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Tech Support

David Murphy

Adfonic Victor Malachard Dec 2013Victor Malachard, co-founder and CEO of byyd, argues that technology is driving the growth seen in last week’s IAB UK ad spend figures.

The IAB’s Ad Spend figures for 2013 clearly show that mobile advertising has grown up to become an essential feature of many brands’ digital marketing toolboxes.Spend on mobile ads doubled, year-on-year, between 2012 and 2013, and the news that mobile ad spend has smashed the billion-pound barrier for the first time truly makes it a driving force in the UK’s digital advertising industry.

The IAB attributes this to key drivers such as more people being online, more of the time, with more of them owning smartphones. However, I believe programmatic mobile advertising is also a key driver.

Premium mobile publications are starting to embrace Real-time Bidding (RTB). Mobile advertisers are seeing that RTB really does work by establishing audience value rather than inventory price. And underlying all of this, is the application of technology to unlock the huge value of big data that mobile advertisers and publishers alike are finding irresistible.

When we look at the availability of inventory via RTB from premium mobile publications throughout 2013, we see an exponential rise. This increases from 342m requests in Q1 2013, to nearly 2bn by Q3 2013, and then 4n in Q4 2013.

The drivers behind this are good, old-fashioned business sensibilities. Publishers reduce risk by incorporating programmatic alongside other means of selling inventory. They differentiate through sponsorships and package deals alongside programmatic. They also realise increased efficiency, especially through private marketplaces, and more efficiency leads to more margin. Reduced risk, increased differentiation, greater efficiency, more margin. Any business graduate would recognise these as compelling reasons to invest.

Unlocking value
For advertisers, it's RTB's ability to unlock real value that I believe is driving mobile advertising apace. The mobile advertising world used to be opaque. Ad networks would match inventory to ads in a method that is not far away from 'spray and pray'. As a consequence, advertisers couldn't really identify how far their budgets were going, nor could they be sure they were being placed in front of the right audiences.

How far we have come since then. RTB has taken the mobile world by storm. As far back as October 2012, when inventory from RTB sources tipped 50 per cent across our platform, we have seen incredible growth in RTB, particularly accessed through a Demand-side Platform (DSP).

This is because advertisers are growing comfortable with the concept of RTB. They understand that by taking first-party data from advertisers, second-party data from publishers and third-party data from ad tech, and by accessing all RTB-enabled inventory across the exchanges, they can see exactly where their campaigns are appearing and exactly what is working. They can also see that the data is working for them to find the right audiences, based on the value of those audiences, at the level of each impression, rather than blocks of inventory at fixed prices.

The fixed, opaque network picture changes to one of sharp clarity and liquidity, which, when equipped with suitable DSP tools, gives advertisers the control they need to maximise their budgets, and the efficiency of the most streamlined mechanism there is – the market.

Technology drives the change
Underlying mobile RTB is the huge effort invested by ad tech, in developing platforms capable of powering programmatic mobile advertising. Consider that, in the time between clicking the link to read a mobile web page and it actually rendering, there could have been several auctions across several RTB exchanges, in which many advertisers bid for several ad slots.

In each case the ad slot was announced to the exchange with its associated data; advertisers whose requirements match those profiles decided firstly whether to bid and if so, how much based on value rather than price; and the winners got to display the ads that they saw to the side of the page. And this all took place between the click, and the display.

The tech aspect is made all the more challenging in mobile by the lack of the third-party cookie that desktop advertisers depend upon, and the fragmentation of mobile into many manufacturers, with many models, platforms and formats.

It's an astonishing feat, and a far cry from billboards and TV ad slots. This is why Ciaran O'Kane of ExchangeWire, on the eve of Adweek Europe, recently urged participants to engage with this new world - because it's 'eating the advertising world alive'. This effort is why mobile is increasing its share of digital ad spend, up from 9.7 per cent in 2012 to 16.3 per cent in 2013.

So to use the classic business school approach again, it's all about confidence. As advertisers and publishers alike realise they can have greater control, transparency and efficiency, they will be more willing to invest. It's up to mobile advertising tech to ensure that they succeed.

Victor Malachard is co-founder and CEO of byyd