Media Buying: A Game-Theory Approach

As advertisers become increasingly aware of the price efficiency available in the real-time bidding (RTB) marketplace, many are asking, “If there’s so much inventory available at sub $1 rates, why am I paying such a premium?” The simple answer is that most advertisers have identified specific campaign strategies that drive high response rates and justify high CPMs. The digital ecosystem enables advertisers to buy only the impressions that they deem valuable. Digital advertisers are willing to pay a premium to reach the right audience with the right content at the right time.

The challenge – and opportunity – with addressable advertising is that demand tends to congregate around small supply sources, distorting market prices. Deciding on the right “when and where” to market your brand is the keystone to a successful campaign. In a recent iMedia Connection post, “A New Approach to Media Buying,” Turn’s Chris Kane outlines tactics to outmaneuver your competition in the media buying process.

  • Advertisers should focus first on under-valued impressions, and only enter competitive auctions when additional scale is necessary.
  • Bidding tends to be the most competitive in the last few days of the month when advertisers are working to close out monthly budgets.
  • For campaign tactics that target specific sites or content categories, exclude commonly-targeted third part audiences.

To be sure, targeting the right audience with the right content at the right time can significantly improve response rates. Campaigns that seek to achieve maximum scale with a proven targeting tactic should continue to pay a premium for the most desirable placements. But campaigns with hard ROI goals and modest scale requirements can benefit from a game-theory based approach to media buying. Advertisers that leverage game-theory based buying strategies can significantly out-perform the market by playing in undervalued corners of display inventory and letting their competitors fight for overvalued impressions.

For the full details of Kane’s media buying game-theory tactics, read the original post here.