when that CPA deal or that CPC deal comes in the publisher’s doing the math to convert that number into a CPM.

Blowing up the CPMFor a CPA deal they’re estimating how many acquisitions they can send to the buyer for every thousand ad views. For CPC, how many clicks per thousand ad views. They’re boiling it down to a CPM because that’s how they can compare the deals. It works like this all the way up and down the funnel.

The CPM has been around for a long time. With the advent of the RTB auction model, the CPM is very dynamic. Each impression up for auction is individually valued based on countless bits of information about the user, the page, the size, the date, the historical performance and a variety of other variables. Even though a separate auction is run for each impression, the bid prices are still in the form of a CPM. It’s in our blood. It is the end result of normalizing the value of an ad impression so that it can be compared to its peers.

Some Problems

I want to point out a couple of problems with the CPM. First and foremost, it’s a single number. This aspect causes a couple of secondary problems that put the buyers at risk. One of the big ones is that there’s no guarantee that the ad will actually show on the page. Steps have been taken to address this by several companies. The result of this problem is a topic near and dear to my heart: discrepancy. Read more

How is an RTB winner chosen in the case of identical bids?

When multiple advertisers are bidding for a certain (impression) and more than 1 enter the same bid amount, (each) being the highest, how does the RTB (auction) determine which ad should be displayed.
This question was asked on quora, below is my answer.

Identical BidsIdentical bids are not unheard of, but they are rare.  Bid prices are presented as a CPM value with up to five decimal places.  That means that the actual impression can bid upon with precision down to eight decimal places.  So in that rare event, when there are two or more matching top bids, the winner is chosen at random.  This is only the tip of the iceberg, though.

Features are being added to RTB systems that allow for preferential treatment of preferred DSPs, agencies, trading desks and even advertisers.   Deals that are struck between site owners and buyers are being executed through the RTB infrastructure.  Those deals can supersede standard auction mechanics, resulting in a winning ad from a preferred partner in the presence of matching (or higher) bids from other parties.

As time goes on and the RTB system is exploited for more and more features, having equal footing in an auction will be more rare, relatively speaking.  There will always be general auctions where no bids are given special consideration.  We are, however, entering an era where premium inventory is available to buyers through RTB.  With that inventory comes a more carefully crafted environment to buy and sell.

One bid per DSP per impression – why?

Why historically (and currently) only one single bid was allowed for each DSP per impression? Why hide demand from the exchange and create opportunities for the DSPs to arbitrage? – I know this is changing now with the possibility of multiple bids per DSP (openRTB v2) but why ad exchanges let this happen at the beginning?
This question was asked on quora, below is my answer.

One bid per impression, why?Short Answer

A multiple bid response was discussed at the very first OpenRTB meeting.  It was not seen as a favorable feature by the demand side, at first.  They preferred submitting one bid.  Supply side partners were not in a position to force the issue, nor had the necessary research been done to support the idea.

Early Days

From the supply side’s perspective, as with many transaction systems, early efforts in RTB were focused on connecting the pipes.  RTB represented a new source of demand and the pressure was applied to getting plugged in to as many DSPs as possible. Read more

What are the most important KPI’s to monitor when launching a proprietary demand side bidder?

What technical, operational and campaign performance [bidder] KPI’s should be considered when ramping up, and are there any industry benchmarks?
This question was asked on quora, below is my answer.

Some bidder KPIs can be monitored with tools like graphite (not angry birds).From a technical perspective you’ll want to measure how many different types of inventory you support: mobile, app, web, video, facebook ads etc… You’ll want to track how many SSPs you’re integrated with and how many impressions are available to you. You should look into creating a feature matrix and decide which advertising features you and your customers find most important.

On the operations side you’ll want to make sure your bidding system is responding to bid requests quickly. The round-trip time for a bid response, from an SSPs perspective, should be no more than 100ms – and even that is pushing it these days. Your internal bidding algorithm should probably make a decision in less than 30 or 40ms. This allows about 60ms for network latency between the bidder and the SSP. Some SSPs have DSP latency monitoring available. This type of monitoring will give you insight into what the SSP is seeing. Read more