AdityaTalks

So finally, i decided to write a blog post after so many years. Mainly because, Internet display advertising – the industry i work in is getting more interesting than it ever was. So many new terms which have popped up – SSP,DSP,RTB,DMP creating a lot of confusion for simple media buyers who at once just understood ad-networks and CPMs. But one thing is for sure – there is a technological revolution happening right now. Its first time in the history when media is meeting technology and data at such a large scale.

I had a couple of meetings this week with fellas from the industry who spend a lot of money on internet advertising and it looks like people are mostly unaware of stuff which is coming up. Probably because, it is very infrastructure and technology intensive.

So what is this all i am talking about ?

Lets crunch some numbers. I estimate, there should be close to 500 – 600 million ad impressions which are generated daily in India. This comes from more than a million sites around in the form of banner ads. Google monetizes around half of it, the rest half is spread between Yahoo’s Right Media exchange and hundreds of other ad-networks. Well, we all know that internet display advertising is dominated by ad-networks. If i do some rough reverse calculation based on assumptions. Consider there are 3 ads on one page, there should be 200 million page views a day. Consider if an average person browses 10 pages per day, it means about 2 crore people surf the internet regularly. They say (some industry reports- IAMAI, Juxt etc.) there are 80 million active internet users. So probably 25% of them come on the internet daily. Makes sense.

90% of that inventory is UNSOLD. Most advertisers do brand buys on premium sites and spend rest of money on google’s content network. The result is – so much of invetory which is unsold have just one way out to get monetized – CPL campaigns. Most networks try to run this campaign by buying cheap inventory from Right Media on a low CPM. You sometimes get RM inventory for as low as 0.05$ CPM which is again coming from another network. Why does this happen ? It is mainly a function of demand. Clients and Agencies are not willing to spend big money on networks. Why ? – Mainly because its an inefficient market. Not all sites are created equal. You can’t spend 50 INR CPM on 100 sites. Not all are worth the same price. Moreover, there is no transparency in many cases. Clients don’t know where there ads are running. What they need is CONTROL and TRANSPARENCY.

The new display ecosystem seems to be solving all of these problems with the advent of a concept called Real time bidding or RTB. There are two sides of RTB – the selling side called SSP (Sell side platform) and DSP(Demand side platform).

SSP is the publishers platform and DSP is the advertiser’s platform. Both of them trade each ad impression one by one. The publisher installs SSP’s tags on his website. Whenever there is an ad impression, it is broad casted to all DSPs with all the data about that impression(URL, size , IP address of the user, contextual data). The DSP’s reply back with an ad and a bid price or pass on that impression. The winners ad is rendered into the browser. All this happens in less than 500 milliseconds (half of a second). It enables highly transparent, efficient and granular pricing of digital media as well as the power to leverage user data. RTB solves almost all of the problems which the display industry faces. Apart from that, it opens up huge possibility of algorithmic and mathematical buying where you can fit mathematical models on ad and user behavior data. Then let the models decide what to bid on which ad impression.

There are many DSPs already in market. In total, i can count a total of 8 DSP platforms (RTB Enabled) globally only 2 of which are active in Asia. (Komli and Brandscreen)

Building a RTB Enabled DSP is supposed to be a big technological challenge because it is a way more advanced and complicated than what an ad-server is. You need to process 500 million ad impressions from India per day, it would be approx. 6000 requests per second. (This is not the number you are buying). This is what you HAVE TO process. Your algorithm decides which impression to buy and which to pass on. You would need a grid of many servers to process it. You need infrastructure to handle such a huge amount of data. (1000 GB+ per day). (To give you an idea, this is the kind of infrastructure required to run the stock exchange). Mechanisms to store, analyze this data. Moreover, all the sell side companies have different APIs standards which adds to the headache. Hence, i guess we will have to wait sometime till we see many other companies come up with such platforms.

Bigger issues are that, exchanges just allow CPM bids as of now though these prices are very low now. But in order to provide CPC or CPA services, the DSP system will have to put up a sophisticated auto adjusting algorithm to arbitrage the pricing.

Some of the points which you should look for in a RTB system are -

1. Never compromise on transparency. URL-level transparency HAS to be provided in reporting or else there is something wrong.
2. It should provide a fully self – service interface where you can upload campaigns yourself. No manual work should be required on DSP side.
3. DSP should fully disclose the media fees it keeps on the money spent by you.
4. On Request, the DSP should be able to provide you with logs of real time bids with all the granular details like bid price, win price of each impression for evaluation purpose.

To be continued. …….