Automated Trading – an Introduction

Online Ad Campaigns are complicated.

The price of putting together an online campaign can be 30% more expensive in time and effort than a print campaign

It is far easier for an advertiser to find 1/2m people who are interested in buying a car at this moment on TV than online.

Real Time Bidding is a technology that grew in response to these two problems.

There had to be a way of bringing advertisers and publishers together in a more painless way.

2007 was the pivotal year. It was the year that created liquidity

Ad Exchanges had arrived. Thesenew technologies created huge pools of available Inventory.This created the scale that advertiserswere asking for. Kerching!!

Apr 2007 – Yahoo buys Right Media.May 2007 – Google buys DC.Aug 2007 – MSN buys AdECN

The DoubleClick logo Shows this industry changeIt now had two greenblobs coming together. This represents the coming togetherof advertiser and publisher.

5 years later it is actually happening.

A Bit.

Most DSP’s started in 2007. This was because advertisers needed access to theNew liquidity in inventory. They provided single buying points for the exchanges.DSP’s were faster and more automated.

THE PLAN COMES TOGETHER.

With large pools of inventory and buyers able to get hold of it. The time was right for a technology paradigm shift. RTB was the missing piece.

Exchanges began to build real time bidding API’s.

This meant that a work flow was developing to allow data driven display advertising strategies.

Display competes with search budgets again.

2009 -2010 saw a surge in support for RTB from the supply side. It began a wave of growth with DSP’s, Ad networks, Agency Trading Desks all eager to take advantage. It has grown exponentially since.

RTB has taken off for one simple reason:

Buyers see real benefits from it.

CPM rates are lower than with Traditional ad networks.

Data allows increase in CTR’s.

The reach is bigger than anyad network could ever supply.

50bn ad impressions a month in UK alone.

It has solved our original problem of efficiency and scale.

Really??

But what IS RTB?2 layers.

• A real-time bidding API.• A real-time bidder.

The API is the pipe.A server-side connection to an inventory source.It ANNOUNCES the each impressions

The Bidder is the ‘Brain’. This EVALUATES each impression on behalf of the advertiser.

Advertisers can bid appropriately for the impressions they really want.

Jargon: Real-time buying: Acquiring inventory on demand.

Audience buying: Acquiring inventory based on audience data.

Auction-based buying: Acquiring inventory by placing winning bids in an auction.

Data-driven display: Acquiring inventory based on data.

Impression-by-impression buying: Acquiring inventory by evaluating each impression as itbecomes available.

Bid optimization: Employing techniques to ensure that bids to acquire inventory are placed in such a manner that goals can be reached optimally.

There is a lot of hype.

Here is the famous and intimidating luma map.

There is a lot of VC money around this area.

VC money means PR.

The emptiest vessel makes the loudest noise when banged.

Aegis Trading Desks.Xaxis Trading Desks.(40% of European buying).

25-50 campaigns a month each.

Actually it’s a bit simpler and bit more like this. In fact you could split it into buy side, sell side.

Demand Side Platforms

These are agency and advertiser buying platforms.

Allows impressions based decision making

Allows agencies to bring in advertiser data for re-messaging

Optimises reach and Frequency across multiple inventory sources

Sampling algorythms find success for agencies

Platform pays the publishers. No IO’s.

The Turn DSP looks like a traditional adserver in terms of targeting but it is focussed on audience and the making the most efficient spend use of client spend.

Targeting options in DSP’s and Exchanges

What type of data can you bid on?Ad slot parameters: visibility (above or below the fold), sizeexcluded creative attributesexcluded advertiserURLsallowed vendor or ad technology.

• Geo parameters: country, region, metro, city.• Content parameters: site URL, site language, seller network, vertical or category.• User parameters: browser, operating system, anonymous cookie (hashed), cookie age.

Trading Desks

Agency buying/trading desks arespecialized entities ofmedia buying agencies focusingon media trading and RTB. Eachdesk represents an agency.

Agency buying desksrepresent the liaison betweenadvertiser or parent agency andthe platforms used to facilitateRTB.

As some agencies don’thave core RTB technology, theymay partner with a third-partycompany such as a Managed Serviceor an DSP itself .

Xaxis the the Trading Desk for GroupM. GroupM is owned by WPP.

Mindshare, Mediacom, MEC, Maxus

Uses Appnexus. BUT the MIG ( WPP’s tech arm 247/Realmedia – has built it’s own bidder called Zapp Trader 4.

Has sales teams across Europe that sells the trading desk concept to each advertiser.

Xaxis make 40-53% margin on the media. Previously this went to an ad network. Margin is a function in Appnexus.

All European trafficking done from London.

In depth study

The Politics of Ad Exchanges and RTB Content

In the same way that publishers wouldn’t put all inventory onto RTB, so Ad Exchangesdo not either. They keep the best stuff to sell themselves.

Google Adx – will not have all of Youtube inventory. Youtube sell premium direct.

Yahoo will not sell all it’s inventory on the Right Media Exchange.

Right Media Exchange will not share any inventory with Appnexus.

Right Media demand that big agencies have a direct seat on their exchange.

Appnexus has exclusive access to MSN inventory because they own 30% of Appnexus.

There is a 10% discount on MSN inventory if bought through Appnexus.

Cliché Alert. – Data is the new oil

First Party Data – the cookies attached to users who have been to an advertisers website. (e.g Abandoned carts.)Second Party Data – the data an agency might generate through it’s own adserving. e.g. Creating a cookie pool of all users that they know have been on a specific type of content 3 times in a week. (Xaxis)Third Party Data – Bought in cookie lists from the providers named above.Contextual Data - Contextual data provided by a 3rd Party.

