Interesting RTB forecast

1. Real Time Bidding and
Private Ad Exchanges
What works (what doesn’t)
and what’s needed
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2. Table of Contents
Executive Summary 3
Wide-Scale Awareness 4
Private Exchanges Will Grow 5
Buy-Side Concerns 6
Sell-Side Concerns 8
What Publishers Want 9
NEEDED: More Understanding, Control 11
Conclusions 13
Methodology 14
About 15
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3. Executive Summary
1. Wide-Scale Acceptance 5. ‘Human Element’ Important
More than half of buy-side (e.g. agency, One in four publishers who are concerned
marketer, consultant) and with RTB eliminating the “human element” in
sell-side (e.g. digital publisher who sells ad selling feel that face- to-face negotiations
advertising) respondents already actively and dedicated account management are
participate in real time bidding (RTB); almost extremely important in their likelihood to use
all expect the market for RTB and private ad RTB in the future.
exchanges to grow significantly over the next
12 months. 6. What Publishers Want
Sixty percent of publishers want RTB
2. Private Exchanges Will Grow solutions that offer:
Advertisers and their buy-side agents
expect - and want - to spend more ad dollars  Advanced control options
through private ad exchanges. One key  Exclusively premium demand
reason for this is that they perceive private  Dedicated RTB budgets
exchanges to offer more RTB control and  Real-time reporting and insights
value than broader ad networks and  Dedicated account management
exchanges.  An enterprise-level exchange
platform to build their own RTB
3. Buy-Side Concerns enabled private exchange
Media buyers want to see greater emphasis
on inventory quality, more guarantees for 7. More Education Needed
brand safety, and greater transparency in A keener understanding of market mechanics
reporting. Two-thirds of agency/marketers and more control over the processes will
said such improvements would prompt them encourage greater participation by those on
to spend more through RTB. the supply and demand side of the equation.
Despite the growing activity in the automated
4. Sell-Side Concerns online advertising markets and despite
Four in five publishers are concerned that RTB relatively high professed technology literacy
will devalue or commoditize their inventory, rates, it is clear that the details of market
while approximately three-quarters fear sales operations and opportunities elude many
channel conflicts and eroding relationships participants on both sides of the buy-sell
with media buyers. More than half of equation.
publishers fear RTB will eliminate the “human
element.”
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4. Wide-Scale Awareness
More than half of buy-side (e.g. agency, marketer, consultant) and sell-side (e.g. digital publisher who sells
advertising) respondents already actively participate in real time bidding (RTB); almost all expect the market
for RTB and private ad exchanges to grow significantly over the next 12 months.
Overall awareness of RTB in the marketplace is high at 92 percent
Awareness of RTB and and eight in ten have at least a basic understanding of the
private ad exchanges is technology and its use in digital advertising. This awareness is
higher among publishers, 94 percent of whom say they are aware
high, but so is of the technology and 74 percent of whom have at least a basic
confusion. This understanding of how it works.
provides an
opportunity for those Specifically, 84 percent of publishers are familiar with
demand side platforms and private ad exchanges; 80 percent,
willing to help media with agency trading desks; 76 percent, with open ad exchanges;
buyers and sellers 74 percent, with supply-side platforms; and 64 percent, with data
leverage the market. management platforms. Recognition was slightly less on the buy
side, with 90 percent of agency/ marketers saying they’re aware
and 81 percent with at least a basic understanding.
Despite the growing activity in the automated online advertising markets and despite relatively high
professed technology literacy rates, it is clear that the details of market operations and opportunities elude
many participants on both sides of the buy-sell equation. “I have many colleagues in the industry who are
woefully ignorant of what RTB is, and what it’s doing in the market,” said one executive.
A willingness to educate RTB participants on automating so-called mid- and long-tail inventory can serve as
a differentiator for middlemen and help preserve the value of premium properties.
Sell-Side Buy-Side
(Publishers) (Agency/Marketers)
Awareness of RTB Technology 94% 90%
Have a Basic Understanding 74% 81%
4

5. Private Exchanges
Will Grow
What percentage of your online/digital advertising
budget/inventory is/will be bought/sold through RTB?
