Market researchers Parks Associates report that ad revenues from real-time bidding (RTB, which allows companies to target consumer segments in real time) will reach $7 billion in North America by 2017. The independent research firm's report "Real-time Bidding: The Online Ad Exchange" finds that RTB will account for 34% of all online display advertising revenues by 2017.
Industry efforts like Facebook Exchange, along with companies like SpotXchange, Nexage, and Google that are opening their ad inventories to the RTB market, are significant factors driving growth.
"Facebook’s newly launched ad exchange is a driving force for RTB adoption and could help Facebook regain its market value as the social network serves approximately 33% of U.S. display ad impressions," said Heather Way, research analyst, Parks Associates.
Display RTB Demystified
RTB refers to the complete process, including the technology infrastructure and management systems, that enables the automated purchase and placement of online display advertising to specific audience segments. This more efficient and targeted advertising method is an important tool for firms such as Facebook, which is struggling to monetize content, because RTB allows them to place more relevant ads in front of their members.
Its advantage over traditional buying is that RTB in theory enables greater transparency, control, and accuracy. "So once media buyers realize the benefits and become familiar with the new ad buying and selling process, ad spend from traditional display advertising will quickly transfer to RTB platforms," Way said. "Incumbent display ad sellers, such as ad networks, must integrate RTB capabilities to avoid losing market share."
Still, RTB is not easily understood by the buyers of online display. "Ad agencies face multiple obstacles, including new media consumption and multidevice adoption, in an expanding and very complex business environment," Way said. "New ad markets such as RTB are difficult to navigate, and agency executives struggle to understand the inner workings of digital media and their impact on media campaigns."
Display RTB Cleared Path For Video RTB
Forrester Consulting in March predicted that US online video RTB spending will reach $387 million 2012; will account for over 15% of all online video spending in 2012; and will grow to $667 million in 2013. This growth stems largely from brand advertisers flocking to a familiar, TV-style creative format. While most of this investment comes from digital buyers, Forrester believes that TV and print buyers are also beginning to see online video as a strong media buying opportunity.
But, they want better analytics. Forrester concludes that “digital media buying models are shifting from the opaque, manual process of traditional media buying to a more dynamic process where data-driven decision making and automated processes help buyers and sellers avoid redundant manual tasks and focus on delivering value.” The company observes that buyers and sellers are already using innovative tactics like impression-level decisioning and automated optimization to drive efficiency and effectiveness in online video buys.
Not to take away from display RTB; it has laid the foundation for video, and those experienced in display RTB are among the early adopters of video RTB, which in turn should enable video RTB to grow more quickly than display. Still, experienced digital buyers will be tasked with educating new-to-RTB colleagues (like TV buyers), and publishers will have to clearly articulate how RTB-enabled buyers can do business with them. Also, vendors like exchanges and DSPs must educate end users to help create a consistent language for talking about the online video RTB market.