The Growing Effect of Real-time Bidding

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The Economist recently featured an article, “Innovation in online advertising: Mad Men are watching you,” that presented an examination of the rise of Real-time Bidding (RTB) and perspectives on the potential impact that RTB will have on media companies. The article provides a good overview of the changes in the digital advertising industry, a general description of how RTB works and correctly highlights the rapid rate of industry adoption.

RTB enables advertisers to target audiences directly instead of using content as a proxy for audience. This means that the relevance of advertising can be increased dramatically. When the relevance of advertising increases, it becomes much more interesting to the consumer and more interesting advertising is dramatically more effective. This leads to a better experience for the consumer, more revenue for the publisher and better ROI for the advertiser.

But it's important to realize that RTB is growing beyond its roots as an auction markets for remnant inventory. What RTB really represents is that for the first time the “pipes” connecting the buy side and sell side of the advertising market have been laid down. Over the coming months many different things are going to begin flowing through those pipes. Specifically, RTB will expand to support all digital advertising sales, regardless of media channel (web page or mobile), ad format (banner ad or video) and pricing model (auction or guaranteed). These are important and exciting times for the ad industry and RTB is a big part of the future.

Here at Turn, we are thrilled to be at the forefront of an industry in which technological innovations are driving progress and creativity at an increasingly rapid rate, and we always welcome thoughtful coverage, such as The Economist to draw attention to important trends and spark productive conversation.