What is mobile RTB anyway?? The complete training 4 app marketers and publishers

Mobile RTB (Real Time Bidding) is the new guy on the block, the new hype, and the magic expression everybody just loves to throw into the conversation these days. It’s all over the place. But what does it mean for me? What are the implications for my app marketing plans or my ad revenues? Here is all you need to know about mobile RTB.

The usual expectations setting:

1. This item provides premium training (for premium members only) on RTB ads and the industry ecosystem. Read this and you will understand what’s going on, who the players are, and the actions you need to take.
2. Additional related trainings and references are linked wherever relevant. Enjoy your reading!

If you are more of a visual person, you can watch our webinar on Real Time Bidding, which summarizes this training.

Basic terminology

Real-time bidding (RTB) is a method of selling and buying online display advertising in real time, one ad impression at a time (thanks, Wikipedia). Google call it an auction model – buying and selling inventory that allows network buyers to evaluate and bid on impressions as they become available in real time. RTB is enabled through server to server (machine to machine) integration using a bid engine. Real time means right now, at this second, on the move. oopps, moment is gone. Here, now. Missed it again…bid now! It’s what machines can do, they don’t need to do it manually, like us, humans.

RTB methodology is relatively new to the mobile industry, while existing for a few years now in the desktop/web ecosystem (did I ever mentioned that the mobile industry is relatively young and hence rapidly evolving?J). It’s the outcome of new technologies that were not available before. There’s no argument that it’s the future of the mobile ads marketplace. It’s clearly where the industry is going. Moreover, mobile RTB is the result of a natural evolution. Machines are taking over, in this industry as well.

Mobile RTB is combining programmatic buying and mobile advertisements. MRTB Spending is growing, the technology is constantly advancing, related companies are being acquired, new players are popping up and market researchers are continuously writing about it. That’s enough evidence for a growing trend. Therefore you, who take part in the mobile industry, might want to understand what’s going on. I, who take part too, am here to shed some light.

When the time was right…

The thing is, that as smartphones conquered the world and users started browsing and exploring via mobile more than via desktops, two important changes had occured:

• Desktop ads growth started to decline, which pressured players to compensate lost revenues through mobile ads. Ads balance had generally shifted towards mobile. But that’s old news…
• As a consequence and within short time, the demand for mobile ads has grown massively, which stressed out service providers, making them come up with technologies that can cope with this demand, plus help mobile ads management become more efficient.

So, that set the terms for the growing popularity mobile RTB. And here we are.

What is the difference between mobile and Desktop RTB?

Well, the cookies. While desktop ad platforms use cookies to track their performance and targeting, cookies are not an option for some mobile platforms, your guess is right, Apple are the gate keepers again. So, technology had to reinvent itself to fit mobile, and it did.

Today, mobile ad platforms can manage campaign delivery for an advertiser across mobile apps and mobile web to such a level that it is possible for an advertiser to specify the number of times a potential customer sees an ad in one day. Targeting data is collected through a variety of sources and usually includes detailed location, platform, device, time and user engagement. In short, problem is solved, but mobile RTB demands specific technology which is not relevant for desktop, hence not transferable from the desktop world.. meaning specified players of mobile RTB had entered the game.

What’s the big deal?

Think of it like that: Until the mobile RTB age, an advertiser would define the target audience (gender, age & additional targeting) and the campaign budget. The media buyer would then search for the optimal media channels and “book” the inventory in advance. Manual set up and opening shot, and then the campaign starts.

Now, with mobile RTB, it’s all done in real time, server to server, machine to machine, with instant decisions upon media buying – yes or no. Inventory that once took days and weeks to move can be priced and sold within milliseconds. Instead of buying blocks of inventory, the RTB engine evaluates each impression, simultaneously as the mobile user opens a page on a mobile site or app, and, if the slot is relevant for a specific campaign, it is purchased, so the ad is shown as the page displays on the mobile device. This all happens within a fraction of a second, with no human interference.

