Real Time Bidding (RTB) has received a lot of hype over the past year, but is it deserving of all the attention? Raymond Reid, managing director of Neo@ogilvy Canada, and Andrew Casale, vice-president of Casale Media, spoke about this rapidly growing digital sales model at the INK+BEYOND newspaper conference in Ottawa on May 2.
“The model is evolving, it’s forcing a change in the sales organization but people are still trying to figure out what it means,” said Reid. “The marketplace is changing quite a bit; people feared initially that RTB would cannibalize the direct sales organizations, but it’s actually complimentary to the direct sales approach.”
RTB is an automated buying model which makes it very efficient for media organizations to sell remnant web display ads. As a web user visits a site page, units for sale go up for auction in real-time and sell immediately to the highest bidder.
“There is far more inventory available on the web than the direct sales reps can actually sell,” explained Casale. “Publishers are only selling about 40-60% of their inventory because of lack of resources; programmatic buying allows existing advertisers to access this inventory.” RTB gives media organizations the opportunity to monetize remnant and untargeted inventory and allows advertisers to tap into this unsold space and gain efficiency through scale
So who’s buying using the RTB model?
In Canada there has been major brand adoption in the last 18 months. Five hundred brands have gotten on board with RTB including banks, telecommunications, auto companies and a number of Consumer Packaged Goods companies. Among these early adopters, 10 brands accounted for 45% of total RTB spend in Canada in Q4. A number of RTB buyers entered the top 10 in Q1 2013, but there is still a lot of room for growth which will come, said Reid, with continued education on the publisher and the advertiser side.
But while efficiency is important, context and content are still relevant when it comes to this new data-driven sales approach. “Consumers associate different media brands with a certain type of advertiser and buyers are willing to pay a premium to publishers that have high quality content,” said Reid. Programmatic buying doesn’t mean your content is devalued – premium environments should still demand premium pricing.
Machines aren’t taking over, but they’re playing an increasingly important role in the media sales landscape. Programmatic buying is now migrating from the digital space to out of home billboards and other platforms. “We are going to see significant dollars move into RTB in the upcoming year,” said Reid. “Ogilvy is moving into this space because it believes in the growth rates.” He predicted a growth of 30% or so in the next year.
With the increasing prevalence of this new buying model, publishers will need to think about bringing in staff with new skill sets to augment their sales teams. Casale spoke about the data-heavy nature of RTB and the importance of putting mathematical minded individuals next to traditional sales reps.
Both speakers agreed that an RTB sales model is best used in conjunction with direct sales. “You need direct sales relationships to facilitate premium ad buys like website takeovers,” said Casale. “Most advertisers will do their mass awareness buying through direct sales and then they’ll look to RTB where they can get efficiency.”
It’s important for media organizations to remember that programmatic buying cannot replace direct sales; you need to establish real relationships to get the most out of your advertiser.