Are Real Time Ads A Game Changer?

Suppose a prospective customer of yours searches on the web for a category that your product or service is in. Or, maybe the person does a search on one of your direct competitors. Wouldn’t it be nice to know that – and to place an ad for your product right then?

That possibility is now a reality. As the Internet progresses towards becoming the most popular ad medium, big players like Google (DoubleClick Ad Exchange), Microsoft (AdECN exchange) and Yahoo! (Right Media Exchange) are enabling advertisers to place instant ads through a technology called “real-time bidding.” Advertisers can “examine site visitors one by one and bid to serve them ads almost instantly,” according to a recent report in The New York Times.

Google’s DoubleClick Ad Exchange, for example, is a marketplace that creates a pool of global advertising inventory and brings buyers and sellers of online display advertising together. Buyers can create ad programs with precise targeting, defined bids and budgets, and frequency caps on purchases. With the addition of real-time bidding, an advertiser can basically “make on-the-fly decisions about what ads to show based on what people [are] doing on the Web.”

Neal Mohan, Google’s VP of product development, tells The New York Times that before real-time bidding arrived, “the technology hasn’t really been there to deliver on the promise of precise optimization, delivering the right message to the right audience at the right time.”

Mohan sees the advance of real-time bidding as “not just a big opportunity for Google, but more importantly, we think that the overall display advertising pie, as it exists online today, can be substantially larger.” Google, of course, would win on both ends of the spectrum, since it is also involved in search advertising as well.

Apparently, advertisers who like the sound of “instant” ads are willing to pay more for the ability to target them precisely to prospective customers. A Google study indicates that “publishers received prices on average that were 130 percent higher on ads sold through the DoubleClick exchange,” which suggests that advertisers will pay more for ads that are targeted. United Online, which owns sites including Classmates.com, confirmed that it is selling real time ad space for “50 percent higher prices on those spaces.”

AppNexus, mentioned in the Times report, just introduced an ad platform for real-time advertising. The platform, which has been used by eBay for the past year, now allows an advertiser to use advanced analytics to go through thousands of ad transactions per second. The platform “lets companies funnel what they know about a Web user into the ads they show that person.” Matt Ackley, eBay’s VP for Internet marketing and advertising, says the company has seen “triple-digit increases in return on investment” using the ad platform.

Real-time bidding may inject some new life into online advertising, which has lost ground to search advertising in recent years, but questions about its widespread adoption loom. For one thing, only big advertisers who use ad networks currently have access to it. For another, real-time bidding raises the issue of privacy – long a bane of online ad targeting. Jeffrey Chester, founder and executive director for the Center for Digital Democracy, told The New York Times, “The fact that you can be auctioned off in 12 milliseconds or less just illustrates how privacy in this country has rapidly eroded.”

On the positive side, though, real-time bidding could lead to the day every online marketer dreams about: being able to show the ideal prospect an extremely relevant ad message – at precisely the time it could lead to an inquiry or sale.

About Barry Silverstein

Barry Silverstein is a freelance writer/marketing consultant. In addition to writing for ReveNews, he is a contributing writer to Brandchannel.com, the world’s leading online branding forum. He is the author of three marketing books, The Breakaway Brand (co-author, McGraw-Hill, 2005), Business-to-Business Internet Marketing (Maximum Press, 2003) and Internet Marketing for Technology Companies (Maximum Press, 2003). Barry ran his own Internet and direct marketing agency for twenty years. You can find Barry on Twitter @bdsilv.

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