At Brand.net, we focus on maximizing ROI for Brand advertisers.  We demonstrate day in day out that tight management of the Metrics That Matter – Reach/Frequency against the target audience, and high-quality, contextually oriented media – yields outstanding offline sales ROI.  Obviously, Brands need both high ROI and high volume sales to move their P&L needles.  We address this by broad reach buying. How broad? In 1H ‘11, our average campaign ran across over 80 publishers.

What happens when we bring RTB into this focus on maximizing ROI for Brands?

Having moved past the buzzword stage, RTB is taking a rapidly growing slice of the spot market avails.  There’s been nonstop discussion of its benefits for DR advertisers.  But does it help further Brand advertisers’ goals? And, what about Publishers – how good is RTB for them?

The discussion of RTB’s impact has centered almost exclusively on the undeniable benefits of a more efficient marketplace.  Increased liquidity in the market creates a virtuous economic cycle.  Advertisers benefit from more and more diverse supply and publishers benefit from increased demand and competition for the inventory.  Since Brand advertising, like DR advertising, requires broad reach to maximize financial return, an efficient marketplace is a benefit.

But is the positive impact of RTB on brand advertising limited to just a more efficient market? No. RTB also facilitates greater focus on those Metrics That Matter to Brand advertisers:

-          Reach / Frequency: A key principle in branding is to maximize reach against the target audience while controlling frequency.  We can maximize reach more efficiently with RTB by bidding only when it results in incremental reach.  That is, bid smartly for reach – winning a new user for a campaign outweighs winning an additional exposure/increased frequency to an existing user.

-          Targeting: With audience data integration, RTB allows targeting at the user-level.  This allows Brands to win the trifecta: at the same time audience composition is optimized, reach is increased and frequency is managed.

-          Context: Exchanges or other data providers can score the various contexts that are applicable to the page – NOT the domain/site – from which the bid is originating.  We can bid only when the page-level context matches a campaign’s requirement.

-          Quality: For transparent inventory, Exchanges provide the URL of the page from which the bid originates.  We can screen for brand-safety and appropriateness of the content at the page-level before we bid, thus ensuring a quality environment for the brand. (We can do the same for anonymous inventory in a private marketplace – more on that in a separate blog.)

Again, dozens of offline sales studies prove that tight management of these levers drives highest actual offline sales ROI for brands.

How did we manage all of this before RTB, i.e., when inventory could only be bought directly from publishers?  At Brand.net, we built ad-serving technology – supplemented with operations – in anticipation of the Exchanges and are excited to plug in to the Exchange-oriented “tech stack”.  For example, with SafeScreen™, we apply quality at the page-level and discard impressions when they are not safe for brand advertisers.  (In 1H’11, we discarded 4.4% of the impressions for brand-safety reasons, even with buys across top comScore 50 “premium” publishers.)  However, with RTB, we will bid only if it is safe – no wasted impressions.  Similarly, for R/F management or targeting, our ad server is built to make user-level and impression-level decisions.  With RTB, we just move this upstream into bidding to minimize waste.  Our buying algorithms have always focused on the right inventory, the right amount, and at the right price – with feedback to refine & improve. With RTB, the feedback is more fine-grained (better) and in real-time (faster) resulting in smarter decisions.  Better, Faster, Smarter – that’s a good tagline for RTB!

So, RTB makes “achieving brand advertising goals” a better, faster, smarter possibility.  BUT (always a but)…the technical challenges to achieve those benefits using RTB are a lot greater than with publisher-direct buying, and even greater for Brand advertising than for DR advertising. For example, while there is more inventory with RTB, coordination across 10x more inventory and more publishers smartly requires significantly more technology, predictive modeling, and analytics.  Since there is a greater possibility of unsafe inventory, filtering and quality management become more challenging.  Since there is greater volatility in inventory availability and pricing, guaranteed delivery and smooth delivery – basic needs of Brands – also become more challenging to engineer.  If an ad technology company can’t manage against that volatility, the problems outweigh the benefits.  Want another challenge? At a purely infrastructural level, factoring all these considerations and returning a bid before the server times out is in itself a critical challenge and is, essentially, table-stakes for RTB.

Large numbers of DSPs have sprung up to help media buyers achieve the maximum benefit RTB can provide to direct response campaigns. Predictably, they are eager to access the huge brand budgets as well.  Media buyers beware:  success in DR does not ensure success in achieving Brand campaign KPIs. Make sure that your vendors understand and can prove that they achieve these Brand KPIs.  At that point, the benefits of RTB are realized for Brand advertisers.

So, what could market players – exchanges, IAB, publishers – do to move this brand opportunity even bigger?  A lot.  In my next blog, I’ll call out the key levers.