25%
20%
21%
19%
15%
10% 13%
10%
5%
6% 6%
0%
Publishers Agency/Marketers
12 months ago Now 12 months from now
There are real growth opportunities for both RTB through real-time bidding, a leap of 9 percentage
and private exchanges, as demand grows on the points from today.
advertiser side. Advertisers and their buy-side
agents expect – and want – to spend more ad In addition, more than two in five publishers who
dollars through private ad exchanges. One key don’t currently use private exchanges say they are
reason for this is that they perceive private likely to start using them in the next year.
exchanges to offer more RTB control and value
than broader ad networks and exchanges. What do those publishers consider as “must-have”
features? The exchange must:
“I see real time bidding as inevitable, and as part
of the ecosystem,” said one sell-side respondent. 1. Be verticalized by category
“You need to get smart and play in it, and there’s 2. Have full-service account management
still room for differentiated direct sales.” 3. Have high enough fill rate to justify the
bottom line
RTB budgets for both publishers and agency/ 4. Be part of a turnkey solution
marketers are expected to rise over the next 12 5. Offer full pricing controls
months; publishers said they’ll sell 19 percent of 6. Allow for human interaction within the
online/digital advertising inventory available exchange for buy-side questions/consult
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6. Buy-Side Concerns
As eager as they are about the future of RTB, buy-side respondents (agency/marketer) have some
reservations about spending more through RTB platforms. Specifically, buyers want to see greater emphasis
on inventory quality, more guarantees for brand safety, and greater transparency in reporting. Two-thirds of
agency/marketers said such improvements would prompt them to spend more through RTB.
More than three quarters said they would spend more if there was a greater emphasis on quality or viewable
impressions. “What’s lacking is better, more premium inventory from high-quality publishers,” said
one buy-side respondent. Other concerns included: inadequate guarantees for brand safety (70 percent);
inadequate transparency in the RTB process (65 percent), and vague value propositions of different supply
sources (64 percent).
Q: Indicate how strongly you agree/disagree with
the following statements regarding RTB:
I would spend more on RTB if…
77%
There was greater emphasis on quality impressions
70%
There were more guarantees for brand safety
65%
There was greater transparency in the RTB process
64%
It was easier to distinguish between supply sources
54%
There were more creative options/formats
53%
I understood the technical processes more
36%
There were more DSPs to choose from
80% 60% 40% 20% 0%
Buyers who responded 4/5 or 5/5
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7. Q1: Rate how important each of the “There is still nothing as controllable as site
following is when purchasing or specific buys where we have more control over
considering the purchase of online/digital where we are running,” said one agency
respondent.
advertising via RTB.
Q2: Rate your level of satisfaction with Also, cited was a lack of creative formats and
options, such as rich media (54 percent), and
each of the following RTB characteristics.
ignorance of the technical processes involved (53
percent). There is a strong disconnect between
88% what agencies and marketers feel is important and
Performance/ROI
38% their satisfaction with those things. For example,
86% 88 percent of buy-side respondents cited
Targeting options
32% “performance, return on investment” as the most
81% important RTB attribute, Yet, a mere 38 percent
Inventory quality
25% said they were satisfied with their ROI.
78%
Reporting/insights
32% Similar disparities were seen in other
77%
attributes, as well. The availability of targeting
Transparency options was cited by 86 percent, though only 32
32%
percent said they were satisfied. Inventory quality
0% 20% 40% 60% 80%
was cited again and again as a sore point among
Importance Satisfaction buy-side respondents. 81 percent said it was
important to them, but a meager 25 percent said
they were satisfied.
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8. Sell-Side Concerns
“ the effectiveness of our brand relationship with the buyer & buying process; and therefore
significantly diminishing the human impact with the non-quantitative aspects of the
“
“Automated processes diminish the need for speaking with direct sales reps, therefore diminishing
buying/evaluation process.”
Four in five publishers are concerned that RTB will devalue or commoditize their inventory, while
approximately three quarters fear sales channel conflicts and eroding relationships with media buyers. More
than half of publishers fear RTB will eliminate the “human element.” There were other perceived downsides,
as well. Forty-six percent of publishers fear that RTB use will limit their control of inventory transparency and
rates; forty-two percent fear buyers will use URL level transparency to make purchasing decisions.
“Programmatic buying is allowing CPMs to go down from advertisers we’re used to getting a better
price from,” said one sell-side respondent. “Agencies have used their trading desks to compress CPMs,
threatening to move more into RTB exchanges, driving prices down for direct buys.”
Displacing direct sales efforts brought a Q: Rate how concerned you are with each of the
range of responses. Those with more following when selling via RTB
experience understood that a healthy digital
advertising ecosystem supports both direct
and programmatic sales, and that human
intervention is an important element in Commoditizing
84%
inventory
maintaining that balance. For those with
less familiarity, the prospect seemed more
like an either/or proposition.
