Online advertising: A perfect market?
There's no denying the increasing importance of highly sophisticated digital technology in the advertiser's toolkit. Not only can digital ads be scientifically targeted based on a vast catalogue of consumer data and measured accurately against ROI, but one day all ads could be purchased for precisely the right amount at that moment. Advertisers would be spending in the most intelligent way while customers would be only exposed to the most relevant advertising. It would be a win-win situation – a perfect market. But while manual bidding remains rife, we are far from achieving this. By Dominic Trigg.
By Dominic Trigg
Ad spend reports over the last few years have shown an undeniable trend: an upturn in measured digital media investment and a downturn in spending on traditional media. Recent figures released by GroupM predict that online will represent a 20 per cent share of this year’s global measured ad spend – and this figure will keep rising apace.
As the economic downturn continues to squeeze budgets, brands are being forced to become increasingly savvy with where and how they spend their money. The result is that budgets are increasingly flowing into highly targeted digital advertising campaigns.
But this is not a short-term change that will correct itself once the economy has picked up. The powerful technology used in digital advertising campaigns delivers measurable results and ROI with little wastage, whether an advertiser is looking to drive sales or increase brand awareness. Brands are becoming increasingly astute and pushing their agencies to deliver a higher return on investment and digital is the only way to scientifically and consistently deliver this.
The digital evolution
In the early days of the internet, the digital ad marketplace was dominated by long term contracts and bulk buying, negotiated directly through publishers. Today, real-time bidding is allowing parties to use mathematical strategies based on behavioural data to calculate the size of an appropriate bid for a specific piece of ad space. It’s now about quickly and efficiently buying access to an audience’s eyes wherever they may be online.
This technology should have led to huge value creation for advertisers. Complex bidding algorithms that adapt and ‘learn’ based on success can ensure that exactly the right price is paid at the right time for the right impression for the right customers. In reality though, many companies still manually bid for ad space, preventing a perfectly liquid market.
At the moment, a lot of exchange buying is being purchased in neat multiples showing that unscientific, manual bidding is hugely prevalent. Many agencies do not have the tools to decide how much an impression is really worth and which ads will convert. The result is that they overpay for some inventory while missing out in other areas. Sophisticated real-time bidding technology can run rings around this type of activity, allowing immediate action to be taken when an impression shows potential.
I see firsthand how this market is evolving. Brands are increasingly challenging advertisers to unlock the full value of this ecosystem and value is created by optimally matching demand with supply, to fulfill the “right ad, right user, right time” promise. In this way, everyone wins with publishers being fairly rewarded, advertisers winning more relevant ad spots and consumers only seeing the most relevant information.
While the digital world continues to develop increasingly sophisticated, measurable and cost effective advertising, the rise in digital advertising spend is an unstoppable trend: the current 20 per cent share of overall ad spend is only the beginning.
Dominic Trigg is a digital advertising specialist responsible for spearheading the European arm of Rocket Fuel. Dominic joined Rocket Fuel from TradeDoubler, Europe’s number one affiliate network, where he was Vice President of International. With a proven track record of success in the advertising arena, he has held a number of senior management roles, including Managing Director for Infospace, Director of Yahoo’s Ad Operations in Europe, as well as Advertising Director for MSN UK, Hotmail and Expedia at Microsoft’s then fledgling business.
Rocket Fuel is the leading provider of artificial-intelligence advertising solutions that transform digital media buys into self-optimising engines that learn and adapt in real time, and deliver outstanding marketing results from awareness to sales. Over 400 of the world’s leading brands rely on Rocket Fuel to power their advertising programs across display, video, mobile, and social media.
Founded by online advertising veterans and rocket scientists from NASA, Yahoo!, DoubleClick, and Salesforce.com, Rocket Fuel is based in Redwood Shores, California, and has offices in eleven cities worldwide including New York, London, and Toronto.