An insight into the digital advertising industry in 201, by Julia Smith

10 years ago the digital advertising market was a simple place.  Trading of advertising happened in just two ways – direct between agency and publisher or direct between brand and publisher. Then five years ago a new element was added in the form of advertising networks and ad sales houses. They created an intermediary level between the buyer and the seller in two ways – either representing the publisher as their sales house or selling remnant publisher inventory to agencies or brands.

Simple? Well at least it used to be. But this is no longer the case. The landscape has evolved into a complicated mix of businesses that sit between the buy and the sell side. In fact, the industry has seen more change in twelve months than potentially occurred in the last 10 years. Right at the heart of these changes is Real Time Bidding which has altered the way buying is bought for brands, agencies and publishers.

So what is Real Time Bidding?

Real Time Bidding (RTB) is a buying method that allows several Advertising Buyers to bid on inventory on an impression-by-impression basis at the same time. Each impression is auctioned along with information about that impression and user in real time. Each Advertiser responds with their bid and the highest bidder gets to deliver their banner ad.

To make this simpler to understand, I will use an analogy based on the words of Forrest Gump – “life is like a box of chocolates.”

  Imagine a box of chocolates such as Matchmakers, either orange or mint for example, representing a publisher’s site. Traditionally, a buyer would have to choose to buy one flavour of Matchmakers and target just these users through one site.

Now imagine a box of Quality Street is a publisher’s site. Buyers now have a choice of size, colour, flavour, texture and popularity and can pick and choose which chocolate is right for them.

Through employing real time technology and campaign management expertise, publishers can offer advertisers the exact flavours they want and for which they are willing to pay a higher CPM. This ensures a more efficient buying process and delivers better results for buyers and sellers.

The use of real time bidding in ad-trading has made it easier for money to flow through the chain and Inventory Sellers (publishers) are already seeing higher CPMs. By partnering with Real Time Networks, such as Jemm to manage their advertising, publishers have more time to focus on adding value to their premium inventory, improving their brand and proposition.

As the landscape has changed quickly and radically, it is essential for brands to understand the impact this has on buying and selling. And the biggest question currently being bandied around is “Do all these changes mean increased value for my campaigns?”

The increased use of technology across all areas of direct response campaigns means that brands should expect to see increased effectiveness and conversion, as crucially they will have targeted the right user at the right time. This is delivered through dynamic media buying optimisation (DMO) which is “dynamically adjusting the price of an ad impression based on its specific audience data and performance history”. Forrester believes that 2011 is the year for both advertisers and publishers and that this optimisation will redefine on and offline media buying and selling.

For brands to survive and flourish in 2011, they will need to understand how they can target the right user – at the right time – for the right value. The technologies that are now available allow both buyer and seller the real opportunity to achieve exactly this goal.

Watch this space – expect to see DMO explode in even more directions in 2011!! The brands that are effective in maximising digital advertising will be those who understand how the landscape has already changed.

is the 'voice' and communications director at Jemm.

WHY IS THIS ON CREAM? Real time bidding isn't the easiest concept to get your head around. Julia Smith goes some way to explaining how they work, and why the idea is so important.