If you look at the IAB Ad Spend figures for 2013, there are plenty of big numbers. For me, the standout is that mobile has passed the one billion pound mark. It's an astonishing ascent for mobile advertising, particularly when you consider that the IAB didn't even break out mobile's contribution until 2012.

Even when we zoom out a little and look at mobile's contribution to digital overall, the figures are still impressive. For example, the IAB’s findings show that mobile now represents 16% of all UK digital advertising spend and 35% of total digital social media advertising. While just about every year for the past three years seems to have been called 'the year of mobile', it’s clear that digital marketers really do need to sit up and take notice now.

When you consider the drivers for this, initially it's about quantity. For example the IAB says that it's a case of more people being online, spending more time online, and, specifically for the mobile element, greater penetration of smartphone ownership.

While I think this is the truth, I believe it's not the whole truth. I see two other drivers here, which you can imagine overlapping like a Venn diagram: firstly, the contribution of programmatic buying; and secondly the increased propensity of premium publishers to embrace programmatic.

Let's look at programmatic first. It does what it says on the tin, that is, it's the automation of the buying and selling of mobile advertising space. There are many analogies around but my favourite is that it's the difference between lining up to buy something, and the instant crowd auction.

A brief history lesson: when mobile advertising was nascent, the 'line up' model worked fine. Mobile publishers with inventory to sell could be matched to advertisers who wanted to buy that inventory through direct relationships, virtually on a first-come first-served basis.

As mobile took off, ad networks attempted to mediate between buyers and sellers but the scale proved problematic. Eventually it became clear that ad networks were buying blind, that is, almost hazarding a guess at which inventory would be right for which ads.

Buyers didn't like this because they had no idea where their ads were being placed or whether their budgets were being properly utilised. Sellers didn't like it either because inappropriate ads might be served against their content. And the technology had to keep being redeveloped and refined: every integration between a buyer's systems and a seller's system meant new bespoke design.

Clearly a new approach was needed, and quite some time ago we saw it as Real-time Bidding, or RTB. This is a version of programmatic buying which actually is an online auction. Our CTO, Wes Biggs, describes this in detail in the Huffington Post but in summary, it means that advertisers use big data and sophisticated algorithms to bid for each individual ad slot in an auction, and the winner displays the ad. This all happens in the microseconds between clicking a link and seeing a page.

RTB carries numerous benefits. Principally, advertisers gain access to a global RTB-enabled inventory, which readily achieves billions of ad requests a month. If they have a mobile Demand-side Platform (DSP), they can also choose exactly the exchanges and publishers they want to work with.

And, as RTB is a version of programmatic, it introduces transparency and efficiency. The transparent nature of RTB is that, when traded through a DSP, buyers know exactly where their ads are appearing, which means they have the control that blind ad networks do not offer. The efficiency kicks in when you consider that the DSP can bring together monitoring and reporting from across all the RTB exchanges in a standard, like-for-like format. No more instance-specific development or integration. You simply plug in.

This is why, since we saw ad requests from RTB-enabled inventory tip over 50% on our platform in October 2012, RTB has grown incredibly quickly. More recently, on the eve of European Ad Week, Ciaran O'Kane, editor of ExchangeWire, claimed RTB is 'eating the advertising world alive' and at the time of writing RTB is predicted to rise by 73 per cent in developing Asia. Clearly this will impact on any figures relating to mobile advertising spend.

So we now have two bubbles in our Venn diagram: the quantity of adoption as defined by the IAB, and the qualitative drivers from RTB. The third bubble I see as the increased willingness of premium mobile inventory to enter this programmatic world.

In digital advertising, inventory simply means ad slots. For desktop it means ad slots on websites. In mobile, this can mean ad slots on mobile apps and mobile sites too.

We can go further and talk about premium inventory. For desktop this generally means the equivalent of the major offline publications, so it would be true to call, say, the Guardian in the UK a premium publication, or the Washington Post in the US. It can also mean websites that command huge audiences, for example Amazon.

For mobile however, premium can also encompass mobile apps with extraordinarily high levels of engagement. The main difference here would be games. We live in an age where the creators of Candy Crush are set to be multi-millionaires, and where Flappy Bird generated its reluctant developer a reputed $50,000 per day until he removed it from the Play Store (only for many lookalikes to spring up – and Flappy Bird itself possibly to be reinstated). I list my definition for what is premium for mobile on PerformanceIn.

Traditionally, premium publications have treated their inventory in a bespoke manner, through relationships with advertisers and special packages designed to benefit both parties. It was thought that, while advertisers readily embraced RTB, publishers, especially premium, would be slow to embrace it. The belief was that their inventory was too precious to be made available in a programmatic environment.

However last year, while we charted the growth of RTB among advertisers, we also took a look at inventory coming from the mobile premium sites. It was quite an eye-opener. Look at the chart below and you'll see that actually, it forms a non-linear curve, accelerating upward.

In the same way advertisers benefit from transparency, control and efficiency through RTB, there are distinct benefits for publishers too.

Publishers also see increased efficiency because of RTB's programmatic nature, as they deal through Sell-side Platforms (SSPs) to plug into exchanges. But for publishers, programmatic reduces risk, because it means they have another way of selling inventory. And they can still differentiate through their advertiser relationships, introducing sponsorships and package deals alongside other means of selling inventory. Indeed, far from homogenising the mobile advertising world, my belief is that programmatic actually brings the human element into sharp relief. The relationships become a real point of difference.

And that's our Venn diagram completed. In the centre, we see the IAB's astonishing ad spend figures. Around that, we have the drivers of quantity as described by the IAB itself. But now you also see that the quality of RTB has spurred significant growth on the buy side while, on the sell side, premium publications entering the programmatic world have also contributed.

I urge you to look at the IAB figures more closely because they're momentous. We have moved from mobile being a secondary consideration, to the 'first screen'. Let's see how the figures – and the diagram – look next year.


By Victor Malachard, CEO and Co-Founder of byyd

PrivSec Conferences will bring together leading speakers and experts from privacy and security to deliver compelling content via solo presentations, panel discussions, debates, roundtables and workshops.
For more information on upcoming events, visit the website.

comments powered by Disqus