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LUKE LUCKETT: Good morning and good afternoon everyone.
My name is Luke Luckett, senior manager of member
services here at the IAB.
I'd like to thank you for joining today's IAB member
webinar, entitled The Arrival of Real-Time Bidding.
And I'm pleased to be joined virtually today by staff
members of Google and Forrester, who will be sharing
insights with us today.
On a programming note, since this is an interactive
webinar, we will be taking questions throughout the
presentation and encourage you to type those questions into
the chat feature on the upper right-hand
corner of your screen.
As the online media and marketing space continues to
evolve, a mixture of trends, practices and revolutions
sweep through sectors of the industry on a frequent basis.
The topic of real-time bidding is no exception to this.
In fact, RTB is proving to be a very hot topic this year.
So today, I am pleased to welcome two panelists from
Forrester, Senior Analyst Joanna O'Connell and Analyst
Michael Greene, as well as Scott Spencer, a director of
product management at Google, who are going to explore how
advertisers and publishers view real-time bidding.
And with that, Scott, I'll let you take it away.
SCOTT SPENCER: Thank you so much.
And thank you everybody for joining us.
We wanted to talk about what's going on with real-time
bidding, what's going on in the landscape, and give you a
little bit of flavor of what we're seeing and how we look
at the elements that comprise real-time bidding.
When we look at real-time bidding, what's first
interesting to note is in a survey that was done earlier
this year, 88% of media buyers plan to buy in real-time
bidding this year.
We are seeing a significant jump in interest and
excitement around buying through this.
But to understand what that really means, we think it
makes sense to take a step back and decompose what
real-time bidding really stands for and understand the
components that make that up.
When we look at real-time bidding, we look at it as
having two distinct components.
An analogy that works well here is there's a pipe, an
API, that's going to provide the inventory in real-time to
the system, and the brain, a system that's going to make
the decision, that's going to use data, use optimization to
determine what's actually bid for that inventory.
And it's only in the combination of these two
elements that you're able to actually
get real-time bidding.
If you just use the brain aspect, if you're just buying
with optimization and data, you can do real-time buying,
but you're not really doing real-time bidding.
It's the combination of taking that optimization and having
it be coupled from the inventory, and having the
inventory then fit into it is what really constructs a true
real-time bidding environment.
When we look at what is driving, or what the
elements are here--
and let's dig a little bit into what the pipe means--
there are some key elements in terms of the inventory itself.
When the pipe is offering the inventory, when it's bringing
that inventory in, it's as close to having an ad tag on
the page as possible.
The information that comes across will include things
like attributes of the ad given, the ad slot,
information about the geography of the user that's
looking at the web page, information about the content
and the environment in which that page is, and information
about the user, the consumer, for elements like
[? unalist ?]
targeting or remarketing.
When we look at the question of what is important on the
pipe, and ask publishers about what matters when they start
to offer inventory via this pipe, there are some key
elements that come out.
The most important thing for publishers is to protect their
audience, their brand.
And so as we look at the elements that are important
for offering inventory to real-time bidding, it's not
surprising that we see key elements like malware
protection, data protection at the top.
And the ability to also control channel conflict, so
what buyers can buy using this pipe, versus buyers that could
buy directly on one site.
And that's covered by things like being able to control
preferred buyer access, or being able to block a given
set of buyers or multiple buyers.
Also on the channel conflict side, different pipes support
the ability to be anonymous.
So that as a publisher, I can offer that inventory, but I
can remove certain information and offer it in an anonymous
manner, so that it's not possible to understand from
which site it actually originates.
And then finally, as a publisher I need to understand
what's going to run in that ad unit and have tight controls
over the kinds of formats.
If I support the expandable add, I may need to have a
cross-site scripting file.
So I need to be able to control when that kind of
expandable can run and when it can't.
I may have a policy that says that I'll allow it to do do
verification of certain types, and so I want to be able to
control, through the pipe, which kind of technologies can
actually run.
Now, the brain side evaluates each of the individual
impressions.
So the brain aspect is now going to look at that and say,
now that I have the information about the
inventory, what's been passed through this pipe, telling me
each of the attributes that we went through.
There's about 100 milliseconds to evaluate and decide and
answer three questions.
The first question is, do you want that actual inventory.
There's the opportunity in real-time
bidding to pass on it.
That's actually a very powerful element and worth
digging into, because unlike a traditional buy, or a
traditional network buy even, when I had inventory allocated
to me, not using real-time bidding, I must do something
with that inventory.
I either will deliver an ad that I'd like to have show, or
I may have to pass it back to another system, redirect it
someplace else, deliver a house ad, or somehow do
something that is suboptimal.
With real-time bidding, the first question of do you want
to show an ad here, and the ability to say no, allows the
buyer to subjectively determine if they are going to
put something in there, and actually increases the yield
on that inventory.
Because they can do that decision, and if they are not
buying on it, someone else can.
The next question that comes in is the pricing question.
Once the determination is made that this is worth delivering
an ad on, the next question becomes, at what price.
Almost all real-time bidding systems are done in a second
price auction.
So that enables a buyer to be able to say, what's the
maximum value that this is worth to me as a unit of
inventory, knowing that I will probably pay less than that
maximum amount, because someone else may not bid as
high for that inventory and I only paid their price, the
second highest price for the inventory.
But I still need to be able to evaluate it using this
intelligence, using the data, using the optimization, to
determine what the value of that inventory is and be able
to the price on it.
