Real Time Bidding: The Win-Win Solution for Mobile Developers & Advertisers

With the increase in smartphone and mobile Internet users mobile has become a key focus area for marketers. While mobile advertising has already been explored in various forms and models, it is still an evolving space, striving to meet the challenges and concerns of the advertisers as well as the publishers.

Some of the key concerns that keeps haunting most mobile app developers and publishers:

1. Trade Off: User Experience vs. Monetization. Most developers and app publishers today are focused on delivering a superlative user experience. It is often a concern that incorporating ads for monetization can put the ideal user experience in jeopardy.  You definitely don’t want to show a Valentine’s Day gift ad to a man who lost half his fortune in a recent divorce.

2. How Much: It is a common complain amongst mobile app publishers that the revenue from mobile ads is not good enough. Considering they are often times compromising on the ideal user experience to incorporate the ads, which could result in loss of users, one must ask, “what is the real cost?” How does a developer maximize the CPC/CPM (Cost per Click / Cost per thousand Impressions) on his inventory?

3. Fill Rate: While developers are trying to cope with this problem using multiple networks, still they would often times find a part of their inventory not being utilized. Ad inventory is the most perishable commodity for a developer, if he is not able to serve ads to one visitor, that impression is lost for ever. Hence fill rate remains as one of the top challenges for the developers.

Real Time Bidding seems to be the new kid in the block for mobile advertisement that is offering a definite win–win solution for both publishers and advertisers. Let’s understand how Real Time Bidding works.

What is Real Time Bidding ?
Real Time Bidding (RTB) means that every ad impression can be evaluated, bought and sold instantly. When a user opens an app, the users attributes are sent through the RTB Exchange server to the Demand Side Platform (DSP). Based on the perceived value of the users, interested advertisers place their bid to win the ad impression. The highest bidders’ ad is then shown to the user. This entire process happens in less than 200 milliseconds, thereby eliminating any visual delay for the user.

So how does RTB help solve the major concerns in mobile advertisement?

1. Better Targeting: As the user attributes are passed on from the RTB exchange server to the DSP, advertisers get to evaluate each impression and judge the relevancy of the target user before serving their ad, resulting in highly-targeted advertising that the user would easily relate to. While this takes away one of the major publisher concerns, interrupting the user with irrelevant ads, it also delivers better result for the advertisers due to highly specific targeting.

2. Higher CPM: In RTB, each impression is evaluated and multiple advertisers place their bid for the same impression before going to the highest bidder. This process ensures that the publishers get the best possible CPM for each of their impressions and maximize revenue.

3. Fill Rate: With more and more companies implementing OpenRTB (an emerging, open standard for Real Time Bidding communication), it is becoming easier for  publishers to connect to multiple DSPs for the same impression, resulting in the highest possible CPM and less untapped inventory (as explained in the point above).

It has been observed that RTB provides significantly better results than traditional ad buying. A report from Adfonic, comparing RTB vs non RTB ads for mobile shows that the click-through rate for RTB ads are 97% higher than non-RTB ads.

RTB provides buyers with more access, targeting and transparency while sellers get a better price for their inventory as multiple advertisers compete for the same impression that is perfectly matched to their targeting attributes.

RTB for Mobile Ads – What’s the big deal ?
Real Time Bidding has been in play for web-based display advertising for some time now, so its eventual progression to mobile isn’t unexpected. So why is everyone going gaga about it? Well, there are few distinct advantages that Real Time Bidding brings to mobile advertising.

1. Location: A consumer carries his mobile everywhere he goes; to the mall, to the coffee shop, to the spa and all this invaluable location data could be made available to the advertiser. Now imagine, if you know the consumer is at the mall and you could push an ad to him with a discount coupon for your brand of chocolates – isn’t that likely to leave your competitor’s brand on the shelf?

2. Better Control and Efficiency: Advertisers have always been leveraging consumer data, but on the mobile it goes to a different level with a lot more consumer data, including location, contextual and demographic data being made available in real time with the ad request, helping the advertiser have better control, deciding whether or not they want to bid on a particular impression and how much would they like to spend on it. Also, such specific control over targeting delivers better results and higher ROI for advertisers.

3. Improving the Mobile Ad Ecosystem: With RTB, publishers are already seeing increased CPM, resulting in larger publishers joining the bandwagon and opening up premium inventory. The advertisers, motivated by the better results and eager to take advantage of this premium inventory, are ploughing more money into RTB ads.

The combination of Real Time Bidding and rich display ads could do wonders for advertisers and with the ever-increasing number of smart phone users and higher Internet penetration, it is providing a golden opportunity for mobile developers to cash in on their users, without any significant disruption to the user experience. While privacy remains a concern, users today are often okay with sharing some information about themselves in order to have a better online/application experience and Real Time Bid Exchanges can successfully leverage the same to facilitate highly targeted advertising, filling the coffer for the publishers.