What real-time bidding means for mobile apps and games

Mobile Marketing - Member Content

Ross Barasch, Fyber's vice president of demand for North America, breaks down how programmatic is benefitting in-app advertising like never before.

While real-time bidding isn’t exactly new to the mobile industry, what is new is the rate at which brands are opening their wallets and investing their advertising dollars in mobile games and other apps. According to App Annie, in-app advertising is set to triple by 2021, from $72bn (£53.4bn) in 2016 to $201 billion. For many mobile apps and games this also means having new types of demand vying for their audiences.

As I wrote in Three Ways Programmatic is Changing Mobile Game Monetisation, in the not-so-distant past, global companies and brands like Unilever, IKEA etc. were reluctant to advertise in mobile games. With adults spending up to 2 hours, 41 minutes a day using mobile apps and because games offer advertisers a premium closed publisher environment, i.e. a level of brand safety that apps based on user generated content can’t offer, advertisers have dutifully followed the coveted consumer in an environment brands have more control over.

Real-time bidding exponentially increases the number of brands and agencies that can access publisher inventory and what was industry buzz a few years ago, has now cut through the noise as a strategic inflection point for mobile apps and games.

How can RTB help me, a mobile app?
As part of a mobile and app monetization strategy, real-time bidding addresses issues of scale, efficiency and control. This trifecta translates to increased competition, which drives up bid prices and ultimately raises eCPMs to deliver more revenue.

  • Scale: By connecting publishers to hundreds of advertisers through a single point of integration and auctioning inventory programmatically, publishers can effectively scale their monetization.
  • Efficiency: RTB enables publishers to approach multiple buyers at the same time. This allows publishers to monetize their mobile audience more efficiently than traditional buying methods, which would require a publisher to work directly with all of its demand sources.
  • Control: Tools within SSPs (supply side platforms) and ad exchanges allow publishers to maintain control by implementing and automating business rules such as floor prices, pacing and blacklists.

What’s a programmatic instantaneous auction?
First, let’s define programmatic. Programmatic refers to the automation of the advertising buying and selling process––an automated system that allows publishers to individually traffic each ad and advertisers to use algorithms to determine what ad to buy at what price.

An instantaneous auction is just that. An auction that happens, well, near instantaneously. Each RTB transaction takes about 100 milliseconds (a 10th of a second). It takes three times longer just to blink.

Is programmatic the same as RTB?
Programmatic media buying uses data and technology to reduce the overall costs of making media buying/selling decisions in an automated fashion. Before programmatic, media was bought and sold manually. It was a system based on human decision making in which buyers, on behalf of their client, had to reach out to a salesperson of a website to negotiate CPM rates and place ads. Any changes to a campaign, no matter how big or small, required written change orders. Programmatic is not synonymous with RTB. RTB is a type of programmatic buying that uses technology, data, and software.

What was wrong with traditional media buying?
Aside from the overhead cost and room for human error, traditional media buying has unique disadvantageous for both buyer and seller.

For advertisers, buying digital media in a traditional CPM model means buying impressions in bulk at a predetermined fixed price, which doesn’t take into account the different value each impression can have for the advertiser.

For publishers, traditional methods of selling digital media can often leave a significant portion of inventory unsold or sold below market value. Conversely, with print media, advertising space is limited within any given publication (i.e., there is only so much physical space). This is not the case with digital media, as advertisements can be placed in several places, making the opportunities seemingly endless.

Who is involved with the new way of buying?
In order to sell inventory on the open auction (i.e, real-time bidding), a publisher needs to make their inventory available on an exchange via a supply side platform (SSP). The RTB ad exchange is what facilitates the auction andconnects sellers/SSPs and buyers/DSPs. Here’s the roster of the players involved to make it all happen:

  • Advertisers - a company advertising a product or service. Advertisers such as brands or agencies use DSP’s to purchase impressions.
  • Demand Side Platforms (DSPs) - are software platforms used by digital media buyers (advertisers, brands, agencies) to access inventory (or ad impressions) across multiple ad exchanges.
  • Ad Exchanges - facilitate the purchase of inventory of digital media in the milliseconds before a page loads.
  • Publishers - businesses that create and/or delivers content to an audience.
  • Supply Side Platforms (SSPs) - the counterpart to the DSP, is a software platform used by online publishers to manage, optimize and sell their inventory. It connects a publisher to multiple buyers (other ad exchanges, DSPs, and networks) at once.

How does it all come together?
The RTB process is triggered as a user engages with an app that has advertising space available. A call for the ad (a bid request) is made by the SSP to the ad-exchange, where the auction will take place. The bid request contains demographic, location, browser history, and other types of data. The ad exchange then passes the bid request with all this information to the DSPs (representing advertisers and brands) who bid in real time. The highest bid wins, and this advertiser has its ad served to the user. This same process happens again and again and again in milliseconds for every ad unit on the publisher’s property.
As mobile apps become the primary source of content engagement, advertisers and publishers need to operate in real time in order to keep up with audience behavior and actions.

Ross Barasch is vice president of demand for North America at Fyber.