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Is real-time bidding growing at the expense of creativity in mobile?

RTB

RTB on the upswing

Real-time bidding continues to take on a bigger role in mobile advertising, accounting for a significant and growing portion of spend. While the data-driven strategy’s appeal lies in its efficiencies, enhancing relationships through creative campaigns still has a role.

Recent numbers point to significant gains in mobile RTB, with Smaato reporting that its RTB ad exchange has hit a $110 million annual run rate this month, while Nexage is seeing more than 50 percent of revenues on its exchange coming from RTB. These numbers are being driven by the fact that with so much mobile inventory going unsold by publishers, RTB can help marketers access inventory at efficient price points.

“The call for a quick death of ad networks at the hands of RTB is misguided,” said Dave Gwozdz, CEO of Mojiva, New York.

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“Yes, a real-time bid per impression is important to drive higher CPMs, but there are many instances where brands are looking to forge a relationship with a consumer and often that means staking out a position as a content sponsor with relevant content day in and day out to gain a noticeable and trusted presence,” he said.

“History has proven that brand trust leads to brand loyalty - it is a vital element in the relationship-building process and ad networks will always be better positioned for this than a programmatic, ad match looking for a conversion. Good ad networks are more about brand relationships.”

Inventory issues
Excess mobile inventory is a function of the fact that consumer consumption on mobile continues to significantly outpace ad spend.

RTB’s promise of more data and sophisticated targeting technologies is appealing to marketers and help drive demand.

However, dynamically buying ads in real-time also has the potential to disrupt mobile advertising, with concern that RTB will diminish the role of the ad network as pressures grows to provide a unique selling point.

Some ad networks are looking at enhancing their offering as result of the growth in RTB.

For example, mobile ad network Mojiva has introduced Mocean Mobile Exchange as part of its Mocean ad serving platform. The new RTB exchange will enable advertisers to bid on impressions while giving publishers access to more real-time demand across mobile Web and apps, various publishers and ad networks.

Exclusivity is key
Others ad networks may end up focusing on exclusivity to drive demand.

“The ad networks that remain focused on selling premium inventory alone will need to ensure that they are the exclusive sellers and that they can offer a level of targeting that keeps agencies and brands interested in the face of competition from the technology available in the RTB space,” said Guillaume Lelait, vice president of North America at Fetch, San Francisco.

Many expect ad networks to continue to play an important role beyond RTB.

This is especially true as brands look to enhance their relationships with users, which requires more creativity that RTB can typically provide, although this could change.

Pioneers of mobile RTB are developing sophisticated and creative ways to target and deliver ads to just the right consumers in a cookie-less way, which will give advertisers and their agencies the confidence they need in order to justify increased ad spend,” Dan Schwartz, cofounder and chief operating officer of Run, New York.

“Brands should be aware of the fact that unlike in the desktop world, mobile is not pre-disposed to the commoditization impact that is now so prevalent in the desktop world,” he said. “Because of the lack of a persistent cookie in mobile, true creativity is required in order to target at scale.

RTB challenges
RTB comes with its own set of challenges.

One question that has not yet been answered is how valuable conversions driven by RTB are over the long term.

“Can real-time bidding be hugely efficient? Yes, but efficient at what?” Mojiva’s Mr. Gwozdz said. “Today it’s driving sales or conversions for a better ROI on that conversion.

“What brands need to get better at, what we all need to get better at, is measuring the lifetime value of a converted customer,” he said.

“Does a conversion that happens via a well executed bid strategy lead to a long-term, high value customer? Or is it a less expensive sale for a “one and done” customer with no lasting relationship?”

Trend just beginning
Still, there is no denying that RTB is taking an increasing share of ad spend in mobile. 

With agencies already putting aside budgets for spend on RTB or programmatic markets, some industry forecasts put RTB’s share of the market at 40 percent in the next few years, up from 15 percent in 2013.

The pace of growth has picked up significantly in 2013 now that agencies and brands are beginning to understand the benefits of RTB.

The growth in RTB could help drive up CPM rates for mobile, which have traditionally been lower than on desktop.

“We are only at the beginning of the trend, both in terms of mobile spend altogether and programmatic mobile specifically,” said Victor Milligan, chief marketing officer of Nexage, Boston.

“RTB, or programmatic, will have a positive impact on CPM, not a negative impact,” he said.

“This is for a variety of reasons such as buyers will respond to richer and more precise targeting data, we will see continued growth in the population of rich media and video ad units, more private exchanges will emerge where buyers will respond to first look or exclusive opportunities.”

For networks that do not grab a hold of RTB quickly, they could find themselves at a disadvantage.

For marketers, the promise of being able to better predict who will respond to an ad can be compelling.

“For networks who choose to embrace mobile RTB quickly, the future is bright,” said Anthony Iacovone, founder/CEO of AdTheorent, New York.

“For others who may stay steadfast in older technologies, the market and needs of advertisers may put them against the 8 ball,” he said. “Technology in the ad space is changing quickly and with that networks must adapt to stay relevant.

“Brands must understand that RTB done right has put true predictive science into buying both audiences and performance with efficiency. The days of behavioral targeting are giving way to a new paradigm of predictive advertising through data science.”

Final Take
Chantal Tode is associate editor on Mobile Marketer, New York

Associate Editor Chantal Tode covers advertising, messaging, legal/privacy and database/CRM. Reach her at chantal@mobilemarketer.com.

 
Related content: Advertising, RTB, Mojiva, Dave Gwozdz, Fetch, Guillaume Lelait, Nexage, Victor Milligan, AdTheorent, Anthony Iacovone

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