So we are talking here about a whole new scale of efficiency …

However, if you are using mobile ads to promote your apps, there are costs to using RTB. Performance based advertisement (cost per install for instance) is not an option when using RTB (in which you bid per impressions). Since performance based advertising is challenging in terms of scalability, service providers are moving out of performance and towards RTB. Scaling is problematic since performance-based advertisers tend to jump between networks, and present lower than average ad spends per campaign. Brands, on the other hand, behave differently. They spend much much more and continuously over time. They now shift to advertise on mobile as the industry matures, inventory is widely available and CPM prices are continuously dropping. So we’re seeing global brands entering the game, and performance-based advertising getting less and less attention. It might cause inventory to drop, hence prices to rise. Whoever uses performance-based ads (in many cases it’s us, mobile app marketers, for instance…), might experience the mobile RTB downside (higher prices for performance based ads).

Like it or not, RTB (also known as programmatic buying) is becoming the standard. Major ad exchanges and networks have already invested (either developed or acquired existing solutions) in RTB technological enablers, and others are on the way.

Who will benefit from mobile RTB?

Mobile Advertisers. Advertising through mobile RTB is more transparent. You can see the rate for every ad impression you buy; you can judge which ads present the best performance, or engagement. You can optimize campaigns by controlling which exchanges are used, and how much you bid for inventory.

Compare this with traditional buying through ad networks that operate in a ‘black box’ style, buying the inventory at the lowest rate and selling it to advertisers at the highest. Often advertisers may not know where the ads have been served or the real cost/value of the inventory they have purchased. So you are trying to optimize but you just don’t have enough available data. So you pray…

Furthermore, programmatic buying includes smart algorithms using advanced prediction models to assess which impressions are worth bidding on and at what price. Ad buying analysis becomes super-efficient, methodological and accurate.

Advertisers make their bid without knowing what the competitive bids are, so they don’t bid against each other. Instead, they bid based on what they believe is a fair price. It’s an elegant, efficient way of ensuring that real value emerges, rather than advertisers bidding against each other and distorting price levels. This process takes place in the milliseconds during which a mobile app or site page is being rendered on a mobile device.

Media buyers can plug directly into RTB exchanges (e.g., Flurry, Pubmatic) or use a DSP (“demand side platform”-a system that allows buyers of digital advertising inventory to manage multiple ad exchange and data exchange accounts through one interface). This allows them to access many RTB exchanges from one place (e.g., Madison)

Advertisers’ benefits: efficient, methodological, optimized and fair

Mobile publishers. If your app is generating revenues through one or more of the known ad-networks, be sure that they will plug-in your app to their RTB engine, plus take care of the main “techy” stuff. You might, though, need to develop some minimal integration and adaptations. The benefits, as big players claim, will be huge. Since programmatic buying is smarter and more efficient, you will enjoy maximized fill rate (“purchased inventory”). Though during the transition phase towards RTB, CPM prices might drop, and also many buyers might still not be enabled with RTB, hence not able to buy your inventory. RTB could still be worth joining as it brings many more advertisers to the table and contributes to the increase in market size. Besides, it’s becoming the mainstream so you must get on board, let’s face it.. whether you like it or not.

Publishers can plug directly into RTB exchanges, but if they want to EASILY make their inventory available across many RTB exchanges it’s more efficient to use a supply-side platform (SSP – a platform built to automate and optimize the selling of online media space (e.g., Addapttr, improve digital). Then you feed another mouth, naturally. It is what it is.

Publishers’ benefits: higher fill rates and more money in the long term

Mobile app marketers. If you are wearing your app marketing hat, you might encounter some pains along the advertiser’s benefits. As mentioned, the shift to RTB business model causing performance based advertising to lose strength. The weaker performance ads ecosystem gets, the less inventory you will have to continue pushing your app on pay per download/install/action basis. So you would start paying more. When promoting an app, and targeting distribution, you would many times prefer performance based advertising which is less risky. Though you could pay per impressions and still calculate your action ratio, you will not be able to know your performance for sure and in advance.

Still, what goes around comes around

Ironically, your tough life as an app marketer will serve your app’s monetization targets (as long as you sell your inventory though performance-based ad networks), as the prices of performance-based ads will go up and this inventory will become more precious. Performance based inventory is the unshakable kingdom of mobile app publishers. Do you see where I am going with this?