Finally, there's a third element that this aspect of
real-time bidding needs to decide, which is which
creative do I deliver?
Once I know I want this space, I can evaluate the price.
There's another layer of creative optimization, where I
can tailor the message to that given piece of inventory,
given the information that's been passed to me, and make
the decision of exactly what I'm going to deliver.
So putting these two things together, looking at the pipes
and the brains, there are different technologies that
support those two elements of what
constructs real-time bidding.
On the pipe side, there are two areas--
add exchanges and sell-side platforms
that provide the inventory.
They're slightly different, in terms of how they operates,
exchanges being predominantly done as a real-time bidding
basis and being offered in real-time.
And sell-side platforms having that as an additional element
that they do, focusing more on being able to offer direct
management of network deals.
For the brain side, there are multiple elements as well that
come together to be able to make a decision.
There are some ad networks which take their decision
logic, their ad server, and are able to use that in order
to make the decision about what ad they're going to
place, what creative they're going to render, and
what the price is.
There's new technologies that have been created called
demand-side platforms. What those are is they are purely
the buying part of a network, the ability to make the
decision to determine which creative to deliver at what
price, but without any of the other elements typically
associated with ad networks, like inventory, aggregation or
inventory controls.
Trading desks have been a new entrance into
the market as well.
They typically work in conjunction with demand-side
platforms or using their own technology to bring the
expertise of an advertising agency to the process, in
terms of being able to bring unique data that they may have
from their advertisers, or being able to bring unique
buying models that they've been able to use to purchase
media and apply that either via a
demand-side platform or directly.
And then there other media buying intermediaries that
come in here and that are able to provide intelligence and
support for being able to decide which kind of creative
they want to deliver on the inventory [? made through ?]
on the pipes.
So the real-time bidding has created an interesting
ecosystem of new providers that come in to be able to
provide both the inventory, the connection to the
inventory, as well as the decision logic, the
brains, to buy that.
So that is an overview.
I wanted to hand this over to the Forrester team to talk a
little bit about some of the research
that they've uncovered.
JOANNA O'CONNELL: Thanks so much, Scott.
Let's advance to the next slide.
So my name's Joanna O'Connell.
I'm a senior analyst. I'm here on this webinar representing
the buy-side of the RTB ecosystem.
So the agencies, marketers, and so on, that are actually
buying into the RTB space.
So from our perspective in the research that we've done on
this topic, RTB is definitely here to stay.
And generally speaking, it is being embraced
by the buying community.
Next slide please.
In the research that we've done, nonspecific to RTB, but
sort of more generally when we talked to interactive
marketing professionals about what they're looking for, we
find that there's real need for a reduction in the amount
of waste, better targeting opportunities, and more
insight on the part of interactive marketers.
58% said that better targeting of ads would encourage them to
spend more in online advertising.
Almost 40% said easier ways to find
valuable audiences online.
Nearly a third said less waste in the media buying process,
when we asked what would encourage you to spend more in
online advertising.
And interestingly, less than one fourth actually said lower
CPMs for online advertising, which is interesting.
I actually think that that's good news for probably all of
us on the phone, whether we're on the
buy-side or the sell-side.
It's not necessarily about finding
the cheapest inventory.
It's about finding the right audiences
with the right inventory.
Next slide.
So when we reached out to some folks that were pretty
significant buyers in the real-time bidding space, and
asked them really specifically what it was about RTB that was
so interesting and valuable and attractive to them, we
heard a few things consistently over and over
from the buying community.
One key theme was transparency.
Next slide, please.
So what's interesting about RTB is it enables transparency
in its many forms. And that's really increasingly a quote
unquote "must-have" for buyers.
So when we say transparency, that can mean a lot of
different things.
That could be transparency into the actual URL on which
the ad is appearing, the page that it's appearing on.
That could also mean all of the different elements that
are part of the equation that lead to the ad rendering on a
page, such as the price, such as the time of day, such as
having the decision to render the ad or not render the ad.
So transparency is actually broader than simply knowing
which site you're running on.
When you speak to the buying community, it has
many facets to it.
And we heard from many folks that this was becoming a real
requirement for them, in one form or another.
So just a couple interesting quotes here, one that's not on
here, but which I'll mention is, we did have one very large
marketer say to us, "If I don't know what the
URL is, forget it.
I'm not going to buy it." So that's certainly one form of
transparency.
We also heard things like, "We now have optics into all the
variables entering into the equation.
We know what's working--
there's no more quote unquote 'black box.'"
We also heard, "Transparency is the whole reason why I'm
doing this." And this person works at an agency in the
trading desk capacity.
He said, "I wouldn't feel comfortable telling a client
'Oh, yeah, we're just putting your ads up.'" i.e.
we're it putting up, but we don't really know where it is.
What appealed to him about real-time bidding, from a
transparency standpoint, was that he had a very defensible
position with his client, in terms of being able to explain
exactly where that ad was and why that was being shown at
the time that it was and the place that it was.
So another thing that we heard time and again when we asked
about the value of RTB for buyers is that they felt like
it gave them a tremendous amount of control.
They felt like they were in the driver's seat when they
were buying real-time biddable inventory.
Next slide, please.
So specifically, buyers have always been hungry for the
opportunity to be able to make very deliberate, strategic,
repeatable decisions, so really to be in the driver's
seat when it comes to making their display buys and acting
on their display buys.
