Data is power, or rather is empowering to any business. When one thinks about data with regards to digital advertising, most likely what first comes to mind is targeting data, which essentially is any data that allows a marketer to get the right message to the right person at the right time. But regardless of how valuable or invaluable demographic, intent and audience data is to a digital marketer, when it comes to real-time bidding (RTB), both the sell and buy side for the most part continue to overlook the importance of transactional data and the insights it can provide.
For those not deeply ingrained in the inner workings of the RTB marketplace, over the last few years the buying process of digital ad space has become automated to the point where marketers can purchase digital inventory from publishers by impression in an auction style marketplace—instantly. The publisher experiences the benefits of increased demand for its digital ad space, and marketers can purchase more efficiently. Like online shopping, the RTB marketplace is faster, more convenient, and cheaper than the alternative. But like any evolving technology, there are improvements that need to be addressed.
And so when we talk about RTB transactional data, we’re talking about closing price, winning buyer, the number of bidders, and any other information available from the actual bidding and purchase of a given impression. And the truth is that the sell-side platform part of the ecosystem has been operating under an opaque transactional model since RTB came into existence. Transactional data is really only possessed by the exchanges that are conducting the transactions, leaving buyers and bidders with no real insight into what is going on behind the scenes. In less than half a decade the RTB marketplace has become a $2 billion industry, but I’m willing to argue that the RTB market has to evolve in order to continue its growth, and more transparency is the key to that evolution.
The media traders I speak with agree that they want to know how each price they pay is set—especially in the wake of chatter regarding the practice of algorithmic price setting based on one’s own bidding history. By making data like this available, buyers would gain an even higher level of confidence in this emerging buying model.
This kind of approach would also help address a huge sell side want—more bid density—by making it even more efficient and therefore easier for new buyers to get in the game. This would effectively reduce the upfront cost burden for new buyers and platforms to start trading. If we take something like price discovery alone, and look at how one attempts to discover prices today, one has to literally “test the market” across dozens of exchanges and hundreds of thousands of sites and data points before they can confidently bid widely in the marketplace today.
That’s very expensive to do, and a big deterrent. And worse, as soon as pricing has been discovered it likely will have changed. If a new buyer could instead ingest transactional data across all exchanges available they could immediately know what the price impressions typically clear at, in any conceivable combination, what is in high demand and what is not, and tune their algorithms before they go to market.
By giving the buy side access to transactional data there would be greater opportunities for new buyers, current buyers and publishers across the board. Brands once hesitant to engage in RTB would reconsider. Opportunities would emerge for the long tail that was hesitant to make investments in RTB due to the necessity for potentially expensive market testing. Experienced digital marketers would have greater customer satisfaction and the ability to make better purchasing decisions. Publishers would in turn see greater even profits from the channel.
Today all buyers of RTB know is that they placed a bid, won or lost that bid, and if they won, the clear price paid. In the event a buyer lost a bid, they don’t know why they lost, they don’t know who won, and they don’t know how much a lost bid went for, and what the winning bid price was that led to that win. Moreover if they won the bid they don’t know how the clear price they paid was computed—was it set by a floor, was it actually set by the second highest bid, etc. The buy side today has to trust that exchanges are operating scrupulously.
The RTB market needs to treat itself more like the financial markets such as the NYSE and less like a street fair. In November 2012, Casale Media released a holiday RTB demand report that spanned the various exchanges powered by its Index Platform. The report found that bid density and clearing prices during the Black Friday and Cyber Monday shopping season increased by 70 percent. We can infer that the RTB buying channel is becoming so mature that it’s mirroring seasonal dynamics happening elsewhere in the world. We are no longer operating within a bubble.
Both NASDAQ and the NYSE, for example, have entire corporate entities dedicated to making their transactional data available. In my view we should at least start by opening the discourse to implementing an industry-wide policy on the availability of transactional data. Naturally, sellers have a vested interest in making the buyer buy more, and the buyer must be able to make the most informed business decisions to do so. As this buying model is gearing up to become a $7 billion industry by 2016 (per eMarketer), if we are going to compete as a major trading operation, we need to start acting like one. The first step is to make our platforms more transparent.
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