Sharpened reflexes

One of marketing’s biggest problems has always been that, until recently, the very last stage in the buying process was out of the brand’s hands. A company could plan its campaign to the finest detail, but once media space was bought, it had very little say about which individuals ads were shown to and precisely when.

Real-time bidding (RTB) is changing this. The practice, which enables brands to select an audience and bid for each impression online through automated auction systems, puts companies back in the driving seat because they can use the viewer data to offer them a fitting individual message. As Hitesh Bhatt, head of digital acquisition at Lloyds TSB International, puts it: “It means display is able to move from branding to more of a direct-response channel.”

The latest development in RTB sees marketers being more creative than ever in their approach. They are using data in a sophisticated way to make sure ads are more targeted to potential customers than ever before. As the discipline develops, brands are finding that experimentation with RTB can offer them a more effective advertising solution and also save money.

“With RTB, we have a number of creative variations we test and rotate, depending on performance,” says Nick Thornhill, digital marketing manager at insurer Allianz. “We’ve been using demographic and targeting options on ad exchanges but RTB’s dynamic nature and immediacy of inventory allows us to be increasingly efficient as the targeting is more precise. That is vital to reaching our desired customer segments.”

Thornhill says RTB ads run through its agency Steak have represented huge savings over conventional campaigns, largely through better response rates and, hence, less wastage. “RTB is providing the best performing cost per actions (CPA) on the [marketing and media] plan – some 50% more effective than other network buys, on average,” he says. “We expect this to evolve as more brands adopt the tactic.”

It is a very similar story at mobile operator 3, where RTB has brought a 50% reduction in CPA through constant testing and evaluation of creative. Working with targeting company Quantcast across a range of advertising networks, the brand is using RTB to feed back on which adverts are performing the best on which sites.

“We will typically have creative for six different handsets and we can see which creative is performing best for which site at which time and use that to avoid wastage,” says Richard Bettinson, online marketing manager at 3. “We’re not sure where the whole privacy debate will go, so we don’t use a lot of data, we just know a person’s location and what they’re looking at, and make deductions from that.

“We prioritise the ads and creative that performed well on a particular site and if we have run out of stock of a phone [handset], we stop advertising it immediately,” he adds. “That’s the beauty of RTB; you’re not over committed, you can optimise campaigns, stopping and starting them when you see fit. We have daily meetings to decide what we’re concentrating on pushing that day.”

He adds that the company also uses RTB in its retargeting. If someone has shown an interest in a particular handset, the brand has a range of creative material that it can retarget people with. This aims to take them on a journey from the creative they originally saw, which may have been a price promotion, through to features they are likely to find useful. It means people don’t see the same aspect of a phone and tariff advertised twice and is intended to move them further down the purchase funnel.

The Internet Advertising Bureau’s (IAB) mobile and networks manager Amit Kotecha says that while his organisation is not currently measuring RTB as a portion of the overall advertising market, it is planning to open a counsel for the practice later this year. It will give practitioners and interested brands a forum to discuss the opportunities of the latest development in online display.

“It’s the really hot topic in display for the year ahead so we’re going to be doing a lot of education work,” he says. “It’s a very small proportion of overall online display but it’s going to grow significantly because everyone stands to gain. Publishers should maximise their yield and advertisers can push forward with the most cost-effective and best-targeted campaigns possible.”

With more creativity and options creeping into RTB, brands are questioning the wisdom of paying up front for inflexible campaigns. Instead, they are buying impressions one at a time through networks offering RTB. Lloyds TSB International’s Bhatt claims that through its agency MEC, buying impressions individually can cost as little as just 10% of a publisher’s online rate card.

“When you plan campaigns direct with publishers, you can pay a lot for inventory but with RTB platforms, you can get access to the audience you’re targeting when you want to reach them at far lower rates,” he says.”We’ve been using it with great success to target our core market of expatriates, so behaviour such as looking up lots of British information from a foreign ISP and, in particular, looking up financial products and accessing financial advice and ex-pat forums will trigger us to bid for a click.”

Although RTB will often bring a reduction in CPA, the ability to choose where and when to pay to advertise to a person is only one aspect of the process. The other factor is the flexibility around the variable fee a brand is willing to pay so a message reaches different audiences.

A person who appears to only partly fit a brand’s key demographic will be of less value than a shopper who has a proven interest in that brand and is exhibiting behaviour of a consumer about to purchase, so will attract a lower bid rate.

Sportingbet digital media and operations manager Jacklyn Low says she has been working with Agenda21 to look into this area. Although, like many brands, it will look at which website a potential customer is on and examine recent anonymised browsing history, it has also built up models of how its most lucrative customers behave.

This modelling allows the brand to look forward at the life-time value (LTV) of a potential ‘punter’ and base a bidding decision on looking forwards as well as back. Like any bookmaker, Sportingbet is most keen for its message to be put in front of keen gamblers. A person who only places a single bet a year, normally for a big occasion such as the Grand National, is far less attractive.

“Life-time tracking of current customers allows us to identify the potential LTV of prospective customers and consequently how much we bid for an impression,” Low says. “We can identify people who have previously been to sports sites, or target them contextually while they are there. We can also use data that shows what people search for, including the sports content and the keywords they use.

“A lot of this data is given away by the cookies on people’s machines, because we can see where they have been and their surfing behaviour,” she adds. “We can also infer their age and demographic, depending on their behaviours. Between this, bought data and supplier technology, we can build up substantial personas.”

The same applies in electronics retailing. Play.com has been working with agency bigmouthmedia to build profiles of how its most valuable customers have acted in the past, so it can advertise to its most lucrative leads.

“We’re able to look closely at those factors that are good predictors of a customer’s future behaviour,” says Chris Howard, head of digital marketing at the etailer. “We can identify which onsite behaviours suggest someone is more likely to convert, and we also know how this behaviour is affected by advertising.

“For our retargeting activity, where we can use first-party data, the cost is more than 15% lower than non-RTB-bought media, and the cost of acquiring a new customer is about 15% cheaper.”

Ultimately, RTB is also enabling brands to create new business models by using audience data they own or can access. Andy Mihalop, head of search and biddable media at Moneysupermarket says the company will be experimenting with creative forms of RTB in the first quarter of this year with the aim of launching it both onand offsite as a means of building closer brand relationships based on exclusive products.

“Data is power and our business model is always to supply providers with new customers more cost effectively than they can sign them up on their own,” he says. “That’s where the huge amount of data we own about visits to our site and the masses we can buy in from third parties is going to make a real difference.

“We’re only experimenting now but we’re hoping to get brands to launch exclusive products through us, maybe co-branding them,” he adds. “If a credit card issuer, for example, wants to target a certain demographic and we can reach it for them in sufficient quantities, we could co-launch the card through display on our sites and third parties.”

With many companies already using RTB, what will divide success and failure this year will be the levels of creativity used. As Play.com’s Howard says: “Because RTB enables us to cut out wastage and make more discrete, intelligent bidding decisions, we are able to drive a higher number of new customer sales for the same budget.”