So an interesting quote here from one, "'We can do that'
has become the answer.
Whatever that client is trying to do, we now can do it
directly." And this was from a trading desk guy.
And he said, "I'm a control freak and so is my team--
knowing we're empowered with these tools is great." So he
liked being in the driver's seat.
Another quote which was interesting-- and I think you
hear this time and time again--
is, "We've got the controls of search and the bells and
whistles of display." So all of the value and all of the
great rich opportunity that display provides, but with
real, in the driver's seat control in the search.
And another really key theme we heard, time and again, was
this concept of granularity, really being able to make
much, much, much more granular buying decisions.
So what RTB actually enables is buyers to do much, much
deeper segmentation than quote unquote "traditional"-- if you
can call display traditional.
We've only been around for 15 years.
But much deeper than traditional display has really
ever allowed.
The RTB world is no longer constrained by line item on
plan that is run of network 728x90.
The RTB world adds a tremendous amount of
opportunity for granularity, even inside a
line item like that.
So one buyer said, "As our program is running we're
thinking, 'how do we break the buy into chunks to better
toggle up and down what's working and not?'"
And we also heard, "I can see exactly what fueled the
decision to buy any given impression at
any point in time.
I know that I thought that impression on that page
because X, Y, Z was true." All of those parameters were
parameter that that buyer had access to in making those
buying decisions, which meant much, much
more granular decisions.
So why does this matter to the buying community?
Well, transparency, granularity and control are
certainly great concepts.
But really what that translates into for the buying
community really is a few key things.
One is insight.
And I think as buyers, we've always been hungry for more
insight, whether we're in an agency role or at a marketing
organization, just gleaning more meaning from our
programs.
This also means more sophistication.
So all of the interesting and deeper things that we wanted
to do, now have become reality that allows us to make much
more sophisticated buys.
And ultimately what that means, and depending on how
you define performance, really leads to better performance.
Whether it's something like a lower CPA or higher lifetime
value, or whether that means increased brand parameters,
performance on brand parameters.
Next slide.
So the big caveat, of course, is that it's really still very
early days, although it feels like we're talking about it in
the industry all the time, and folks are probably even tired
of hearing the acronym RTB, it's very early days.
And as a result of that, there are certainly still challenges
that hamper the efforts of RTB buyers.
So I wanted to explore those briefly with you.
So one of the things that we heard time and again was that
there really is a dearth of standards.
And that's something that the buying community really
bemoans right now.
It still feel a lot like the wild, wild west to folks that
are participating in the space from the standpoint of
standards around things like the parameters that are passed
during the transfer of information, to the pricing
model, to a number of other particular sets of standards
that just are not consistent at this point.
So quality concerns do also come up again and again.
And certainly there is a tremendous amount of really
good inventory that's available
through real-time bidding.
But there's certainly a desire on the part of the buying
community for even more quality inventory.
So we heard things like, "One of my biggest challenges is
getting quality inventory.
I'd spend more if the good inventory was there."
Note to publishers, pay attention to that.
That's really the opportunity for you is to be able to meet
that need for large buyers that have embraced RTB, but
are really hungry for more scale in quality inventory.
We also heard, "We see a lot of poor quality inventory:
Blogs, UGC, piracy.
There's a lot of crap out there," is something that we
heard from someone.
So they're really hungry for more good inventory.
So we also heard that it still feels largely like a flash
banner opportunity.
There's a real hunger for broader opportunities from a
creative standpoint.
So one large marketer said to us, "In terms of brand buying,
RTB plays a small part.
Most brand campaigns are large rich media placements.
I find RTB to be used for the smaller units where you may
want to target your specific audience."
We also heard, "We do have a surprising amount of brand
dollars flowing through our desk"-- which is great--
"But what's lacking is the ability to deliver expanded
creative." And certainly there are moves there.
There are some rich media opportunities.
There's video opportunities and some mobile opportunities,
but there's a real hunger for more of that.
And entrenchment.
We do live in a world with human beings, and adapting to
change very rapidly can be challenging.
Things have been done a certain way for a very, very
long time in the media and marketing world, and this is a
pretty big change in the way that folks are thinking about
and buying inventory and audiences.
And that just takes time.
There's a lot of education that has to happen.
There are a lot of concerns and suspicions
that need to be overcome.
And that's just an ongoing process that all of the folks
on the buy side, who are working in the RTB world are
dealing with on an ongoing basis, whether that's inside
agencies or certainly inside of client organizations.
So some really I would say basic, almost simple, or
simplistic, recommendations for buyers considering
bid-based buying.
I know these probably some fairly obvious, but I think
they're probably worth saying anyway.
The most important thing you can do is educate yourself
about this space.
The more strategic thinking you actually bring to this
marketplace, really the more you're going to get out of it.
One trading desk executive actually said to us, "A
marketplace allows fair value to come to bear for those with
the most information." So the smarter you are about the
process, the more information that you bring to bear in the
process, likelier the more successful you will be.
Because this is certainly a marketplace that creates value
for those that are sophisticated in
the way they purchase.
Treat this as a long-term strategic opportunity.
This really is not intended to be another line
item on your plan.
It shouldn't be treated as quote unquote "just another ad
network." It really is a fundamentally different model,
which really has very tangible benefits to buyers which we've
discussed, if it's well executed and it's
intelligently executed.
That's said, of course, it's very hard to make a wholesale
change overnight.
