John Wanamaker, an early marketing and department store pioneer, is often quoted as having said, “Half my advertising is wasted. I just don’t know which half.” If Wanamaker were alive today to witness the recent evolution of demand-side platforms, he’d be able to find out exactly what 50% of his advertising brought sales and what he could safety trim from his budget.
As the last couple of years have shown, demand-side platforms have proven to be an incredibly efficient way to buy and manage online display ad inventory. In a recent interview Neal Mohan, VP of product development for Google’s display ad products, reported that over 99% of its top 1000 advertisers are now running campaigns on the Google Display Network–a pretty impressive number, considering that a couple of years ago only a handful of advertisers were experimenting with this new model.
By 2012, it’s projected that real-time bidding will account for 50% of the US market’s online and display inventory.
Here’s a brief overview of why these new platforms (and their major networks such as the Google Ad Network, MicroSoft Ad Center, and Facebook Ads) represent a much more efficient way to target and reach online customers.
The short answer? Ad networks like to sell you a lot of ads.
That’s because ad networks pre-buy vast quantities of inventory at large discounts from web publishers and then resell this stock to advertisers. Typically, the price is negotiated by the volume of ad inventory. More is assumed to be better.
In contrast, demand-side platforms use auction-based real-time bidding to sell “single” impressions to advertisers. Using a sophisticated interface which plugs into several vast ad exchanges, they are able to eliminate wasteful wholesale media buys. With access to these giant exchanges, advertisers can be highly selective about the type of impressions they buy. They can then decide what they are willing to pay for a particular impression and set prices based on what makes sense for their campaign. Advertisers can also choose between different pricing models, including CPM and CPC. These two main pricing models can be used for different campaign objectives. For example, if you sell a $25,000 unit which involves a long sales process, then CPM (cost-per-thousand-impressions) can be used for creating brand awareness or collecting soft-leads. But if your company sells small consumer items that are purchased online, CPC (cost-per-click) can be used produce a measurable (and scalable) campaign. Here are a few key benefits of demand-side platforms:
A demand-side platform is a technological interface that organizes display ad inventory and data from numerous, fragmented sources. It allows you to set customized specifications about the type of customer you want to attract and then bid on impressions that match those criteria.
For example, you may be willing to pay a premium price to retarget users who visited multiple product pages on your site and then left. Or using cookie data, you can set a higher bid to retarget users who have abandoned multiple shopping carts.
While your CPM (cost per thousand impressions) might be higher than the bulk inventory offered by ad networks, you know that if you reach the right user at the right time, you are going to get a much higher response and conversion rate.
While retargeting and behavioral marketing aren’t new concepts, demand-side platforms allow you to receive data from multiple ad exchanges, including the ability to subscribe to data exchanges such as BlueKai and eXelate.
You have a much larger pool of consumers and tons of real-time data that you can layer on your target. This enables you to be much more selective in the type of consumers you want to reach, as well as the messaging frequency.
In a recent campaign by American Express , for example, the advertisers were able to set extremely precise targeting criteria, including the exclusion of users who had an internet history of visiting gambling websites. Not only did this eliminate advertising waste, it also allowed them to prescreen credit applications.
“What’s important for American Express,” says Mathew Turner, the head of digital acquisition, “is that impressions reach an audience that is not just likely to convert, but that has the right level of income and a good enough credit rating to make it through the application process. The correct use of data is critical.”
With this type of flexibility, advertisers can launch much more tactical campaigns and have increased options to target a range of different levels in the buying process.
Demand-side platforms, in many ways, reflect the evolving way people live and interact with digital environments. Traditional publishing (and its online equivalent of ad networks) has always stressed the value of where an ad runs–popular pages get more views and therefore are more expensive.
The trouble is that a user doesn’t care if they read an article within a social media platform or if they go to the original website. Online real-estate is a declining commodity as it really is a hang-over from traditional mass media publishing (where central stations and media bring together millions of eyes into one place).
Advertisers can also benefit from enhanced features on the Google Display Network such as frequency capping which limits the number of times your ads appear to the same unique user.
While these features have been available in traditional ad networks, platforms are able to gather much more data on who their audiences and community members are. Again, you are buying audiences. Not a blank slot on a popular webpage.
Traditional ad networks will serve your ad across several networks of publishers. This means that if a consumer is reading about “shoes” on one popular site and then moves to another site about the same topic they will often be served your ad again. Frequency capping enables you to avoid wasting ad impressions by serving the same ad to the same consumer across multiple sites.
Demand-side networks and platforms also provide you the ability to cap impressions. Not only does this reduce annoying consumers with multiple viewings of your ad in a few minutes of browsing, but allows you to spend your budget more efficiency, testing to see exactly how many impressions your target has to see before they respond.
Likewise, Microsoft Ad Center, another demand-side network, allows “intelligent targeting.” With this feature, you can find out where your potential customers live, work, and shop and also access data on the days of the week and time of day they like to go online.
You can also do “incremental targeting” which allows you to increase bids for a particular demographic. If, for example, you are selling luxury golf packages and your target is men 50+, you can add 10% (or any percent you would like) as a “bid boost” for that audience segment.
One thing to consider, though, is that the success of a campaign often relies on identifying the proper platform to use. A branding campaign typically does better in Facebook Ads; whereas Google’s Search Network can work for better for lead-generation and direct response campaigns. That’s just because people go to Google to search. And they go to Facebook to browse, look for entertainment, and be social.
It is also important to work with your agency to identify the right demand-side platform as some of them have limited access to ad exchanges.
Demand-side networks do more than just correct some of the inefficiencies of traditional ad networks. They offer better ad performance and conversion because they understand that online success isn’t about group exposure or millions of views. Direct response advertisers benefit with more relevant targeted ads, higher click-through-rates and better conversion rates. Brand advertisers benefit from targeted brand exposure and retargeting capabilities to further engage prospective customers as they consume content online.
What really counts online is the ability of advertisers to reach consumers with the exact right message at the tight place a the right time. If Mr. Wanamaker was still around today today he would be short one heck of a quote. With demand-side networks you definitely know which half of his ads are working and which half are not. Cut the fat and allocate resources accordingly. For more info on how One Net Marketing can help you create an effective display advertising campaign please click here.