The traditional CPM model of buying impressions in bulk is not efficient anymore because advertisers are buying impressions for the same price per unit, when in reality each impression has a different value, based on the characteristics of the user who interacts with the ad.
Now imagine the following scenario.
An Internet user lands on a page on a website, which begins to load. At that very same moment the website sends out a bid request to thousands of advertisers saying: "There's a user here who is a 30-years-old Hispanic male, he's a manager who lives in Florida, has a dog, and he’s interested in golf and action movies. How much are you willing to bid to display your banner ad on this page?" In about 100 milliseconds an auction is conducted and the winner is allowed to place its ad on the page.
The whole process takes place in 300-500 milliseconds, causing no visible delay to the user, and it is repeated every time a web page loads for every ad slot on the page. This process is called "Real Time Bidding" (also known as RTB) and it’s making it possible for advertisers to reach their target audience in a more efficient and cost-effective way, leading to more relevant ads for consumers, better performance, and ultimately more sales.
As technology improves, so are the targeting capabilities for display advertising. The incredible amount of “Big Data” data currently collected online and used in Real Time Bidding to target the ideal customer can include online searches, website log files, consumer-uploaded images, retail transactions, loyalty card information, email communications, mobile location information, and social media interactions, just to name a few. It is this data that makes untargeted, generic display campaigns a thing of the past.
Can you see how display advertising, through Real Time Bidding, is now closer to paid search as far as how relevant ads are to the online user?
The three essential players in the RTB landscape are Demand Side Platform (DSP), Publishers, and the Ad Exchange. While Demand Side Platform (DSP) is a tool that automates the purchasing and optimization of online advertising on behalf of advertisers, and Publishers supply the inventory, the Ad Exchange is the key software that connects advertisers and publishers, and makes the real time auction possible.
As a marketer, it's crucial that you take action now and embrace the power of Real Time Bidding to offer your prospects and customers a more "customized-to-their-needs" experience which will ultimately increase your ROI and profits.
To learn more about how we can help to take your display advertising efforts to the next level, email us and one of our Interactive Advertising experts will be available to assist.