US display sector evolves

11 February 2011

NEW YORK: Real-time bidding could reshape the face of the US online display sector in the near future, a study has argued.

In a report commissioned by Admeld, research firm Forrester interviewed ten ad agencies, publishers and demand-side platforms, combining the findings with its internet display forecast.

It reported real-time bidding (RTB) was worth $350m in 2010, representing 4% of the whole display market, and almost half of the $733m related revenues directed through ad exchanges.

Forrester predicted 2011 might prove a "banner year" for the category, as RTB totals more than double to $823m, a majority of the $1.4bn in display resources invested via exchanges.

The key contributors to industry growth last year was Google rolling out ADX 2.0, supplying constantly-updated prices.

Invite Media, MediaMath and Turn made parallel improvements on the bidding side, and Admeld offered superior services for premium publishers.

Media buyers such as VivaKi, a unit of Publicis Groupe, and Omnicom Group's Accuen, played a "significant role" in prompting a reallocation of expenditure.

"It also helps that agency holding companies have their own financial incentives to shift client budgets to the trading desk model," Forrester added.

"After years of watching media agency fees erode, agencies are using their trading desks to both add additional value to clients and capture margin from third parties like ad networks."

Content providers have similarly adapted, reacting to the previous sub-optimal situation, often requiring them to establish relationships with over 30 different networks.

In December 2009, CBS Interactive decided to rely solely on its in-house sales force and bid-enabled exchanges, and NBC created the Universal Audience Network six months later for the same purpose.

Looking forward, Forrester suggested agencies will seek deeper alliances covering a smaller number of premium publishers, benefitting more exclusive networks such as Admeld and Doubleclick.

Enhanced verification tools and greater agency know-how should encourage advertisers to trial RTB, particularly from the consumer packaged goods segment, where ROI is most readily balanced with scale.

Independent trading desks, for example Accordant Media and The Trade Desk, also stand to gain ground on the major networks that have dominated to date.

Alongside advantages concerning targeting and potential yield, early-adopters could profit by moving ahead of anticipated changes across the communications industry.

"Companies like Visible World and Simulmedia are bringing audience targeting to television, and exchanges are touting the arrival of a 'futures market to online display."

"While these advancements are unlikely to become mainstream in 2011, they speak to broader future opportunities for which publishers would be smart to prepare."

One obstacle to be overcome is worries linked to poor-quality inventory, especially among auto and FMCG brands, where anxiety regarding ads appearing next to the wrong type of content is widespread.

Slow take-up by many exchanges, including Yahoo's Right Media, and the need to implement new technological solutions from planning to billing, pose equal problems.

Legal pressure may also play a part, as media, political and popular discontent about the tracking of user data become increasingly vociferous.

"Forrester believes that aggressive self-regulation is both the best and most realistic path for advertisers and publishers alike," the study said.

Data sourced from Forrester; additional content by Warc staff