Sales channel
76%
conflict
“The key here is getting smarter in each
channel and maximizing those channels to
achieve whatever market balance is
Eroding direct
available to you,” said one publisher. “Top 72%
relationships
digital properties in the country are going
to have a given advantage towards the
direct side; the smaller companies need to 0% 20% 40% 60% 80%
find ways to scale up on the programmatic
Pubs who responded 4/5 or 5/5
side.
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9. What Publishers Want
From RTB & Private Exchanges
“
Sixty percent of publishers said they would be
interested in RTB solutions that offer:
 Advanced control options (price floors,
“
“Customer service and human sales contact
is one of the key attributes in selling. You
get better feedback through
personal contact.”
demand sources, selling transparency,
blocks, etc.)
 Exclusively premium demand with
dedicated RTB budgets For those already operating a private exchange,
 Real-time reporting and insights (bid four technological factors were highly valued:
win/loss, average CPMs, demand verticals,
etc.) 1. Ad server compatibility
 Dedicated account management, support, 2. Cost structure/fees
and intelligence 3. Ease of implementation
 Enterprise-level exchange platform to 4. Technology plan/track record of
build your own RTB enabled private effectiveness in implementing
exchange improvements/enhancements
In deciding on a vendor to power a private Seven of ten publishers who are concerned with
exchange, full-service partnership was cited as an RTB eliminating the “human element” in ad selling
important factor, particularly by those not yet feel that face-to-face negotiations and dedicated
operating a private exchange. It is essential, they account management are “important” or
said, that solution providers take the time to help “extremely important” in their likelihood to use
their sales team use the technology to its full RTB in the future. If human interaction is
advantage. Above all, publishers want RTB eliminated altogether, critics say, customer service
technology partners to offer a fully managed and customer feedback are greatly diminished.
solution, including everything from sales strategy “RTB eliminates opportunities to get or save a
to coaching, to facilitating introductions to ’sell’ with unique, customizable opportunities or to
demand sources. They also want to be able to sell top sell a client that’s ready to increase spend but
inventory through direct negotiations, and be able needs hand holding,” said one publisher.
to connect with agency trading desks.
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10. Eighty-two percent of publishers cited the importance of dealing directly with buyers to negotiate unique
terms. The ability to set price controls (for example, setting reserve bids, according to advertiser industry,
demand source, brand) was cited by 73 percent of publishers who sell through private ad exchanges.
Likewise, 73 percent of respondents emphasized the importance of being able to segment inventory, that is,
to be able to decide which sections, placements, etc. are available for purchase.
Q: How important are the following features when
selling through a private exchange?
Direct deals (Deal ID) (directly negotiate and set rules to
accommodate specific/unique terms with buyers)
82%
Price controls (setting reserve bids according to demand
source, advertiser industry, brand, etc.)
73%
Inventory segmentation (defining which
sections/placements/etc. are made available for purchase)
73%
Full-service technology partner (willing to comment on
sales strategy, provide resources/intelligence, and 55%
introduce demand sources)
Real-time insights and reporting (comparison charts,
bidding activity by rate and brand vertical, etc.)
55%
0% 20% 40% 60% 80%
Pubs who responded "Very Important"
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11. NEEDED: Better Understanding,
More Control
A keener understanding of the market mechanics and more control over the processes will encourage
greater participation by those on the supply and demand side of the equation. Platform providers that can
facilitate this understanding have an opportunity awaiting them. When asked about areas of RTB they would
like to understand better, respondents were able to easily identify a number of points of confusion or
ignorance. They would like to know, for example, the differences between RTB, private ad exchanges, supply-
side platforms, demand-side platforms, agency trading desks (ATDs), and data-management platforms
(DMPs) – and how these differ from ad networks. They also want to know more about the mechanics of
audience targeting, for example, how granular or accurate can audience targeting get and how are the
parameters identified.
Q: How familiar are you with each of the following?
100% Publishers Agency/Marketers
(who responded very or somewhat familiar)
80% 84% 84%
80%
76% 74%
73% 72%
70%
60% 64%
62%
56%
51%
40%
20%
0%
Demand Side Private Ad Agency Trading Open Ad Supply Side Data
Platform (DSP) Exchange Desk (ATD) Exchange Platform (SSP) Management
Platform (DMP)
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12. Q1: Rate how important each of the following is when Meanwhile, there is a strong
purchasing or considering the purchase of online/digital disconnect between what both
advertising via RTB. publishers and agency/marketers
feel are important RTB attributes
Q2: Rate your level of satisfaction with each of the and their satisfaction with them.
following RTB characteristics. Publishers say that maintaining
control of their inventory is the
most important attribute of any
96% RTB platform. However, only 28
Control
28% percent of respondents
expressed satisfaction
92% with their ability to control
Ad quality
36% inventory. Similarly, 92 percent
said that ad quality was
88%
Reporting/insights important to RTB. Yet, only 36
32%
percent of publishers are satisfied
88% with the ads. “Schlocky ads are
Transparency
36% appearing on my site,” griped
one publisher.
