Though closely related, real-time bidding and real-time optimization are ultimately very different. One is about price, while the other focuses on performance.
This year, U.S. programmatic digital display ad spending will reach $22.10 billion, representing 67 percent of the country’s total digital display ad spend. As real-time bidding (RTB), the most well-known aspect of programmatic, continues to garner a greater share of ad dollars, it is key that before marketers bid, they understand a concept that’s note quite as well-known.
Real-time optimization (RTO) involves the ongoing evaluation of the ad’s performance. Using self-improving algorithms and data to maximize performance, RTO ensures cost-effective engagement by optimizing to what is working best in real time. It also ensures that you’re delivering the best return on investment – a relative term to one’s KPIs, goals and budget, of course – for the buy.
Overall, RTO’s focus is on performance, while RTB is more about using the same methodology to focus on expenditure. RTB scours the market for the cheapest placement and digital interaction available. Unfortunately, in many cases, agencies and brands are getting exactly what they’re paying for.
With a sophisticated understanding of one’s market, RTO can be applied more strategically for a better end result. Here are four tips for doing so:
1. Consider the big picture
RTB can often support a “race to the bottom” to find inventory at the cheapest price. However, when analyzing from the perspective of optimization, the lowest priced inventory isn’t always the best value.
Consider the analogy of making an investment purchase. At face value, a luxury home might not seem like the most cost-effective option. But when considered in the context of the quality and longevity of the investment, the home can turn out to be “cheaper” than the more affordable option that can’t maintain value long-term.
2. Remember that context is everything
RTO often involves carefully curating the context in which your ad is placed. Advertisers invest substantial resources in creating the best possible deliverables and when they are not being highly selective about context, there is a loss of brand perception and a loss of opportunity.
You don’t want your great ad to be placed in a bad contextual next to low-level content. Not every product fits a luxury placement or a mass awareness location. The best use of online advertising is to pinpoint one’s audience and lead its interests towards your product.
What’s most important is to reach the correct audience, in the correct way, when it’s considering similar purchases.
3. Use data to adjust in real time
You’ve bought contextually-relevant inventory designed to deliver big picture ROI. Now the question is, is your buy performing?
While machine-driven companies can purport to use predictive analytics to maximize performance, that promise can be as false a hope as a magic elixir. There is only so much you can do with predictive analytics. Need to be convinced? If someone told you they had a formula that could predict politics, human behavior, or the stock market, you’d likely run the other way.
It’s the same for your digital ad buy. The only way to truly maximize performance is through obtaining and analyzing real-time data, making adjustments based on actual on-the-court performance of your campaign.
4. Use humans to manage the computers
A mixed human and RTO approach to campaign distribution delivers the best managed campaign results. The single-mindedness of algorithms and AI are extremely powerful.
However, without proper oversight, a campaign risks losing its performance and primary narrative when there is an over-reliance on tech. RTO is not a tool which can run an entire campaign; instead, it’s a tool led by trained professionals who monitor its progress over the period of a campaign.
RTB vs. RTO: The bottom line
RTB is just one way to use RTO technology, but RTB’s focus on finding cheap inventory dampens performance metrics. The best campaigns are run with clear goals, limitations, audiences and performance indicators. The best marketers understand the role of each, and performance is relative to a brand’s goals.
RTB may be the gateway drug to all RTO techniques and the future has yet to be written on this space.