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Many advertisers, agencies, and technology providers face their biggest challenge in 2011: how to innovate and keep pace with the dynamic and every changing digital landscape.
Going into 2011 advertisers and agencies will need to adapt, embrace innovation, new technologies and structure for changes in the way that display is purchased and managed. Data, inventory, demographics, audience segmentation and behavioural retargeting are all vital components in the rise of demand side platforms (DSPs).
Market Shifts and Growth
Real time networks and audience data sources are changing the display buying landscape with many demand side platforms (DSPs) and exchanges engaging in auction based bidding for performance display purchases.
Going into 2011, performance-based digital buying (search and display) will start to be managed alongside a multitude of other digital disciplines. Display growth and potential auction based buying is due to gain lots of traction over the next few years. The US currently has larger growth opportunities due to the availability of more inventory with the UK still showing potential for rapid growth.
EMarketer predicts that the display advertising market is showing continued intense growth, with a projected 14% increase in 2011. Much of this is fuelled by the growth of demand side platforms (DSP) and real-time bidding (RTB).
• Forrester predicts that 30% of online ad spend will be done via DSPs and RTB next year.
• Google predicts that 50% of online advertising will be done via DSPs and RTB over the next few years.
ComScore Ad Metrix showed that display grew 34% in the UK this year.
• It found total UK display ad impressions grew from 164bn in Q3 2009 to 221bn in Q3 2010.
• Facebook being a primary driver (over a third) of display growth in the UK.
• Experts predict that the use of RTB is estimated to account for 3% of display ad spend this year and 15-20% in 2011.
A new era of biddable display presents amazing opportunity. However, the quality and quantity of data and inventory is key to its success.
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In 2011 data, its source, and what you do with it is going to be pivotal to the success and growth of display through DSPs and RTB. The reality is that a DSP is nothing without valuable data behind it.
Anyone can build a DSP. Just like anyone can build a platform. It’s the data and inventory, audience segmentation, and the value you attribute to that data that defines a true DSP. How you use your data and target is crucial to real-time bidding success.
Going into the New Year real time bidding (RTB), used in conjunction with remarketing data, will enable real insight into consumer behaviour and allow value based retargeting of users across a multitude of platforms.
Do not be surprised to see battles between web publishers and advertising networks about who owns data. The quality of third party data and proprietary data is going to be fundamental for RTB, behavioural scoring and retargeting based on consumer data (demographic, web site data, propensity to consume). If data does not have a value then why would you use an auction based platform?
Debate over privacy and legislation regarding data and behavioural targeting is only just starting in the UK and Europe. However it’s a hot topic in the US with the recent ‘Do Not Track’ proposals coming from the FTC.
The Office of Fair Trading in the UK, is also keeping a close eye on the revenue from online behavioural advertising which is currently valued at between £64m and £95m.
In 2011 the UK industry needs to become more involved in this debate. The IAB has been taking huge strides towards self regulation. Steve Sullivan, vice president, digital supply chain solutions, of the Interactive Advertising Bureau states “Consumers who participate in a Do Not Track solution could soon find themselves the targets of cheap and irrelevant advertising.
To borrow a SEO analogy, we may see a ‘white v black hat’ approach to data targeting in 2011.
The data in the US market is large. The UK data market is growing but lags behind that of the US with less premium inventory. One thing is for certain, the market is fragmented and a less fragmented marketplace in 2011 allows for greater efficiency for display purchases via RTB. Unlike the US - In the UK publishers have been slower to make their Inventory available to DSPs. An issue that needs to be addressed in 2011 in the UK.
DSPs can provide massive reach but, it's important to note that high quality premium inventory can also be guaranteed by non auction based systems. 2011 will see more display purchases through DSPs but also, with the rise of ad networks, direct purchases of premium inventory through, non auction based, digital exchanges will also occur.
As across all digital advertising, and especially display, agencies are becoming more creative with their ad formats. Marketers are able to monitor ad sizes and format and report on insightful data on effectiveness and delivery.
The display industry growth is fuelled by the growth of video and social display advertising. What’s more, search-centric RTB allows display marketers more control. Google predicts that display advertising will be be a $50bn industry by 2015 with 50% of all targeted display advertising being controlled and relying on real-time bidding.
The most successful demand side platforms for purchasing display in 2011, will combine remarketing data and insight to add even more information that can be used to influence real-time bidding.
Advertisers and agencies will have better transparency, efficiency, accountability, and greater control over targeting and managing their display campaigns. Producing a balanced approach to purchasing display through DSPs and non auction based systems/networks is going to be very important.
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Efficiency and Profit
DSPs and ad exchange platforms in 2011 will allow efficient buying and selling data-driven audiences, offering enhanced scale, behavioural targeting, audience segmentation and improved transparency. CPMs for many for advertisers will be lower.
Research from Pubmatic (US) on RTB revealed a 64% lift in revenue for publishers and a 749% performance increase for advertisers using real time bidding with RTB campaigns showing an ROI 101% higher than non RTB campaigns
Real-time bidding can increase the ROI of display ads by increasing click rate. However, as real-time bidding depends on the quality of data and inventory (as explained above) clicks and amount of bidders it needs to be managed careful and in balance with mature data and quality inventory.
The agency and innovation
With every evolution in digital media, agencies need to adapt rapidly.
Optimising people is just as important as optimising performance media. Search marketers can help display and exchange specialists with auction-based media. Display people can help search specialists with dynamic creative and understanding of networks and exchanges. Hence, we may more ‘biddable media’ departments in 2011.
One thing is certain. Agencies will need to adapt and structure their business for some holistic ‘biddable media’ growth in 2011, ensure that they stay ahead of the curve with attribution modelling, and ensure cross channel exchanges of information and human capital happen across their organisation.
The modern agency of 2011 must have control and access to audience data. As a side note, it will also be interesting to see how networks and agencies adapt and structure also.
Some agencies will acquire technology companies. Maybe advertisers will acquire ad networks. The important thing to remember, in 2011, is to try and keep an eye on the bigger picture and plan accordingly. For every agency, the approach will be different depending upon your core domains of specialisms, talent in the organization, and departmental flexibility.
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It would be interesting to hear how you think the display market will evolve and how this may affect the way agencies may operate and how they are structured. Please leave your comments below...