So it is OK to test into it if you need to, but
be smart about it.
If you're going to have two competing programs running, do
things like isolate cookie pools for one versus the
other, isolate media sources for one versus the other.
Because you don't want to put yourself in a situation where
you're setting the test up to fail or yourself to fail by
creating a suboptimal testing environment.
So that's it for me.
I'm actually going to hand it over now to my colleague,
Michael Greene, who's going to talk a little bit more about
RTB and what it means for the sell side.
MICHAEL GREENE: Thanks, Joanna.
Thank you for the introduction.
As Joanna said, my name is Michael Greene.
I'm an analyst on the Interactive Marketing Practice
at Forrester, focusing on publisher-side ad technology
and monetization strategy.
This idea of RTB is certainly something that's been
extremely attractive on the buy side.
And I think the reasons for that are obvious.
Advertisers have heard, as Joanna just mentioned, some
really good things.
These ideas of transparency, granularity, control,
extremely attractive to the buying community.
And it's no surprise that we heard numbers like we heard
from Scott earlier, that buyers are really looking to
invest in this way to access inventory.
However on the publisher side today, when publishers hear
these words their reaction is largely one of the fear.
When publishers hear transparency, granularity and
control, they hear much more frightening things.
They hear things like cannibalization, channel
conflict, unpredictability.
And for publishing organizations who are still
trying to figure out the keys to build an affective digital
monetization strategy, adding this type of channel can just
be very scary.
If we move on to the next slide we see that for so many
publishers the first instinct, when it comes to RTB and
exchange-based buying, is to dig into the trenches, protect
their legacy investments, protect these legacy ways that
they've sold inventory to their advertisers.
And while there are reasons that maybe in the past they
should have been afraid, I think, as we'll be on the next
slide, that's beginning to change.
And there's reason for hope for publishers that they can
succeed in the world of RTB.
The real question today is not if you can succeed, but rather
how you can succeed as a publisher, how this becomes an
effective sales channel for you.
So let's move to the next slide and dig into this idea a
little bit further.
So if you're a publisher, you've probably become very
familiar with this idea that inventory has become somewhat
commoditized, perhaps turning into, in the words of Wenda
Harris Millard, pork bellies.
And I think despite these early fears, the reality in
the marketplace when we go out and talk to advertisers, and
more importantly, talk to publishers who are actually
experiencing this space, is that it hasn't happened.
It hasn't become purely commoditized.
In fact, what we've found is that quality inventory today
is what RTB buyers want the most. And this is an
exceptional opportunity for publishers to move into this
space, give advertisers what they want the way they want
it, and profit from it.
They just need to use the right tools and strategies to
extract the maximum amount of value from their RTB
experiences.
So let's take a look on the next slide at what some of
these tools may be.
So publisher experiences overall show that buyers are
willing to pay for quality.
As we heard from one publisher is that their CPMs through RTB
have exceeded what they believed they
were going to get.
In fact, they were 3x to 4x higher than what they were
getting from other secondary monetization sources.
In this case, they were working with a
variety of ad networks.
Above that they said that these are increasingly moving
in a positive direction as we see more demand flow into the
system and bid prices move up through that
aggregation of demand.
Equally positive to us was what we heard from another
publisher when it came to this idea of cannibalization.
While this is certainly a legitimate fear and one that
every publisher needs to think about when they introduce any
kind of secondary sales channel, what this publisher
said was that they hadn't seen any direct evidence of direct
sales cannibalization.
Certainly they considered it a risk, but they felt that they
had the tools and the mechanisms to actively manage
against that.
And that's an extremely important note here.
The tools are in the marketplace to help publishers
fight against this risk of cannibalization.
Let's move forward.
So what are these tools?
Number one is this notion of price controls, being able to
set variable price floors to protect the direct sales
channel and maximize the yield on that inventory.
This is something where the capability is
in the market today.
Many publishers are struggling to figure out exactly where to
set these price floors.
But we're confident, as new technologies come into the
marketplace and as exchanges roll out new kinds of features
for publishers, they're going to be able to make smarter
decisions about where they set their prices floors, and thus
but able to optimize yield more effectively.
Ad blocking.
This is something that Scott alluded to earlier.
Essential to protecting that publisher brand.
Just as advertisers don't want to show up next to the wrong
type of other advertiser, the wrong type of advertising
content, you as a publisher have worked very hard to
create a premium brand that your direct sales force goes
and sells against. Being able to block advertisers by source
or by category, keep the wrong type of advertising content
off your pages, extremely important to
protecting that brand.
And then finally is this idea of private RTB functionality.
This has become very important in terms of getting the feet
wet for many publishers in this space.
Able to maintain their control, maintain the
relationships that these publishers want with
advertisers, by enabling RTB for only a select group of
trusted advertiser partners.
We fully expect for more publishers to move in the
direction of more open RTB functionality, but for many
moving in with this private RTB functionality is a great
first step and a way for them to experience RTB, learn about
RTB, while aggressively managing against some of the
risks that they feel are associated with it.
Let's move to the next slide.
And on this concept of private RTB relationships, I think the
most important thing they've meant for the market right now
is they've helped create a win-win for publishers and
advertisers.
They've helped grow the pie for these premium publishers
and bring the best kinds of advertisers on board.
As one publisher told us, he said that the private gives
them control, but it also allows them to deepen that
advertiser relationship.
