Navigating the murky media waters of RTB, DSPs, DMPs and ATDs

This post is by Michael Smith. Michael is one of the UK’s digital veterans and is Managing Partner and Digital Director of Media and Communications consultancy, ID Comms

Digital media trading used to be simple. There was a time; eons ago, when all anyone had to worry about were banners, buttons and click through rates. It was so simple inventory levels could even be tracked by scribbled numbers on pieces of paper! Of course at that time we thought it hugely complicated and cutting edge. Little did we know but fast forward 18 years and those humble practices seem like child’s play compared to the current complex digital trading eco-system.

However, for all the complexity, digital media trading has never been such a fascinating journey, full of exciting opportunities for advertisers, agencies and media owners. Keeping up with the pace of change and having an informed view about how to navigate through the multitude of decisions is a challenge faced by all modern marketers. The important thing is to always have a clear view of your destination and the measures of success along that journey through the digital eco-system.

Digital_Media_BuyingOf course it is easy to be distracted. No self respecting conference, forum, trade mag or blog can resist in some shape or form, talking about automated buying, real-time bidding (RTB), demand side platforms (DSPs), Ad Exchanges, Data Management Platforms (DMPs) and Agency Trading Desks (ATDs).

Boy, we’re an industry brilliant at creating acronyms!! All of this is rather long-hand for the simple process of buying, serving and tracking an advert that’s targeted to a particular audience based on a number of targeting filters. And that is what marketers need to keep in mind, is the core process is the same, just the eco-system is much more complex than before.

So for all the complexity let’s not forget that this is just about buying the right ad at the right price, serving to the right person, in the right environment at the right time with the aim to encourage them to perform the right action / outcome.

Thankfully there are masses of material and opinion that can be found online that explain in graphic detail about the role of each of the innovative tech platforms within the new eco-system. The ANA whitepaper on Agency Trading Desks is a terrific map and a must read for those wanting to understand the role of the trading desk, the origins, benefits and crucially the questions to ask of your media agency.

So whilst there’s no shortage of material explaining the changes to the eco-system, it’s difficult for marketers to get to grips with the decisions and actions that they need to make to ensure continued value from their media investments. We’re not talking small scale either. Google predicts that the future digital display market will be worth $50 billion dollars and perhaps as much as 50% of future trading will be conducted through a real-time bidding process.

In one paragraph let us explain that $50bn landscape!!!

There are now more people online, spending more time looking at an increasing number of websites and as a result there are more available ad slots to sell, not all of which are sold – supply exceeds demand. At the same time an increase in data collection, targeting abilities and technology that allows buyers to bid on and buy individual impressions rather than buckets of impressions, has created a new type of marketplace where advertisers can have greater control of where their ads are shown and whom they’re shown to.

To facilitate trading within this new marketplace ad-exchanges have arisen that provide the hub where buyers and sellers can trade ad slots in real time. The role of the Demand Side Platform is as a technical layer that allows for buying across multiple ad-exchanges, at an impression-by-impression level, in real time with targeting filters enabled. All within a single interface. Still with us? The agency-trading desk as the name suggests resides within an agency and is a centralized, service-based organization accessed by agencies within the group to buy ad slots via a DSP on behalf of the agencies clients.

This all sounds pretty sensible, if not a little complex (trust us I’ve hugely over simplified).

If only things were that simple. However, no great surprise a multi-billion dollar business with multiple layers of technology is going to attract some challenges and fiercely raged debates. That’s by no means a reason to ignore the opportunities offered but rather by understanding the debate, informed decisions can be made.

The hot topics as they current stand fall into the following themes:

Transparency

A combination of trading and new ad technology provides equal measures of lack of transparency and mistrust over trading practices. Perhaps much of that mistrust is unfairly levied at media agencies, or perhaps not!!

What’s up for debate is the perception about the way that agencies make their margins from their client’s media dollars. Agencies will argue that they’re often blind when it comes to buying through ad-exchanges, which in turn does little to repair already fragile relationships. The issue of ‘Arbitrage’ also adds a degree of opaqueness that many agencies will argue tarnishes them unfairly.

Rather than get hung up on transparency, the advice has to be to neutralize the debate by developing remuneration models that both incentivise and reward. Models that galvanize all sides to strive for effective and efficient outcomes are clearly the winners in this space.

Verification

You only have to look across the much-publicised Lumascape Digital Display Ad Tech landscape to appreciate that ads don’t always appear where they should. At times innocent at others potentially reputation damaging, the problem is so toxic it warrants its own set of logos on the Lumascape landscape.

The solution is not an overly simple one and is debated at an industry trade body level. Nonetheless it is one that the modern marketer needs to be aware of irrespective of whether trading is handled by a media agency partner or handled in-house. Which leads to another hot topic.

In-house vs. Out-source

I’ll come onto one of the big reasons why ‘In-house’ is becoming a very real option for a growing number of advertisers but the fact remains that trading through a media agency partner is now not the only option.

The advent of exchange based trading and ad tech platforms have given many advertisers the environment and tools that they require to maintain control over their media investments. The decision to move digital trading is not to be taken lightly and can be a disruptive force within a marketing department. A decision not to be taken lightly especially given the myriad of costs / disruption / pros and cons to be considered.

However, one of the primary reasons for advertisers exploring in-house trading, aside from control of costs and margins, are business decisions based on controlling customer data.

Data

Try as we may to avoid using the ‘D’ word it’s nigh on impossible when reporting on the developments within the digital trading space! Whilst we won’t go down the ‘Big Data’ route, the fact remains that data is playing an increasing role in the decision making process of how digital media is bought, served and tracked.

Those advertisers who have brought digital trading in-house have data high on their agenda and not only want to control the use of their customer data but also don’t want to find themselves with the real threat of losing invaluable data as and when they decide to move their media buying account from one agency to another.

If only there was one solution to suit all needs… there isn’t. Understanding the implications of where digital media trading is going is fundamentally crucial for all advertisers who currently spend in digital, or have any aspiration to spend on digital in the future.

Questions and opportunities…

Let’s remind ourselves that for all of the complexity surrounding the new digital trading ecology, there are many fantastic and exciting opportunities that will benefit clients, agencies and media owners alike.

This space will only become more complicated but as it does so will advertisers understanding of how to navigate, assuming that is that they start to ask the right questions now and make informed decisions.

Here are the three most important considerations to help you navigate this eco-system:

  • Decide whether digital trading remains within your traditional media agency, whether you appoint an independent or take the step to bring digital trading in-house.
  • Don’t squander the valuable opportunities by obsessing on cost and transparency. Take control of the situation and implement remuneration models that incentivize and reward.
  • Crucially, have an ambition for digital media and clear vision for how it will drive business growth – this will inform what technology is right for your business rather than technology dictating what direction your business takes.

This post was the basis of the Trendsetters article published by The Internationalist on April 4, 2013

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About Michael Smith

With an unparalleled digital knowledge and experience across both the public and private sectors, Michael is one of the UK’s digital veterans. Michael is Managing Partner and Digital Director of Media and Communications consultancy, ID Comms
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