The pros and cons of real-time bidding for mobile
By Chantal Tode
January 15, 2013
Growth rate slows for mobile ad budgets
Real-time bidding promises to impact the way in which mobile ad inventory is traded and can significantly boost performance, according to a new report from Adfonic. However, it still comes with some challenges for marketers and its future role is by no means guaranteed.
In a report that was released today, Adfonic compares RTB with non-RTB methods for running mobile advertising campaigns and finds that the clickthrough rates for RTB ads is 97 percent higher on average. Results are even higher for certain verticals such as fashion and style and when RTB is combined with rich media.
Today, RTB is still a 'mid sized' part of the mobile ad space, said Howie Schwartz, CEO of Human Demand, a mobile DSP focused on real-time bidding. Twelve months ago, I would have said that it is a tiny part, so we have experienced significant growth and scale.
OpenRTB as a standard has really sped up integrations and access to supply, he said. I think the next big growth areas in mobile RTB this year will focus on: hyper local, mobile audience, rich media, mobile video.
RTB is the programmatic trading of mobile ads based on algorithms. By bidding for inventory in real time, advertisers can access impression-level attributes very specific to their audience and are likely to pay less because they eliminate most of the friction from the sales process.
"The AdSnap: Mobile Real-Time Bidding Report" from Adfonic suggests big data and algorithmic trading can have a big impact on mobile advertising, with style and fashion-related RTB ads experiencing an average lift of 231 percent.
Combining RTB with rich media mobile ad formats that users can interact with can be even more effective for advertisers, achieving a 218 percent lift compared to standard banners.
While some industry forecasts have predicted that up to 50 percent of all targeted display ads will be bought using RTB in the next couple of years, marketers still face some challenges using RTB for mobile.
RTB enables advertisers to automatically determine whether a user matches their target profile and bid at auction for the right to serve that user an ad.
However, audience understanding has been one of the issues holding back RTB in mobile because of the issues around tracking behavior in mobile.
As a result, other targeting data besides behavior is often used in mobile, such as location.
The RTB market is an exciting and effective tool for advertisers looking to target specific audiences in a cost effective manner, said Joe Germscheid, director of consumer engagement at agency Carmichael Lynch.
In the PC-connected world, the cookie is the key to user history and targeting, he said. In the mobile world, where cookies don't exist, it's much more difficult to effectively target and use the RTB business model.
Some companies are beginning to solve these challenges with geo based ideas such as Wi-Fi connection information, but it is still difficult to verify unique user identity.
Challenges with scale
Other issues include scale and inefficiencies around price which are likely to be addressed as RTB continues to mature.
Another drawback to RTB is that marketers have to give up control in terms of the context in which their ads appear and in the types of ad products they can use.
The biggest problems with RTB are that it is much harder to control the context within which your ads show up and you're limited in the types of ad products you can run, said Dave Martin, senior vice president of media at agency Ignited. And depending on how narrow, or local, your target might be, you can also run into challenges with scale.
For most marketers RTB on mobile is still a fairly small percentage of the overall mobile mix, he said. But as measurement and verification technologies on mobile improve, more advertisers are likely to test RTB to see if they can squeeze more return from their mobile media buys.
The future of banners
There is also the issue of just how big a role the banner is going to play in mobile in the future, as this is the kind of inventory that RTB is typically handling. Some feel that as mobile advertising continues to evolve, brands will focus more on delivering more immersive experiences and move away from banner ads.
RTB is appropriate only as there is use - or tolerance - for static ads on the mobile platform, Carmichael Lynchs Mr. Germscheid said. As advertisers develop and enjoy success with native advertising in the mobile environment, banners will hopefully diminish in their importance on the mobile platform.
Advertisers and their agencies need to think of better, more native ways of delivering brand messages, he said. Simply borrowing the banner idea from the PC browser is short term thinking.
If mobile banners are not the ad unit of the future - and I hope they aren't -, then RTB as we know it will be irrelevant in mobile.
Chantal Tode is associate editor on Mobile Marketer, New York
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