Real Time Bidding’s Growth Trajectory Dependent on Pricing

  • Posted by Steve Goldberg
  • |
  • May 26, 2013
featured
Real-time bidding (RTB) is probably the fastest-growing segment of digital advertising. eMarketer predicts that 19% of digital display ads will be purchased through RTB this year – that is a 73% increase from last year.
James Green, CEO of Magnetic (one of the search retargeting leaders) credits site retargeting for this explosive growth (meaning that if someone visits your site you can target them again, because you will see them again on an exchange due to the massive amount of liquidity).

The challenge in future growth, per James, is pricing.  Publishers want higher CPM’s, and Advertisers are focused on cost.  Here is how James sees price increases aiding in the long-term growth of RTB:

1.    Advertisers are generally prepared to pay more to find a new customer than to convert an existing customer. So as the lower part of the sales funnel fills up and more “branding” campaigns come to RTB, pricing will move upwards.

2.    The laws of supply and demand state that if demand stays flat or increases while supply decreases, prices will go up; this is exactly what’s going to happen in RTB.

3.    As everyone gets better at assigning value to each marketing touch point, upper-funnel (more expensive) campaigns will get more value, which will help publishers raise CPMs.

Full article:  http://www.mediapost.com/publications/article/201041/rtb-is-gaining-momentum-but-whats-the-downside.html

eMarketer article: http://www.emarketer.com/Article/RTB-Ad-Spend-Continues-Robust-Growth/1009783#vvKOeZ0Q49YgQwtf.99