It almost looks too simple… doesn’t it? So why go real time? Well, it
addresses all the issues shown above. Fewer client side hops results in
faster ad-serving. Deep integration means lower discrepancies and
a trail of accountability. No longer will can ad-networks claim “it
wasn’t me” when a bad ads gets shown as the publisher will know exactly
which as is served when. But perhaps most exciting — since the publisher
asks each advertiser on every impression what he’s willing to pay he also maximizes revenue as every impression goes to the highest paying buyer.
Seems too simple
Now if you’re new to this industry the obvious question is — why
wasn’t like this in the first place? First, you have to remember that
the majority of adservers are focused on prioritization and not
maximizing revenue or eCPM. These systems don’t function in the RTB
world as they assume that delivery is a given and are trying to fulfill
allocations & priorities. It’s much harder to estimate the effective
CPM of all possible campaign/creative combinations versus trying to
make sure that each of 20 campaigns gets it’s allocated share of
impressions.
It is also worth mentioning that the idea itself isn’t particularly
new. We were talking about this at Right Media over two years ago when I
was still working there and Fox Audience Network has been live with a
client-side real-time auction since 2007! It is also not until recently
that the costs of hardware, bandwidth & CPU cycles have come down
enough whereby adservers can cost-effectively decision on ads that they
aren’t guaranteed to win.
What about Ad Exchanges?
Now if you read the post “Ad Exchange Model Part I” I referenced
above, you may be wondering… Doesn’t Right Media solve all these
problems? In theory, yes. Right Media was the first auction-based system
which synchronized adserving across all parties who adopted the
platform. Networks, Publishers and Advertisers who adopted either NMX,
PMX or AMX respectively were integrated on a per-impression basis and
didn’t suffer the problems listed above. There is one big issue with the
traditional Right Media Exchange model — it requires everybody to adopt
the same technology platform.
As soon as Yahoo adopted the RM platform every smart startup & technology player started calling wanting to integrate their
secret sauce into the exchange. Therein lay the challenge — all these
buying systems had to dumb down their algorithms into a limited number
of buying rules (line items) to actually integrate. This is of course
why Right Media is starting to talk publicly about RTB recently.
Now some of you may have read this post on the Right Media Blog:
If all of this sounds awfully similar to what Right Media
already does on behalf of our demand and supply customers on every ad
request, you’re correct: We’ve been doing real-time bidding for years.
We were the first to offer it, we became the largest provider, and we
are still the largest supply pool of real-time, bidded, non-guaranteed
inventory.
I think the above statement has the potential to do a lot of hurt in people’s understanding of real time bidding so I’d like to throw out a little clarification: Right Media pioneered impression level auctions years ago, choosing the highest paying campaign based on either a pre-registered
fixed CPM bid on a line item or a run-time predicted eCPM using the
internal optimization system, but has not yet been accepting real-time bids from third parties. That being said — it sounds like they’re working on it, which is exciting news!
Ok, that’s enough for now. In Part II I’ll talk more about who’s doing it (or who isn’t?) and what does this all mean for industry participants.