When I co-founded Adfonic in 2008, mobile advertising was in its infancy. Five years later almost to the day, Adfonic exists in a transformed world. We have smartphones, tablets and phablets, and by the end of 2013, there will be more mobile devices on the planet than people, according to Cisco. Soon we're going to have wearable devices with curved screens and superfast 4G connectivity.
This increased scale is great for marketers who want to achieve reach – but a nightmare for administration. Meanwhile, the increased fragmentation in mobile simply intimidates marketers who want consolidation to make the most of their budgets.
The solution to scale and complexity lies, we believe, in programmatic buying – that is, the automated purchasing of mobile adspace at a highly granular level, in real time. Here's how.
Your mobile RTB primer
Programmatic is the generic term for automated buying, and by far the most widespread implementation of programmatic is Real-time Bidding (RTB).
Instead of bidding for blocks of inventory at a fixed price, RTB involves bidding for an ad slot, alongside many other advertisers, in the milliseconds during which a mobile app or site is being rendered on the screen. The advertiser with the highest bid wins, but then only pays the second highest bid price, just like on eBay.
So whether you're reading this at your desk or on a mobile device, if the page is showing ads, it's entirely possible that RTB was the mechanism behind showing that ad. In the time it took between you clicking or tapping to read this, and the page being displayed, an RTB auction may have happened and you can see the winner's ad as a result.
What makes RTB work
The key to RTB is data and algorithms. The best systems bring together huge amounts of data which describe the publisher's inventory and the advertiser's desired audience, and combine that with the ad tech data and third-party data bought in. They then use the smartest algorithms to gain insights from the data and zero in on the inventory that best matches the advertisers' goals.
This is achieved using technology that simply was not possible until recently. Many variables are used in the bidding process, with many advertisers bidding for many slots – and this all needs to happen in a fraction of a second. This effectiveness at scale needs the massive processing power behind RTB to work.
Within mobile, we know that RTB works. We analysed the performance of campaigns across our platform and discovered that RTB improves clickthrough rates by up to as much as 231%, when compared to non-RTB-enabled inventory.
Harnessing the power of mobile RTB
The key to effective use of mobile RTB is through a mobile Demand-side Platform, or DSP. This is the system that advertisers use to bring together all the data, feed their data-hungry algorithms, and plug into the RTB exchanges. This makes a mobile DSP like the trading systems buyers use to access financial exchanges, plugging in as much data and using it in the smartest way possible to beat their competitors to the best deals.
The mobile DSP gives advertisers control over what they spend across the mobile RTB exchanges, and where they spend it. This increased control means they can reduce the cost-per-engagement for mobile ads to less than ten pence – around a quarter that of desktop ads. It also consolidates the reporting across all exchanges to make ad buying more efficient.
Meanwhile, because advertisers can see where their ads are appearing, brand safety is assured. So through a mobile DSP, mobile RTB is not only more cost-effective at scale than non-programmatic ways of buying inventory, including premium, it's also still safe for brands.
RTB and the future
This increased performance – working at scale, cutting through complexity to deliver results – is why, according to InterPublic's Magna unit, RTB is expanding at about double the rate it estimated at the beginning of this year, and now represents more than half (53%) of all online display ad buys in the U.S. advertising marketplace. Indeed, at Adfonic we achieved this tipping point in October 2012 for mobile RTB.
So here's to the next five years in mobile advertising. In an uncertain world, we know that mobile will continue to expand. In a competitive world, we know that mobile complexity will increase. And this is why mobile RTB, harnessed to the power of a mobile DSP, will still be around. Mobile marketers, take note.
By Victor Malachard, CEO and Co-Founder of Adfonic.
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