Jonathan Wolf, Chief Buying Officer, Criteo: Does Real-Time Bidding Matter?

A lot has been written about real-time bidding recently. ExchangeWire’s own Ciaran O´Kane recently wrote a piece in the in New Media Age explaining some of its advantages for marketers. But is this as revolutionary a shift as people portray? How should publishers and advertisers think about it?

If RTB is used to deliver traditional agency display campaigns, in a somewhat more efficient fashion than advertising.com first delivered them all those years ago, then the answer is no. In this case, RTB is little sexier than any other piece of process automation, such as buying office paperclips through a procurement system rather than via a phone call to the supplier.

If RTB is used to unlock brand new sources of demand for display, then it has the potential to be really transformational.

What does RTB really allow that couldn’t happen before? Four things:

• Target each impression based on data
• A different creative for each impression (if buyer has capability)
• Buy individual impressions at different prices
• Use competition to generate a fair price.

There are two important things to note here:

1. This is a description of the search business model
2. Individual personalisation is what is really transformational.

The revival of display through Search technology

Originally Yahoo monetised search with display ads. Overture and then Google transformed this. By applying sophisticated technology, individual ads were targeted at the most relevant keywords, and individual creative (text only in this case) applied to each page. This was then sold on a pure performance (CPC) basis to their advertisers. As a result, advertisers uncapped their demand and bought as much as they could get. End result: the ads in search are so relevant that most users view them as content, and CPMs are dramatically higher than in display. Many of my relatives still don’t understand that Google runs ads at all!

Individual personalisation

A great deal of focus on RTB has been about pricing and auctions, but most buyers today are still buying simplistically with very limited sets of bids (eg always bid $2 where I recognise a cookie on a safe site), so this has yet to be that important for publishers. What is really transformational is the ability to target based on data and to deliver an individually personalised creative in response.

By allowing individually targeted, personalised ads we are at the beginning of the same transformation of display as in search a decade ago. A number of US businesses are now allowing hyper-local targeting at scale through IP targeting across thousands of sites in a way that was never possible before. A whole third party ecosystem of players like BlueKai, Exelate and Quantcast is coming into being to provide advertisers the ability to target individual users. At Criteo we are bringing CPC search demand into display. Indeed our partnership with Marin Software now allows search advertisers to buy CPC display retargeting through the same interface they use to buy Google and Bing search ads.

Criteo is one of the largest buyers of RTB globally (see this case study released by Google today), though I should note that it remains a minority of the impressions that we buy. RTB gives us the ability to identify in real-time which users are interesting for our advertisers and share a real-time price for each of those impressions with the publisher. By building the right recommendation and creative for each user in real-time, we greatly improve the performance for our advertisers, and therefore the CPM we can pay publishers. The final result is to deliver a whole new source of true performance demand to publishers.

I believe Criteo is the “canary in the mine”. In a few years time most display ads, like search, will be so relevant to users that those relatives of mine will struggle to identify the advertising from the content on a high quality publisher’s site. Real time audience selection and personalisation will be the plumbing that gets us there.