It's not just about growing that secondary channel, not
just about growing that indirect channel, but even
servicing those direct customers even better by
providing them a different outlet to your inventory for
different campaign goals they might have. In this instance,
this publisher felt that they were able to tap into new
types of budgets that people weren't able to previously
access through their direct sales force.
That's something that's extremely interesting, and I
think is something we'll see a lot of publishers doing as
marketers divide their budgets between what's going to direct
and what's going through RTB.
I think advertisers are having great experiences as well.
And this is something that should be encouraging for
publishers as they look to build these relationships.
As one advertiser told us, they had set up a private RTB
relationship, it was working out really well, and they're
looking to do more.
This is a great opportunity for high quality publishers to
offer their inventory to advertisers.
And advertisers are going to be willing to pay for quality,
given that you have the right controls in place.
Let's move to the next slide.
So at the same time, it's not all roses.
Right?
There are many challenges ahead and many things that
publishers need to do to make sure that they make the most
of this opportunity, and they don't let these risks get in
the way of their success.
So on the next slide, let's explore what some of these
challenges are.
Number one, let's all remember that these publishers have the
tools, but there are some inhibitors that are keeping
them from using these as effectively as possible.
Number one here is a lack of data-driven decision making.
Data is driving programmatic buying.
I think many publishers can say that they've experienced
many instances where advertisers knew more about
their inventory than they did as a publisher.
If a publisher wants to win the space, this can no longer
happen, can no longer make arbitrary decisions on what
inventory to make available, where to set price floors.
You're going to have to get smarter about this.
Connected to this is this idea of operational inexperiences.
You're opts team might have amazing experience working
with your direct sales channel, working with your
direct ad server.
However these are new tools, new technologies, and they
require new strategies in order to maximize yield.
Opts teams are going to have to develop new skill sets.
They're going to have to be familiar with these new tools.
And they're going to have to be able to use these to their
most effective state.
And then finally, and this is an area that's extremely
important, especially as many as of you start out by
engaging in private RTB relationships, you'll need to
create a clear role for the sales staff.
One buyer really surprised me by saying, I want to create
more of these private relationships, but my biggest
problem is I just don't know whom to speak to.
That's a major problem, defining how sales is going go
to mark up these functionalities, how they're
going to package these together, how they build
relationships in RTB world.
Extremely important, especially as you start
entering this exchange-based environment.
So let's take a look on the next slide at some final
pieces of advice.
If we could move to the next slide.
Great.
So here's three quick tips to take away, if you're looking
to get into RTB.
Number one is a mistake we see so many publishers making
right now, is pick a single exchange or SSP vendor.
In an auction-based environment, you want to
aggregate demand, and you want to be able to optimize yield
against that demand.
Working with multiple vendors inhibits your ability to
aggregate that and also causes some operational issues that
many publishers are struggling to overcome today.
Pick an exchange vendor that meets your needs, and focus on
developing success in that environment.
Great place to start.
If you go private, start with an advertiser that you really
trust. This might seem counter-intuitive.
Many publishers say, I want to get new money, I want to start
a new advertiser.
This is something that's new for you.
If you want to avoid channel conflict, the best way to do
it is start with an advertiser who has a lot of skin in the
game, an advertiser who relies deeply on the relationship
that they have with your sales force and isn't going to
violate those rules that you set up.
Start with a trusted advertiser--
oh, did you lose me?
Let's say again, start with a trusted advertiser partner.
Apologies for the break up on the phone.
And then finally, invest in the right personnel.
Bring some RTB expertise in house.
Make sure you have the right people in order to make the
right strategic decisions on the role of RTB in your
overall monetization strategy and to manage these efforts
day to day.
This is going to be important as you look to drive success
in this space.
And with that, I'll turn things back over to Scott from
Google for some of Google's insights into trends they're
seeing in the space.
SCOTT SPENCER: Thank you, Michael and Joanna, for those
insights in terms of what you guys are seeing and hearing
from the RTB world.
What I wanted to talk to next is what does this mean, where
is this going, and some of the additional trends that are
impacting real-time bidding.
The first one is, I mentioned at the beginning, a lot of
buyers are looking to move into real-time
bidding in the future.
But what's interesting is that today 70% of the spend that we
get on the DoubleClick Ad Exchange above and beyond the
spend that happens through our own network AdWords.
So this is spend coming from third-party networks
participating on the exchange.
It's almost 70% going through RTB.
That's a tremendous amount of growth and investment on the
technology to be able to build those connectors from the
brains to the pipes to be able to make this
kind of buying happen.
With this change however, there are some trends that are
happening that are interesting and feeding into that.
The first trend that we're seeing feeding into this--
it's on the next slide-- is the change to formats.
So we have display.
Display is the starting point, and it's hard to think of it
as traditional given how young online
advertising is in general.
But display is the starting point, as well here for yield
management and real-time buying.
That is extending into rich media, the ability to support
expandables, which is complicated by the fact that
inventory is non-standard, and one needs to standardize the
way to work with multiple vendors across that inventory.
Moving into video, in-stream video, being able to offer
vast based video inventory through an exchange or SSP to
multiple buyers and using a real-time bidder, creating
that response back for an in-stream asset and dealing
with all the complications of what codec it is, what time
frame it is, et cetera.
And then finally the format of mobile.
Mobile breaks into two element.
There is mobile support for what would be traditional
mobile, someone looking at a traditional website in a
mobile device and having the ability to enable the extra
attributes that a mobile device provides.
