Along came ad exchanges which allowed publishers to provide agencies and advertisers with direct access to their inventory and more transparency than many ad networks had. Although auction-based models à la search were introduced, the target segments were often pre-set and companies had to work individually on an exchange by exchange basis.

What advertisers really wanted was the ability to bid on relevant people, across ad exchanges, at a price that was fair. And that’s what real-time-bidding (RTB) is offering.

Two things have happened to make this a reality:

1. Agency groups have launched their RTB / trading platforms to enable them to run campaigns across ad exchanges (via demand-side platforms), allowing them to control the targeting, maximum bid levels and frequency of exposure.
2. Targeting has been improved by plugging in data from the likes of Exelate and Weborama to be able to re-target relevant cookie pools, wherever they are online.

And this is as relevant to B2B advertisers as it is to B2C. To give a relevant B2B example: imagine a typical IT vendor looking to target SMB IT and business decision-makers. In the past, the only route to this audience online would have been the tech and business publishers. With real time bidding, advertisers will still continue to use those targeted sites, however they will complement it by:

1. Re-targeting customers off their own site on the networks / exchanges – either to cross / up-sell with targeted messages or even exclude customers if repeat purchases weren’t likely.
2. Re-targeting prospects off the back of the advertising they are already running on targeted sites by building cookie pools and re-messaging them when they are encountered on the networks / exchanges.
3. Even re-targeting from social profiles on Twitter / Facebook in the same fashion as above.
4. Targeting prospects that have been identified by data companies as SMBs and or are IT/business decision-makers.

Although some of the re-targeting options were available already before, RTB means that the agency / advertiser is in charge of who you are bidding for (as opposed to the ad network) and what price you are willing to pay in an auction environment.

Data was previously a missing piece as well, and it’s still not brilliant for B2B / technology. We need publishers to get on board, selling their cookie pools for one off, re-targeting use in order to get sufficient audience volumes. Some publishers like Future have already done this, and more will follow as they recognise the additional revenue stream they can earn from their premium audiences.

To give an example, 100,000 people on a site may generate 1.5 million impressions; however on the rest of the Internet, the same audience will generate perhaps 30 million impressions, most likely more. Selling the data will provide publishers with an opportunity to monetise their audience many times over.

The implications of real-time bidding are vast:

1. It’s changing the face of the online ad industry: demand and supply-side companies have been forming all over the place and ad networks are being squeezed as budgets shift to exchanges, leading to consolidation in the market.
2. Online media buying decisions are being done within the auction environment more and more, with less focus on relationships and the speed of decisions and optimisations are accelerating, à la search.
3. Advertisers will be paying closer to the true value of audiences, cutting out the waste and providing more targeted (and sequential) messaging along the purchase consideration cycle and focusing on optimising against their ROI goals.
4. Power is being taken back to the agency and advertiser from the ad networks.
5. Percentage share of display advertising will increase.

Real-time bidding is transforming the digital advertising landscape as we speak. WPP has been investing heavily in the MIG to capitalise on the opportunity, strongly believing that technology and data combined will transform the industry.

Here’s a helpful, if somewhat confusing, overview of the change that’s taking place in online advertising industry:

The policy is already in place in the US, and will soon extend to the UK, Ireland and Canada.

Furthermore, as a consequence of Google’s recent win over Louis Vuitton in the European Court of Justice and also French High Court that allowed competitive trademark keyword bidding, this will now be opened up across the EU. This is already the case in most other markets such as the UK.

Both policy changes are planned to come into effect on 14 September.

Read the full press release.

Earlier this year Banner organised a Search Huddle. This was an intimate session for B2B marketers with speakers from Autodesk, Avaya, and Microsoft.

While the event was rounded off by Cedric Chambaz, marketing manager at Microsoft and myself, by looking at the latest developments of search and what lies ahead, what generated the most debate was how to get the fundamentals right; what can you do today, to make a tangible difference to achieve your objectives?

Dominic Jukes, web marketing manager at Autodesk shared his experience of managing international paid search campaigns, and highlighted recent corporate structural changes that had helped facilitate increased ownership and subsequent coordination of their search marketing efforts.

Avaya, represented by editor-in-chief Jerome Toulorge, used paid search in a different innovative fashion. With the objective of generating sales through their channel partners, together we had created a paid search reseller program that was rolled-out with selected partners across Europe. The challenges faced where not so much about technology as it was about communication and education.

The event clearly highlighted that although search can many times be perceived as a highly technology focused marketing channel; the biggest factor to success is still the people driving it.

Why are search engines doing this? The adverts CTR is an important signal of “quality” for search engines. The logic is that if the advert matches the users query, they will click it. Therefore the higher the CTR, the more relevant the advert is assumed to be. And of course, since the search engines charge advertisers per click, their revenue increases.

The following chart outlines the main factors that determine the quality score for a keyword on Google Adwords. This quality score is then used in an algorithm that determines click-cost and position.

Due to this, it’s very possible that an advert appearing in top position is paying less per click than the one below. The search engines are of course maximising their revenues by the higher number of aggregate clicks that the top CTR advert is producing.

To make things more complex for advertisers, consider the following scenario: an advert with lower CTR is converting very strongly on the website, as it effectively pre-qualifies the traffic. In comparison a high CTR advert for the same campaign converts poorer, as it doesn’t seek to filter out unwanted traffic at the ad level, but instead on the landing page. Which should you run?

At this stage you would need to calculate the actual cost-per-action and volumes that can be achieved, depending on objective.

In practise, it’s difficult to make this type of direct comparison on a live campaign, due to the ever-changing nature of competition, quality score, positions and costs. However, from experience, typically for b2c the benefit of a higher quality score from optimising ad copies towards CTR (with resulting lowered CPC and higher position) outweighs the alternative, whereas for B2B it might not be the case.