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It's Still Early Days for Real-Time Bidding

It's Still Early Days for Real-Time Bidding

"One of the biggest constraints right now is available volume: Big brand advertisers love programmatic media buying, but need considerable traffic to make it worth their while," noted Fiksu's Steve Bagdasarian. Meanwhile, "the absence of cookie-based data and lack of established third-party data-management platforms on mobile have made the transition more difficult than expected."

By Erika Morphy
09/17/13 5:00 AM PT

Real-time bidding holds numerous benefits for mobile marketers, but there are downsides to the ad technology as well.

In particular, the dominant theme to that downside is that RTB -- at least for mobile ad formats and mobile platforms -- is still in its early days. More specifically, while the technology may have been around for several years, it's only recently that it has scaled to the point where mobile marketers can use it.

Why is that a problem? Here's one example: While there are many bidders out there, not many of them have significant programmatic intelligence behind them, Steve Bagdasarian, vice president of business development and traffic strategy at Fiksu, told CRM Buyer.

'More Difficult Than Expected''

"Without insightful algorithms for analytics and strategic bid placement, much of the promise of RTB remains unfulfilled or inconsistent," Bagdasarian explained.

RTB also doesn't yet enjoy the same market share on mobile as it does online, he added -- even as that share is slowly increasing.

"One of the biggest constraints right now is available volume: Big brand advertisers love programmatic media buying, but need considerable traffic to make it worth their while," he noted.

Meanwhile, "the absence of cookie-based data and lack of established third-party data-management platforms on mobile have made the transition more difficult than expected for some marketers familiar with Web-based RTB."

Bigger Issues

A bigger problem is that mobile marketing in general, while very active and in hypergrowth mode, is also still in its early days.

For example, there's limited or no access to cookies on native applications and IP addresses for geotargeting are unreliable, Benjamin Masse, vice president and general manager of Triton Digital's a2x, pointed out.

Those two issues alone can make programmatic advertising more difficult to scale and roll out, he told CRM Buyer.

However, "many companies are currently working to address this issue," he added.

Certainly mobile marketing's business case can be fuzzy in many instances, especially when new technologies such as RTB are part of the mix.

"Mobile is still a relatively new media tactic for many of our clients, and there is a lot of exploration in terms of how to best leverage mobile advertising," Maggie Merklin, senior vice president at Analytic Partners, told CRM Buyer.

That said, "we expect programmatic buying to be a key part of this testing phase," she added.

Consider, though, the thought process clients have to work through as they approach mobile RTB. Historically, Merklin explained, mobile CPM rates have been lower than desktop, but with growth in mobile RTB ad technology the CPM rates are likely to increase.

Somehow, the industry is coming to the conclusion that "even with higher CPM, we do expect RTB to be cost-effective for marketers who leverage mobile advertising," Merklin said.

Bottom Line

Despite woes such as these, industry experts are bullish on the promise RTB technology holds for the mobile space. There's also the simple fact that in a hypercompetitive market, companies cannot afford to wait for every little kink and quirk to be settled.

"Many advertisers still find themselves in the 'real-time bidding technology 101' phase," Jason Morse, vice president of mobile products for Criteo, told CRM Buyer. "Add mobile marketing to the mix, and for some it's altogether uncharted territory."

With many advertisers still tinkering with ways to measure and analyze on mobile, efficiency and cost-effectiveness are largely looming achievements, he admitted.

Nevertheless, the bottom line is this, Morse concluded: "Savvy advertisers know they cannot sit on the sidelines while this growing channel can deliver better results."


Erika Morphy has been writing about technology, finance and business issues for more than 20 years. She lives in Silver Spring, Md.


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