And then there's in-app mobile, which is a very
different animal, but also can have benefits from working
with a real-time bidding environment, and the ability
to have that mobile inventory auctioned off to multiple
buyers to get the highest yield for that app developer.
The other interesting trend that we're seeing is, from the
publisher side, this desire to be able to work with any kind
of deal between the advertiser and that publisher.
The idea is that no publisher wants to turn down any
dollars, so long as those dollars can be controls for
from a channel conflict perspective, they can control
for it from all the elements we just talked about.
And being able to be flexible, in terms of how they work with
that buyer.
Michael mentioned a little bit about the private auctions
being a way to start.
And the idea here being that there are multiple flavors of
these deal types and what it can do.
There's a private relationship that you could start with.
You could open your inventory and make it generally
available on an anonymous basis, make the inventory
available generally on a branded basis.
And then the demand for new ways to do this.
And one interesting trend that we've seen driving this is
publishers wanting to have more and more of their
transactions sold in a direct way.
And the driver of why they want to have inventory sold in
a direct way is because they want to negotiate the price
and be able to have control over who's buying and
effectively the price at which they're buying.
And that's one of the things that's somewhat hard to do in
an auction model.
The buyers, on the other hand, as we've been discussing
through this, really value real-time bidding because they
can reach an audience at scale.
They can buy and evaluate that inventory in only the
way that they want.
And so being able to create new deal types over time, such
as a fixed price deal, that allows buyers to use real-time
bidding to purchase their inventory and allows
publishers to offer it through a negotiated price.
So combining the key driver for publishers of negotiating
the price, and the key driver of buyers of needing to be
able to buy through real-time bidding and create a new
option there.
So what does this start to look like if you look at all
the different elements and put them together?
You end up having a very wide spectrum of different deals
that can go through these systems. So on the far right
side we've got the direct premium sales process.
That's your traditional process.
This is the next slide.
You've got your traditional process for using an ad
server, talking to the sales team,
creating your direct sale.
Then across the line there's multiple flavors that start to
come in for this non-guaranteed and real-time
bidding enabled inventory, ranging from an open auction
to the direct exchange concept I just mentioned with the
fixed price.
And also feeding into that is traditional yield management,
where multiple networks would be able to buy in a
traditional relationship, but there's a yield manager that's
optimizing which network to call and figuring out what is
the best network to buy.
Being able to provide all of these different elements to
publishers, so that as a publisher they can figure out
which kind of relationship they want to do and how, is a
critical element and a critical opportunity.
All of that is built on the foundation of the key things
that drive publishers' willingness to offer inventory
at all to this environment, and that is protecting their
brand, their data, and their consumers.
When we look on the next slide at the drivers for the
publishers, 48% of publishers are willing to shift inventory
to an RTB platform in 2011.
Not quite as high as the buyer drive, but certainly a great
growth and great opportunity for publishers moving it.
But there are strings attached to this.
There are requirements.
And those requirements are those key
elements for the pipe.
Malware protection, being the number one driver, data
protection closely behind it, protecting your assets of your
brand and your audience.
The number one assets of the
publisher, need to be protected.
The controls over channel conflict--
from being able to control who can buy, blocking buyers,
being able to do anonymity, those are all key controls.
And then finally, the ability to determine which
technologies can run, what vendors, what survey companies
can run, what verification companies can run.
So pulling all this together on the next slide, this is
actually really exciting.
Because it unlocks a new part of the media spend that's been
historically very hard for display to unlock.
And that's the brand dollars.
And as we look at the key elements that can move the
needle for online advertising in general, we think that this
helps us get to a $200 billion industry in under 10 years.
There's many shifts going on today.
There are the continual shift of media spend the following
where users are, and being able to have their spend
follow the time and interaction that they're doing
online, [UNINTELLIGIBLE]
amounts of the shift.
But also the ability to finally buy audience-based
channels directly.
That's been a promise that online's had for many, many
years finally coming to fruition through this model.
Buyers can define the audience that they want.
They no longer need buy a bunch of proxies
to determine it.
They can actually buy the audience and only that
audience at scale through this RTB-based process, and do so
in a way that is actually providing incremental and new
value, new dollars to the publishers on
which they're buying.
That's an exciting place to be.
And we think that real-time bidding is a key contributor
to that process.
So with that I just wanted to say thank you.
I appreciate you guys taking the time to listen to us.
I know webinars are tough, but here's your chance to ask us
questions and hopefully we can answer them.
LUKE LUCKETT: All right.
Scott, Joanna, Michael, I so appreciate your taking the
time to walk us through your thoughts on RTB.
And to those on the line, I encourage you to start typing
your questions or comments for us into the chat feature on
the upper right-hand corner of the screen.
We've gotten lots of questions about this as a recording.
And yes, this presentation has been recorded.
And a link will be sent out to all of you shortly with a link
to the recording and this presentation.
While you're typing in questions, I want to mention a
couple of upcoming webinars, in case you're interested.
The IAB's Multicultural Council will be discussing the
latest census report and its effects on changing marketing
demographics.
That's going to be on June 29 at noon.
July 13, Organic and SAS will be hosting a webinar called
Navigating the Cross-Section of Consumer Insights,
Sentiment, and Online Behavior.
And that's July 13.
IAB has a number of training classes available
on demand at iab.net.
