Real-time bidding (RTB) has transformed online advertising in recent years. Business adviser PwC estimates that nine per cent of the £2.1bn online advertising display market was bought using RTB in 2011 – making it one of the fastest-growing buying technologies – as marketplaces such as Google’s Doubleclick Ad Exchange and Yahoo!’s Right Media Exchange let marketers define their audience and only buy the inventory they want, when they want it.
The challenge for the sector now is to persuade advertisers to look more closely at the opportunities offered by mobile where technological and functionality issues are still deterring brands. Although many marketers are still flummoxed by the complexities of RTB, brands like eBay moving into this area and believe their spend on mobile RTB will almost match online by the end of the year.
There are new opportunities for those considering mobile RTB. By the end of July, Yahoo! will offer demand management and ad serving capabilities for mobile through its Right Media Exchange, meaning that the platforms that exist for PC will be available for mobile for the first time. The cross-platform opportunities for advertisers also include Wi-Fi connection targeting, expanded OS targeting for smartphones and device targeting broken down by tablet or smartphone device and browser targeting.
PubMatic’s figures show that in Q1 2012 online and mobile RTB inventory grew by 120 per cent worldwide, RTB tablet inventory volume was up by a staggering 472 per cent and mobile ad volume by 289 per cent. These figures are from a tiny base, but they do illustrate how fast things are moving as brands test RTB on mobile.
BSkyB, an early adopters of RTB, is spending 35 per cent of its display budget on RTB – up 10 per cent in a year. It is achieving a strong return on investment for its direct response campaigns and director of online sales and marketing Matthew Turner says conversion rates are often three times higher than for other forms of advertising.
Turner is a real champion for RTB on mobile partly because BSkyB already gets up to 15 per cent of its traffic through smartphones and tablet devices.
He says conversion rates for smartphones are still lower than for PCs because people are using these devices for research rather than purchasing its services but he is excited about the potential return from tablets. “There is probably a 50/50 split between conversions on smartphones and tablets now, but the order value is higher on tablets. We are still doing a lot of testing on mobile to see how we can use it more.”
Turner says BSkyB is managing its data and strategy around RTB on mobile in the same way as it does for online. “This is a different space but it is still about telling a story to consumers, warming people up and reminding them of the Sky offer, our brand and products.”
His concern is now about how advertisers can tie together the different mobile devices that consumers use. “It is very difficult to identify the different touchpoints. We need more integration because there is also so much data coming from various devices.”
RTB on Facebook is particularly effective for BSkyB and Turner is surprised just how many sales it achieves through the social networking site. “This is all about reach,” he says. “Many people go to Facebook but not to any of the other websites we advertise on. It allows incredible targeting and segmentations. In fact, up to 30% of our display activity can be on Facebook.”
One of the reasons the medium and long-term outlook for RTB on mobile is so bright is because for many consumers the first screen they look at is their smartphone. If the marketing industry can work out how to measure and analyse the consumer journey on mobile then advertising funds could flood into this area. RTB online already allows relatively accurate reporting of the value of each consumer being targeted.
In reality, brands know it is a case of when rather than if they will invest in mobile advertising because this is the direction that marketing is moving in.
RTB online has become a growing part of eBay’s media plan in recent years and it now accounts for up to 15% of impressions. “RTB can supplement a large brand campaign and the additional data makes it easier to serve ads that are relevant,” says director of internet marketing Daphne Sacco.
She adds: “When it comes to mobile, every brand has its challenges and, because this is a new area for us, we are learning about how the mobile industry works, how we should be tracking RTB activity and which sites our ads will show up on. Mobile is not as transparent as online and we do not want to appear on inappropriate sites.”
Sacco works with demand-side platform firm MediaMath and says because mobile advertising is growing so rapidly she expects eBay’s budget for RTB on mobile to almost match that for online within a year.
“People have their mobile devices with them all the time. Even during the day when they are at a PC they will have their device with them and in the evening when they are watching TV. The timing and relevancy opportunities from mobile are amazing – if we can get over the challenges we face.”
Another brand likely to invest more in RTB on mobile is The Guardian, which is both an advertiser and a publisher. Revenue director Tim Gentry told delegates at a recent IAB conference that RTB accounted for 16% of its total display revenues in the first three months of the year.
He is excited about mobile’s potential but says brands need to use it intelligently at the moment and take into consideration obstacles such as screen size when planning campaigns. He says there is still plenty of “donkey work” for the industry to do around mobile before many more advertisers become fully convinced of its merits.
“Mobile now has its own profit and loss account within our business and as a publisher we have just expanded our sales team for RTB on mobile and we are still recruiting,” says Gentry. “We are looking at what we can offer advertisers so The Guardian product can be adapted to different mobile devices. One challenge for us as a publisher as well as an advertiser is how to integrate a campaign across different devices.”
He expects advertisers to start tackling the issue of knowing which devices people own and when they use them by making the registration processes around promotions more sophisticated.
This is something online betting community Betfair is doing as it invests in building its brand on mobile. It is working with digital agency Essence to analyse the mass of data it collects through standard mobile marketing activity to track and link the different mobile devices its customers are using.
Chris Harrison, Betfair’s head of UK acquisition, says this approach to buying online media is the best way to offer relevant messages to customers who need to be talked to rather than shouted at through online advertising.
Betfair’s senior mobile marketing manager Clinton Peltonen says it is the level of granularity offered by RTB that really appeals to the brand. The company has worked with StrikeAd and can view billions of page impressions from multiple networks on one platform and then only bid for those it is interested in.
Betfair is using RTB to boost its retargeting results. “We are tailoring messaging to those who have visited the site before and are picking and choosing different messaging when we are prospecting,” says Harrison. “We are using data to target the messaging and to ensure the offers are timely. We are currently testing RTB across Europe.”
He is excited about the potential of RTB on mobile but like other marketers is well aware of its limitations. “It took long enough to get retargeting right online and the same journey on mobile is only just beginning . It is all about getting into the data and slowly testing what works and what doesn’t.
“Over the next two or three years this area will expand greatly for us. You cannot ignore mobile but you have to bring in relevancy and work around the fact that individuals are using more than one screen at a time. Re-targeting on mobile is the first challenge; then we can move on to prospecting.”
ISBA’s marketing services manager David Ellison believes that when RTB automated trading moves more significantly into mobile as the technology, targeting and measuring improves it will have a greater impact on the advertising ecosystem. According to ISBA, the nine per cent of UK display inventory traded via RTB is still some way behind the US (15 per cent).
“Many advertisers still struggle with analytics on mobile and consistent measurement remains one of the main barriers to growth,” he says. “Progress into mobile is inevitable but it is too early to predict how much of a return on investment it will yield for advertisers. Much will depend on the amount of inventory available. It means publishers will have a significant role to play over the next few years.”
The Internet Advertising Bureau’s (IAB) senior mobile and networks manager Amit Kotecha agrees there is potential but says those championing RTB on mobile have to constantly address issues around ad serving, analytics and targeting/tracking technologies which are still relatively immature.
“Mobile RTB is still in its infancy but it has grown by 186 per cent in the past year because additional inventory is available,” says Kotecha. “Mobile is where online was in 2005 and over the next few years more exchanges will take on mobile. The market is still dominated by the ad networks because it is not yet big enough for automated trading, but it is developing.”
Mobile clearly provides new and significant opportunities so marketers will be watching closely over the coming months to monitor how quickly the technological challenges that continue to worry them are solved.