Concerned with the impact on your app’s monetization? Here’s some useful advice:

1. As mentioned above, RTB prices might drop in the short term, enough to scare you. You could try and bring prices up by granulating your inventory as much as possible, to capture the attention of specific advertisers. The more targeted your inventory gets – the more valuable it is to specific advertisers, hence the higher the prices you could charge.
2. Expose your inventory values to embrace competition. In an RTB ecosystem, competition means higher bids. Invest in relevant awareness activities.
3. When defining “floor prices” for bids, consider the potential uplift of your fill rate. Even though you will have to reduce your “floor” CPM (to the floor… nice, ha?) its ok when you are compensating for the drop in prices with a close to 100% fill rate…Wondering which (DSP) platform to buy media through? Here’s some useful advice:
4. Inventory – Search for DSP (Demand side platform) with the greatest number of mobile ad exchanges to enjoy the widest access to inventory
5. Formats – search for those who integrate different mobile ad formats, particularly rich media and native ads
6. Statistics and data – search for those who can provide as many targeting layers as possible (location, timing and additional contextual targeting)
7. Algorithms – one of the most important factors is the algorithms used by those platforms (which indicate how they calculate the data upon purchase decisions). However, it’s hard to analyze it, therefore it’s also hard to act upon it – so I can’t provide any tip here other than, rely on word of mouth.

Did anyone say CASH?

When buying media, you’d have to pay on CPM basis with extra commission % on top (for the DSPs). Using an ad agency in the middle? They’d naturally need their cut as well. Quite simple.

How cheap is it really? The big players in the filed claim RTB can improve click-through rates, and by that reduce costs for advertisers, while also increasing effective earnings for publishers. It’s the efficiency that makes it worthwhile for everybody…

Pragmatically, it is all a question of your targets. If you are hunting for quality users, on the hunt for targeted ads, you might find that your targets are maximized through RTB, hence it’s cost effective for you. On the other hand, if you are a believer of “shout as hard as you can, someone will probably hear”, you might want ad networks to buy inventory in as low a price as possible and pray for the best. (BTW, that’s a valuable tactic when you are trying to boost your app rank, for instance)

Summarizing what you should take from this training:

• RTB is an evolving ad buying technology now enabled on mobile, with players providing RTB ad exchange systems, demand side and service side management platforms, serving you in media buying or monetizing your app. It’s enabled through machine to machine technologies, but the bits and bytes are (gladly) not usually of our, marketers, business. Look at it Like airplanes or TV, we enjoy it while all along we have no clue how it really works
• RTB will continue to grow on the expense of more traditional models. Advanced technologies of mobile RTB plus contextual targeting are capturing big brands, therefore big money, It’s now part of the game and it’s here to stay.
• Seems like mobile RTB is good news for mobile publishers, advertisers and service providers, though it might present a bit of a tough time for some publishers until they adjust.
• As a publisher, you have some interesting tactics to lift your RTB inventory prices up.
• If you are used to promoting your app using performance-based ads, you might encounter higher prices (CPC, CPD, CPI & CPA) in the near future (so just compensate through the extra revenues coming from your RTB inventory)
• Since the number of service providers is huge, you might want to use DSP platforms when buying media, or SSP platforms when selling your inventory, to maximize your results. Choose smartly and use the parameters described above.
• Known names include:
  Mobile RTB Ad exchange systems: AdIQuity; AdMob; AppNexus; DoubleClick Ad Exchange; Flurry; MoPub; Nexage; PubMatic; Samsung AdHub; Smaato; Switch Concepts; The Rubicon Project and Yieldlab
  Mobile DSP (demand side platforms) serving media buyers: Adfonic; Human Demand; mMedia and SiteScout
  Mobile SSP (service side platforms) serving publishers: AddApptr; DoubleClick; Improve Digital;mAdserve; Nexage and TapIt

Again, I am reminding you that you can also watch our webinar on Real Time Bidding, which summarizes this training.