And our Mobile Marketplace, a full-scale conference coming
up July 18, here in New York, which will be followed by our
MIXX conference, which is the digital industry's kick-off to
Advertising Week here in New York each fall.
So I hope we'll get to see you there.
So I'm going to go ahead and start off
with our first question.
And I encourage you, again, to keep typing those in.
The first question, request versus
impression in an RTB market.
If you do not get an impression filled, will you
pay for a request instead of an impression?
SCOTT SPENCER: So I think I can answer that.
There is a difference between a request, a call from the RTB
out to the system, saying this impression's available, and
then purchasing that impression having been the
winner of the bid.
Today, within the DoubleClick Exchange, the one that I can
talk about, we don't charge for call-outs going to buyers.
We only charge when a transaction actually occurs.
We do, however, monitor closely the buying rate, the
bid rate as well, to determine that buyers are using the
resources reasonably.
And if we see a bid rate, buy rate that drops too low, we
will throttle back some of the call-outs simply to protect
the publishers from buyers looking at the inventory but
not actually bidding on or winning a sufficient amount.
But currently we don't charge for the call-outs.
We just monitor very heavily both the bid and transaction
rates, to make sure that buyers are looking at those
queries and doing so with the fair intention
of purchasing it.
LUKE LUCKETT: All right.
Thank you.
Joanna, you had mentioned a lack of
standards in this space.
I'm curious what you or what Google thinks about open RTB
and the Networks and Exchanges Quality Assurance Guidelines
developed by IAB.
JOANNA O'CONNELL: I think that the quality assurance
guidelines is a step in the right direction.
I think that there's probably a lot more to be done from a
standards standpoint.
I heard that from a lot of folks that there were some
real challenges for them in working across various RTB
sources, because of things like different sets or types
or definitions of parameters being passed that made it
really complicated for them to do their jobs as effectively
as they'd like.
So certainly I think that what the IAB is doing is a step in
the right direction, but I think that the buying
community is probably looking for standards across various
perspectives of RTB, various areas of RTB, not just from a
content standpoint.
It would interesting to hear Scott talk a little bit about
what Google's doing.
I'd be interested to hear what Scott says that Google's up to
in terms of helping to develop standards.
SCOTT SPENCER: Sure.
So we definitely love standards and are fans of the
IAB Network and Exchange Quality Assurance Guidelines,
and are supporting that guidelines deadline that was
required for doing that.
So those are supported by our network,
supported our exchange.
The other standard that was mentioned, which is the open
RTB, we looked at it and we think that it's a good
concept, but that there's still some elements that need
to be worked out before it can really be effective across all
the different systems. And also it's a question of the
value of standardizing something that's not actually
all that hard of the standards problems to deal with.
Most buyers are able to integrate with the different
RTB systems and that nuances that exists.
They're all fairly similar systems.
The biggest challenge that we've seen with it is just
latency impact and some of the technologies that are chosen
that would be too slow for the scale that we operate at.
But definitely something that we're hoping can evolve to a
point where it ends up being useful to the community, and
that there's a good enough driver of a benefit that would
make it so that that would be really something to adopt.
LUKE LUCKETT: Thank you.
Next question, kind of a terminology question.
When you think of the term RTB or real-time bidding, by
bidding do you mean the CPC that a publisher pays?
SCOTT SPENCER: So let me try and answer that.
There's real-time buying and there's the RTB technology
under the hood.
The RTB technology under the hood says nothing about how
it's going to be priced, but typically says, here's
inventory available, and defines an auction parameter.
For the DoubleClick Ad Exchange, we do a clean second
price auction.
Other systems may do different versions of that that are
second price or some other type of auction.
And so that defines how the inventory's offered and what
it takes to win.
On the brain side, the buyer's side, there's this process of
saying, well, I may want to actually do a CPL, a cost per
lead that I'm looking at.
And I need to determine, for this particular impression,
what is the probability that I'm going to get a lead, that
helps me understand what the proper bid is, based on my
expected cost per lead, and then translating that to an
actual bid in CPM dollars.
Likewise, looking at the clickthrough rate, one would
say, I have to bid a CPM.
I'm out, but if I've got an expected CPC rate of this
inventory of some amount, I can use that to
calculate the CPM.
Our belief is that that is a key differentiator of the
networks out there and the brain of the bidders is how
well they can make the determination of what is the
right CPM, given the CPC- or CPL-based input.
And so we've made the exchange be CPM-based, second price
bidding, allowing that innovation to happen on all of
the different bidders that are actually going to make those
conversions, do that optimization, doing that
optimization with both their basic math and with the data
that they can bring to bear.
Because that can have a significant impact on
additional information and knowledge that they can have
about the inventory to allow them to get a better
prediction on the evaluation of what the CPM should be.
LUKE LUCKETT: All right.
Thank you.
Got a couple of questions about this.
Is there anything to say yet about mobile and video RTB
about the size of inventory, the uptake, in that space?
JOANNA O'CONNELL: One quick thing, Scott.
And then I'm going to ask you to maybe talk about sizing.
But I would say from an interest standpoint on the
buying-side, it is certainly there.
I know in speaking to the trading desks, they're very
aggressively pursuing opportunities around accessing
video and mobile inventory.
And I had one marketer say to me she envisioned a world in
three to five years where all of the digital media,
addressable channels that she was able to purchase, she
could purchase through essentially a
real-time buying platform.
SCOTT SPENCER: So we definitely that share that
exact vision.