Geek Alert - Where do data providers get their data ?

They buy it from publishers, comparison sites, online shopsetc. They pay between 20p and 50p per thousand cookies. They sell around £1.00.

DMP’s Data management platforms allow publishers involved in media buying and selling to manage proprietary data, facilitate the usage of third-party data or port audience data to other platforms. As capabilities of DSPs extend to integrate other media such as mobile, video and social,providers of these emerging types of data and analytics/DMPs will become an increasingly important part of the display advertising landscape.

Anecdotal evidence suggest that in Europe – 3rd Party Data Partners are not working. Only contextual and 2nd Party Data is working consistently. This is not true of the US.

A DMP (Data Management Platform) aggregates all campaign analytics (mediasources, creative, placements&audiences) into one hub.

Having all of this data in one platforms implifies audience segmentation and cross-channel media planning.

House all client audience data in one place for de-duplication, scalability,and insights. Allow partners to login and utilize data.

Grant pre-defined sharing and security parameters.

Empower teams to buy audiences with minimal waste and scalable insights. Allow you to see what kind of audience data you are buying and how it performs.

DMP’s and Publishers

Supply Side Platforms

Help Publishers manage their unsold inventory. They help maximise yield.

Used by most premium publishers.

They protect Data Leakage

Admeld and Rubicon = 65% of all RTB impressions in the UK.

Admeld owned by Google. Is in process of being Googlified.

Rubicon has largest footprint in UK.

The facilitate private exchange relationships between agencies groups and publisher groups. Including special data relationships.

Supply Side Platforms

The problem with this model for the publisher is that with distressed inventory – It lumps really valuable users with those that have no value.

RTB facilitates the right user, right time and Right place. Which through an auction Process unlocks the true value of each cookie.

Increased ECPM across the board.

Anecdote. – The 4th best sales person at thewhole of Future Publishing is in fact the trafficker who manages the SSP relationships.

CLASSIC VERSUS NEW SSP’sCLASSIC SSP’sFocussed on connecting publishers to new advertisers.

Managing the logistical nightmare of dealing with multiple ad networks

Managing the cannibalisation of direct sales by indirect sales efforts

Managing data leakage – cookie stealing.

NEW SSP’s

Allows Publishers possibility of using own cookie data to buy extra impressions from RTB.

In Depth Study

AND

• A&Nmedia - sells unsold inventory on behalf of the biggest online newspaper in the world Daily Mail.

• It also sells Northcliffe Press Regional sites. • It has access to 3bn ad impressions a month.• It is sophisticated enough to have it’s own data strategy and

understands the value of it’s own cookies.• It retargets valuable Daily Mail audiences on open RTB

It uses AppNexus as a DMPFor it’s own cookies.It also buys on RTBcontextually using theAppNexus Apps.

RTB Trading Desks splits the classic purchasing funnel into 2 distinct campaign types.

PROSPECTING

Contextual2nd Party Data3rd Party DataLook-alike

RE-MESSAGING1st Party Data

The biggest single problem on RTB….

The graphic above is taken from Grapeshot and it shows the volume of impressionsThat it blocks on a daily basis on channels built to represent the old IASH standardBrand safety category.

This is for one single day.

An example of some the dodgy URLs in Appnexus

Brands can be routinely found on these sites, due to badly set up re-messaging campaigns.

Brand Safety is big business.

Brand Safety aka – content verification tools

CV products block or report, in real time, the serving of an online advertisement onto destinations that have been defined as inappropriate to the campaign.

This refers to any words that are deemed by the advertiser to be unsuitable for a campaign, including brand conflicting content.

These tools mostly send blank ads when they detect a negative page. In RTB this wastes a lot of money. Only Grapeshot and Double verify can now block sites at a bidding level.

A serious issue for all these guys is - Lack of source level transparency is primarily an unfortunate side effect of inventory “daisy-chaining” (or inter-network reselling)

1. Block the serving of advertising on to pages which contain content deemed innapropriate.

2. Block the serving of advertising on to pages which contain words in content delivered via a linked file.

3. Register changes in page content and then block the serving of advertising. E.g Forums

4. Block the serving of advertising on to domains and sub-domains, deemed inappropriate.

5. Block the serving of advertising on to pages which contain words in the URL, deemed to be inappropriate.

6. Block the serving of advertising on to aliases of an URL or domain, deemed to be inappropriate.

7. See through iframes and block the serving of advertising if keywords or URLs, deemed to be inappropriate

8. Operate consistently in allowing or blocking advertising when JavaScript is disabled.

9. Be capable of incorporating any list of keywords or URLs, deemed to be inappropriate by the advertiser 10. Be configurable to block the serving of advertising to any URL not previously checked.

The Ultimate lists of what Content Verifications tools – SHOULD be able to do.

No one can do all of it. IASH is gone.

In Depth Study

On the Luma Map Appnexus is onIt’s own. Why is this?

AppNexus is more of a platform than a Traditional adserver. More Oracle than Doubleclick

It has the most Open API and a vast team to help developers create tools for advertisers.

This is called the App Market place.

It is a great SSP and DMP for those publishers confident with data. It is a great DSP for those who can develop their own reporting apps. It is all things to all People.

Appnexus Apps available 2012

AdacadoDapperCriteoStruqAdExtentAdexcelEye Return

SkinectedChargeads

This is the Smart Ad Space. Data + Rich Media

This is the self-assembly SMB Space, Studio Tools.

Dynamic Creative Partners