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Real time bidding

  • April 2014
  • -

Key findings

- IDATE forecasts the global RTB market to grow to 17 billion EUR by 2018, up from an estimated 4 billion EUR in 2013, representing a CAGR of 36% from 2013 to 2018. RTB is a form of programmatic buying, and forms a part of the display-advertising market. It is complementary to targeted advertising which is refined through the use of personal data, where RTB gives this targeted advertising the real-time added value. RTB was the fastest-growing segment within the advertising market in 2013 (and for 2012 also), and there is no reason to believe that this trend will not continue into 2014.

- The growth is RTB is driven by several factors, the most obvious being the increase in ROI which RTB brings for both advertisers and publishers. From the publisher point of view, they see an increase in eCPM, since RTB can provide better-targeted advertising space in real-time, which is more effective than traditional inventory. From the advertiser point of view, the increase in eCPM means that they have to pay more to advertise in that inventory. However, the use of RTB means that the advertisers have access to much more targeted, relevant, and thus effective inventory, which compensates for the increase in eCPM.

- Today, RTB is used almost exclusively for indirect inventory. IDATE estimates that in 2013, at least half of all indirect display inventories were sold though RTB technology, and that by 2018 the leading countries will see almost full RTB penetration for indirect inventory. But it is also expected that RTB will expand into direct, premium inventory sales, in conjunction with increased personal data use (targeting) to further increase the premium value of the inventory. This is already starting to happen with the concept of guaranteed upfront sales entering RTB. The concept here is to trade direct, premium inventory on an RTB platform, whilst giving publishers a high amount of control and also advertisers the trading real-time benefits of RTB. This is done by the buyers (typically DSPs) sending a request for certain types of inventory, typically audience demographics (such as age, sex, income or place) and allocated budget to SSPs. The SSPs then provide the buyers with a packaged premium offer aggregating various publishers to meet the buyer request. This is different to standard indirect RTB trading, as indirect inventory is sold as spots rather than packages. The buyers then purchase this package upfront, together with guarantees from the publisher.

- Another growth driver for RTB is how big brands have embraced the technology. In display advertising Google and Facebook are number one and number two respectively, and by a long way, and that RTB has been embraced by these two juggernauts has certainly helped spread the technology in the market. The Facebook launch of FBX was arguably a defining moment, adding inventory and thus liquidity into the market. This also meant increased competition in RTB, and more urgency for other large brands to embrace the technology, either as publisher or RTB provider. Also notable are commercial giants Amazon and eBay who have started to provide RTB on their sites, and the acquisition of MoPub by Twitter in September 2013. The leading specialist players along the display- advertising value chain, such as DSPs, SSPs and ad exchanges are also all embracing RTB, to maintain their value within the ecosystem.

Table Of Contents

Real time bidding
1. Executive Summary 6
2. Methodology and main concepts of RTB 7
2.1. General methodology of IDATE's reports 7
2.2. Definition of RTB 8
3. The technology 9
3.1. RTB: real-time bidding 9
3.2. RTB and behavioural-targeted advertising 10
3.2.1. Tracking and user profiling 10
3.2.2. Retargeting 10
3.2.3. Cookies 11
4. RTB Markets 12
4.1. Market size 12
4.1.1. USA 12
4.1.2. EU-5 (France, Germany, Italy, Spain, UK) 13
4.1.3. Japan 14
4.1.4. Global picture 14
4.2. Positioning in the overall advertising structure 15
4.2.1. The online advertising ecosystem 15
4.2.2. Pricing model 16
5. Player strategies 17
5.1. Overview 17
5.1.1. RTB and the Internet ‘four': Google and Facebook lead the way, Amazon a dark horse 17
5.1.2. Advertising-specific players looking to dominate their specific domain 18
5.2. The Internet ‘four' (Google, Apple, Facebook, Amazon) 18
5.2.1. Google 18
5.2.2. Apple 19
5.2.3. Facebook 19
5.2.4. Amazon 21
5.3. Advertising specific players 22
5.3.1. Twitter / MoPub 22
5.3.2. Rubicon Project 23
5.3.3. Millennial Media 24
5.3.4. AppNexus 24
5.3.5. Criteo 25
5.3.6. Turn 26
5.3.7. Xaxis (WPP) 26
6. Conclusion / strategic analysis 27
6.1. RTB is fastest-growing segment of digital advertising 27
6.2. Drivers of RTB 28
6.2.1. Increased ROI for both advertisers and publishers 28
6.2.2. After dominating indirect inventory, focus moving to direct inventory 29
6.2.3. Big names have entered - both RTB providers and publishers 30
6.2.4. RTB moving into mobile 30
6.3. Barriers to RTB 30
6.3.1. Privacy concerns 30
6.3.2. Mobile advertising less advanced compared to fixed 31
7. Appendix 32

Tables and Figures

Table 1: Overview of player profiles 17

Figure 1: RTB in action within an ad exchange 8
Figure 2: The Real-Time Bidding process 9
Figure 3: Sponsored pages displayed on the Facebook mobile application, taking into account the Facebook
user's profile 10
Figure 4: The retargeting process 11
Figure 5: Example of mandatory cookie opt-in on a Website 11
Figure 6: RTB revenues and share over total display ads, for USA, 2012-2018 12
Figure 7: RTB revenues for France, Germany, Italy, Spain and UK, 2012-2018 13
Figure 8: RTB revenues as a percentage of display-advertising revenues, EU-5, 2012-2018 13
Figure 9: RTB revenues and share over total display ads, for Japan, 2012-2018 14
Figure 10: Global RTB revenues and regional breakdown, 2012-2018 14
Figure 11: The online advertising ecosystem 15
Figure 12: MoPub (SSP) pricing and terms 16
Figure 13: Google RTB on DoubleClick Ad Exchange (AdX) 18
Figure 14: The technological process of FBX 20
Figure 15: Example of FBX in action 20
Figure 16: Amazon Advertising Platform (AAP) 21
Figure 17: MoPub's Marketplace and Private Marketplace 22
Figure 18: The Criteo CPOP Platform 25
Figure 19: Relation between Criteo's performance display and Google's paid search ads 25
Figure 20: Some characteristic figures of Turn 26
Figure 21: Growth of advertising spend on RTB on the Nexage exchange, 2013 27
Figure 22: Percentage of advertisers and publishers who use an auction-based approach to media buying and selling, November 2013 28
Figure 23: Advertising ecosystem revenue sharing percentages 33

List of companies reviewed

Millennial Media
Rubicon Project
Twitter / MoPub
Xaxis (WPP)

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