We believe that all of this inventory, be it in-stream
video, be it mobile inventory, will become RTB enabled.
And we're actively working to do that.
We look at the opportunities for the conversations we've
had with the buying community we work with, is that
in-stream video is a higher opportunity, a larger
opportunity for the buyers and the publishers
that we work with.
And then shortly after that is mobile.
So in terms of our relative prioritization, that's what
we're looking at.
And then we're working to enable buyers on inventory
that is easy to bring in, and then working where it is less
standardized.
So for example, on in-stream video, we have a beta going
where YouTube inventory and inventory from the AdSense for
video world, where it's all standardized on a specific
codec for in-stream video.
We're making that available to our buyers as a beta today,
and they can buy that through real-time bidding.
Likewise, we're moving on the mobile side to enable our
mobile inventory and be able to allow the inventory we have
through both AdSense Mobile, as well as through our
acquisition of AdMob, and make that inventory available to
buyers through real-time bidding.
Mobile is going a little bit after the in-stream, which is
currently available.
The next frontiers on that are enabling
non-standardized inventory.
By that, there's all kinds of different environments that
publishers have created for their in-stream video,
different players that they use, different SDKs.
Likewise, for mobile there's different environments and
different SDKs.
And so working there to try and figure out how do we
enable the standards, enable the declarations required to
make that work so that that inventory can be presented in
a single, unified RTB call-out to our buyers and allow them
to bid and just make it work for them.
LUKE LUCKETT: Thank you.
Next set of questions regarding privacy and
transparency of data.
"If a site is kept anonymous, what kind of content
information is passed through the pipe and specifically does
a publisher get any kind of information as to when and
where the ad ran?"
SCOTT SPENCER: Great question.
In terms of anonymity, and this is something that varies
tremendously amongst the players, so I really can only
talk about the DoubleClick Ad Exchange and how
we deal with anonymity.
Other platforms out there, their anonymity controls
differ for their UI-based buying versus
their RTB-based buying.
And we have a fairly unique approach there, so what I'll
say needs to be taken with a little bit of a grain of salt,
that it may not be representative
of everybody else.
When we deal with anonymity of inventory, we basically hide
and redact anything associated with the URL and replace it,
so that the standard processes will work, but the information
that's provided is an anonymous number versus the
URL of the publisher's site.
So for example, you'll have www.youtube.com may get
replaced with just anonymous123.google.com as a
URL that flows through the system.
That enables things like being able to report on the
inventory and being able to see how things work, being
able to allow buyers to do ROI calculations, and it be able
to spend properly on that inventory.
And we carry that through the entire system.
So regardless if it's a real-time bidding buy, if it's
UI buy, whatever it is, it will be kept
anonymous in that manner.
There is a challenge with anonymity.
And that is when it comes to the ability for buyers to say,
well, where did I run?
And because of that, there's a price difference.
So we believe there's basically a market clearing
price for branded inventory and a market clearing price
for anonymous inventory, and allow publishers to offer
their inventory simultaneously in both ways.
And let buyers decide what they're willing to pay for
inventory based on that information.
We see a significant lift in terms of the clearing prices
that inventory gets when it's branded versus anonymous as a
result of that.
But it's a choice that publishers need to be able to
have, because they can get value for inventory when
they're very concerned about it being available.
So we want to enable the anonymous inventory.
And when we do that, typically publishers block any of the
verification systems that could break anonymity.
And we actually only approve select verification companies
that report on, but do not stop the ad serving process,
again, in part to protect anonymity of the publishers.
So we take it very seriously.
We do a lot of work with our buyers to ensure that what
they're doing doesn't break it, with the vendors to ensure
that they don't break it, and are really trying to be
advocates of the publishers who decide to work anonymously
so that their inventory, their brand is protected.
LUKE LUCKETT: This next question is for Michael.
This person has seen firsthand that publishers wrestle with
new operational tasks associated with
getting into RTB.
Is it a huge part of the dance with perspective vendors who
differentiate on the basis of service?
Do you have any comment there?
MICHAEL GREENE: Certainly, from what we've heard from
publishers, it has been a strong consideration when
they're moving in the direction
of choosing a vendor.
I think ultimately over the next few years, publishers are
going to have to decide whether this is something they
want to outsource, or whether it's something that they're
going to actually have to consider a core competency
when it comes to helping them optimize their yield through
these platforms.
And that's something every publisher is going to have to
make independently, based upon how resources are allocated,
based upon how they package things.
There are many variables that drive this equation.
But the newness of this all is fundamentally upsetting to
many publishers from an operational perspective, and
something that we're increasingly seeing many of
the vendors in this space develop
resources to help address.
LUKE LUCKETT: All right.
Well, Scott, Joanna, Michael, again, I truly appreciate your
time and efforts in putting all of this
together for us today.
Everybody at IAB is very appreciative.
And I thank everybody for joining us on the phone and
from your computers.
I hope you found this insightful.
If you have further questions for our speakers, you are
welcome to send them on to me, and I will pass them along.
My email is L-U-K-E @iab.net.
And here at IAB, we strive to bring originally programming
and different pieces of interest to our members across
the interactive marketing and media space.
So if there are topics you would like to learn more
about, or topic you'd like to speak about, again don't
hesitate to contact me.
It's L-U-K-E @iab.net.
So thanks again everybody, and we hope to see you at our
webinar here in a few weeks.
Bye.