84%
Operational efficiency
44%
76%
Performance
32%
Human 72%
interaction/input 24%
0% 20% 40% 60% 80%
Importance Satisfaction
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13. Conclusions
1. Real-time bidding and private ad exchanges have big opportunity for growth, fueled by rising
demand on the advertiser side.
2. Buyers want to see greater emphasis on inventory quality, more guarantees for brand safety, and
greater transparency in reporting.
3. Sellers want fully managed RTB solutions, the ability to sell inventory through direct negotiations,
and the ability to connect with agency trading desks.
4. More than 7 in 10 publishers believe RTB will cause their inventory to be commoditized, their direct-
sales efforts to be displaced, and their CPMs to erode.
5. A large gap remains between what buyers and sellers think is important and their satisfaction with
current offerings.
6. A large gap also remains between buyers’ and sellers’ understanding of RTB technology and the
technology’s true potential.
7. Opportunity awaits for solution providers that can fill these two gaps.
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14. Methodology
Survey Method Represents Leading U.S. Publishers by
Content and Advertisers by Ad Category and
 All data collected via online interviews by Media Type
Advertiser Perceptions
 Qualitative responses collected via phone  Automotive/Motorcycle/Off-Road/RV and
interviews by Advertiser Perceptions Related (Domestic and Import)
 Incentives included cash and sweepstakes  Baby, Child or Parenthood Related
 Consumer Electronics (Non-
Sample: US Publisher, Marketer and Agency
Computer/Software)
contacts from The Advertiser Perceptions
 Consumer Packaged Goods
Media Decision Maker Database and third-
 Entertainment
party databases as needed.
 Financial Products/Services (including
Qualification: Involved in Digital Insurance and Real Estate)
Display/Video Media Decisions.  Home and Appliances
Understanding of RTB Technologies.  Liquor, Beer and Wine (Domestic and
Advertiser past 12 month minimum spend of Imported)
$500k.  Men's Apparel (Including Accessories,
Jewelry and Watches)
Directional Data: Some findings in the
 Men's Toiletries & Cosmetics
presentation may reflect data with low bases,
 Pharmaceuticals & Remedies (OTC and
as noted.
DTC)
 Retail
Profile Overall (%)  Technology (Hardware, Software or
Services)
VP & above 33%  Telecommunications (Cellular, Mobile,
Wireless)
Director/Supervisor 27%
 Travel
 Women's Apparel (Including Accessories,
Jewelry and Watches)
Manager/Planner/Buyer 40%
 Women's Toiletries & Cosmetics
 Energy (Gas, Oil, Electric, Environmentally
Friendly/Green)
 Quick Service Restaurants (QSR)
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15. About
INDEX Platform Advertiser Perceptions
INDEX Platform is a global digital advertising Today, Advertiser Perceptions is the world leader
technology provider offering enterprise grade in providing the media industry with research-
solutions, intelligence and support for publishers based advertiser insight and guidance necessary
to maximize advertiser demand for their cross for strengthening brands and increasing
channel media. Through the INDEX Platform advertising sales, market share and competitive
exchange or a publisher’s own private exchange, advantage. We specialize in determining,
publishers receive fully transparent real-time analyzing and communicating what advertisers
bidding (RTB) management technology and think—their plans, opinions and motivations.
access to premium demand.
Our proprietary database of media decision
Its parent company, Casale Media, continues to makers is one of the largest in the world. The
establish a strong presence in digital advertising, advertiser survey and questionnaire development
working directly with premium media process that we employ ensures optimal response.
organizations, while focusing on brand-safety and Focus and media industry expertise enables us to
control for advertisers and publishers. effectively analyze and accurately interpret the
research that we conduct on behalf of our clients
Headquartered in New York and Toronto, the who represent many of the largest international
company is guided by its dedication to need- media companies.
based development and a quality-focused culture.
Advertiser Perceptions
INDEX Platform 1120 Avenue of the Americas,
74 Wingold Avenue 4th Floor
Toronto, ON M6B 1P5 New York, NY 10036
TEL: 416-785-5908 TEL: 212-626-6723
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