When the 2011 digital advertising predictions rolled out a year ago, RTB’s transformative nature was often cited.  While many predictions didn’t come to pass – this one did.  In earlier posts, I explained how RTB will transform brand advertising, not just direct response.  With the right agency and vendor partners, optimizing for, measuring and proving brand KPIs, brand advertisers are beginning to access RTB’s advantages.  In 2012, as Video RTB explodes and Mobile RTB arrives, the opportunities seem limitless.  The pace of this change can leave brand marketers with a knowledge gap.  Heading into 2012, brand marketers need to know the RTB basics. There are no stupid questions – this is a brave new world.  Not surprisingly, right now the majority of questions center around environments – inventory quality and brand safety – with questions about formats a close second.

Here are my answers to some of the more common RTB questions:

Q. RTB increases price transparency, but it raises concerns due to blind buying. Placement and context need to be addressed.  How will RTB address placement concerns?

A. Contrary to popular perception, RTB is not all blind.  Most of the inventory is “branded,” with URL-level visibility to where the ad is going to be served.  Further, there are several semantic-categorization services that can provide page-level context at bid-time. And, of course, advertisers can vote with their feet (their bids).  If the inventory is anonymous, you need not bid.  If URL-level visibility matters, it is worth paying for. At Brand.net, we use SafeScreen™ for page-level quality filtering to bid only on brand-safe inventory. Similarly, we ensure that the context is relevant for the campaign, before we bid.

In general, the more and more economically attractive “demand” there is for branded inventory, the more and faster supply will come into the exchanges.  All in all, RTB provides the bidders with the levers that they need to manage the placement and context for every impression.

Q. Is there a rationale for quality inventory to be available on exchanges?  To what extent does RTB trade off quality for price? Seems that RTB may not solve for the concern of brand advertisers that they are being exposed to lower-quality inventory?

A. Greater transparency, the control that comes with “private marketplaces,”  increasing publisher yields, all are contributing to increasing quality.  It is a classic virtuous circle:  as more ad budgets move into programmatic environments, as more publishers add more inventory to RTB-enabled private marketplaces, programmatic buying will create more value for advertisers and this in turn will create more value for publishers.  Publishers are yield-driven, seeking the best overall economics.  If publishers can get the best price on an exchange – placing directly, through their SSP, whatever – we’ll see quality inventory flow into exchanges even more rapidly. 

Q. Speaking of trade-offs, when brand advertisers eliminate inventory that is considered to be brand unsafe, what enables them not to lose scale?

A. RTB scale is already massive. For example, AppNexus serves approximately 14B impressions/day via RTB. And, this number is growing as more and more publishers are adopting RTB. We are talking of a relatively small percent (<10%) of the inventory that is not brand safe.  That still leaves us with substantial scale to take advantage of — 90% of 14B impressions. 

Q. Will there be a day when brands can have it both ways: rich media and scale?  Will RTB be able to serve brand campaigns with large rich media placements?  How will standardization progress?

A. All signs point to a big leap forward in 2012.  Google AdX is in beta with a hover-to-expand rich media offering for RTB. Very interestingly, Mobile is ahead of standard display with respect to rich media standardization with efforts on ORMMA and MRAID.  This is one of several reasons (more below) why Mobile will come onto the exchanges much more rapidly than Video has come along – which is fantastic for the industry.

Q. RTB grew rapidly with display, and is now growing within Video. Does RTB Video have even greater benefit to brands than does display RTB?  Less?  What does the 2012 landscape look like for RTB Video inventory?

A. Yes – I think RTB Video has an even greater benefit for brand advertisers than Display.  Video volume has been lower (still is), so you need to assemble a lot of publishers to get scale – especially if seeking demos, geos, etc.  And technical standardization has been terrible.  2012 is the tipping point for RTB Video’s “virtuous circle.”   Consumer demand is surging, ad spend is jumping, both incenting publishers to make this their year to adopt VAST standardization.  And, RTB Video – coming from Adap.tv, BRX, AdX et. al – provides great monetization opportunities for those publishers.

Q. What about Mobile? How is Mobile evolving with RTB?

A. The rapid adoption and usage of smart-phones and tablets with ad-friendly form-factors is driving up Mobile impression volumes dramatically.   With more precise geo-location, better ad formats, and higher user engagement, Mobile presents a great opportunity for advertisers to reach their target consumers.  And, Mobile monetization is more readily taking advantage of exchanges and RTB – Nexage and MoPub are already transacting at a clip of multibillion impressions / month.  We now have the ability to apply the power of RTB to all the ad formats – Display, Video, and Mobile.   By the second half of 2012, best-in-breed vendors will be working seamlessly across all.

2011 has been a great year for RTB.  It has been a transformative development for digital advertising.  My prediction:  this time next year, we’ll look back at today as old history.  Once technology takes over, change accelerates at an incredible pace.  Our world will change more over the next 12 months than it has over the past several years.