Advertising via Real-Time Bidding – Real Yet?
Thoughts about the costs of real-time bidding, and who will pay for it, now as a column on AdExchanger:
http://www.adexchanger.com/data-driven-thinking/real-costs-real-time-bidding-rtb/
For people interested in just playing around with the figures in this simple example themselves, here is a spreadsheet you can input your own values: Excel 2007 Spreadsheet
We would certainly welcome comments and thoughts: there is a lot of real value that is and will be created here, but there needs to be further thought given to how it will all hang together.
[...] This post was mentioned on Twitter by cpmadvisors, DoublePositive. DoublePositive said: Excellent article by @robleathern of @cpmadvisors on the emergence/slow-ramp of real-time bidding is display http://bit.ly/8Jin3A [...]
A few thoughts:
-For most large scale ad servers, variable serve cost is less then $.01/CPM.
-The largest variable in this cost is normally bandwidth (of which there is essentially none for bidded impressions not purchased).
-The second largest variable cost is normally related to reporting (of which there is none or essentially none for bidded impressions not purchased).
-I believe pre-serve decisioning / bidding is a minority component of the sub-$.01/CPM variable serve cost for most ad servers (so think $.001/CPM range as a ballpark for a RTB function – and that’s without optimizing for a RTB environment, simply using more legacy ad server processes and their associated costs).
-This cost will be included into the smarter players algorithms, so that when it becomes cost-prohibitive, these undifferentiated / low success rate / less valuable impressions are filtered out beforehand instead of real-time decisioned on. A smart algorithm could handle automatically bucketing impressions into larger groups, and understanding which of these it is cost-effective to RTB on, and which are not cost-effective to RTB on and therefore should be excluded or fall under more broad non-real-time bid strategies.