Blog Post

SEA

Nadine

Wolff

published on:

17.04.2013

"Real-Time Bidding is the optimal utilization of advertising budget" – 5 questions for Siamac Rahnavard from GDMdigital

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"Real Time Bidding" or "Real Time Advertising" is one of the key topics in the online industry as it involves the automated trading of online advertising. While experts see huge opportunities, there is also some uncertainty among advertisers regarding quality assurance. We interviewed an expert and posed the most important questions about Real Time Bidding (RTB) to Siamac Alexander Rahnavard, Managing Director DACH at GDMdigital.

Siamac Alexander Rahnavard

1. How do you define Real Time Bidding?

Real Time Bidding is the real-time purchasing of media inventory, including display, video, and mobile resources.

2. What are the advantages and disadvantages of Real Time Bidding compared to regular display campaigns? What makes Real Time Bidding so successful?

With real-time purchasing, you can bid on ad impressions relevant to a campaign. Anything that doesn't work for the campaign is quickly eliminated from the bidding process. Inventory that performs well or brings the desired awareness continues to be bid on. In summary, Real Time Bidding is the optimal use of the advertising budget.

However, it is important to remember that Real Time Bidding is only a part of the marketing mix and should not be used as the sole marketing measure. In practice, you can notice significant differences between campaigns based solely on Real Time Bidding and those that include other measures and yield noticeable synergy effects.

The risks in Real Time Bidding especially occur with inexperienced actors buying non-relevant traffic. A high number of ad impressions at a very low purchase price often means cross-border traffic, which is not beneficial for every campaign. When we look at which campaigns are most prevalent in Germany, they target the German middle class, who rarely browse cross-border offers. This target group mainly visits German-language sites, news websites, lifestyle sites, information, or music portals. Therefore, in Real Time Bidding, it's crucial to bid on environments relevant to the product. Otherwise, advertising budgets are wasted without ensuring the successful implementation of campaigns.

Another risk is purchasing one of the many fake sites that generate many impressions and clicks or produce a high number of clicks at a low price. Often, only upon closer inspection can you see these are fake sites cleverly manipulated to bypass most security technologies and can only be identified through detailed human examination.

Generally, display advertising doesn't make sense everywhere, and not everywhere does Real Time Bidding make sense. Sometimes, it might be more sensible to use the budget for other measures, such as when direct communication with the target group is more effective, which is often achieved through direct bookings with marketers offering very specialized content.

3. How do you assess the current Real Time Bidding market? Who are the players in the market, and what differentiates the various providers?

Looking at the development from 2009 to today, almost all service providers and agencies have some experience with Real Time Bidding, but if you scratch the surface, you quickly notice that true expertise is still quite rare. There's a relatively aggressive approach towards advertisers, trying to gain attention with technological features that others may not offer. However, upon closer listening, you realize everyone essentially offers the same thing, differing only in their communication or wording. Initiatives like the newly founded BVDW Lab Real Time Advertising are active here, aiming to develop a unified language and ensure more market transparency.

It's also interesting that many only associate Real Time Bidding with performance marketing or remnant inventory, which is not correct. The customer steers the service provider in purchasing by setting reasonable bids. If you have to start with low bids from the outset, you don't have the opportunity to purchase good inventory or highly sought-after German-speaking inventory, but must instead settle for cheaper cross-border traffic. Especially for customers with an awareness goal, it's reasonable to start with sensible bids to have the option of appearing on relevant inventory in a good visible placement. This way, campaigns with an awareness goal can be specifically targeted in suitable environments on selected sites.

The keyword here is Real Time Advertising, which can be seen as a complement to marketing premium inventory. The development will evolve more towards an automated purchase of premium inventory, mainly occurring on so-called Private Marketplaces, enabling controlled purchasing of media inventory.

4. In your opinion, does it make sense to integrate third-party data?

Third-party data are inadequately available in the German-speaking region. The primary reason is prevailing data protection regulations. This is also an experience shared by various agency clients we work with who have used third-party data and found that the leverage they expected was not present. In the cost-benefit analysis, it ultimately didn’t bring as much value.

What works very well is building first-party data for clients in the German-speaking region and expanding various product segments in the long term. This provides the opportunity to build something meaningful for the clients, enabling mid- to long-term campaign optimization.

With the help of Data Management Platforms, or DMPs, applied in conjunction with a DSP, advertisers can conduct Real Time Advertising appropriately to the market and product, ensuring meaningful, market-related programmatic buying.

5. How do you evaluate Real Time Bidding in connection with retargeting?

Basically, you need to distinguish between two types of retargeting. One is static retargeting, where you implement a pixel in different positions on a website and build user segments, for example, a website visit, visitors who logged in, or visitors who made a purchase, etc. Then, according to this marking, you can directly address users without any difference from regular ad materials. Depending on subsequent management, this can be a very subtle form of retargeting.

Then there is dynamic retargeting, where the user receives personalized ads. Here it's crucial to proceed very subtly. It's not the point to be very aggressive, as some providers do. One should approach it cautiously, especially considering the massive data protection discussions in Germany about cookie setting. The well-intended approach to increasing sales results in users feeling their privacy is significantly invaded, causing concern over their data.

However, with discreet use, we have had positive experiences. I only bid on the user I need for my product, allowing for very targeted bidding, often at a favorable price. Not every user surfs in well-known publishing environments but also on niche sites. Especially for more specialized products, it's the niche sites, such as niche forums, where there is direct context to the topic. The likelihood of a user subscribing to a newsletter or making a purchase is much higher than if I bid on inventory in less relevant environments.

Thank you very much for the interesting and pleasant conversation.

Nadine

Wolff

As a long-time expert in SEO (and web analytics), Nadine Wolff has been working with internetwarriors since 2015. She leads the SEO & Web Analytics team and is passionate about all the (sometimes quirky) innovations from Google and the other major search engines. In the SEO field, Nadine has published articles in Website Boosting and looks forward to professional workshops and sustainable organic exchanges.

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