Parks Associates: RTB will change online display advertising

In its report Real-time Bidding: The Online Ad Exchange, research firm Parks Associates predicts advertising revenues from real-time bidding (RTB) practices will be worth $7 billion in North America by 2017, says research analyst Heather Way.

With RTB, buyers bid for ad impressions and, if the bid is won, the ad is served instantly on a publisher’s site. This enables buyers to target customers in real time. The report estimates that RTB will be responsible for 34% of all online display advertising revenues by 2017. Aggregators such as Google, Yahoo!, Microsoft, and Facebook Exchange will play crucial roles in promoting this substantial growth.

“RTB offers buyers and sellers greater transparency,” Way says, adding that enhanced accuracy and better targeting of audiences are two additional benefits. “You’re buying at the impression level versus buying at groups of 1,000, which is typically the way online display impressions are made,” Way says. “You have more control over whom you’re targeting.”

If there is a factor that might inhibit growth in RTB advertising revenues, Way says, it is a lack of understanding within the industry. However, Way adds that at worst this will only slow growth, not stop it.

Way also acknowledges that “there is a fear among both the buy side and the sell side that [RTB] will replace human touches,” noting that “one person managing this technology can do the work of 20.”

The Parks Associates report focused on online display advertising revenues which, Way says, is a mature market. However, she says RTB will become a bigger factor in advertising on mobile, video, and social media in future.

“Buyers and sellers are adding inventory to these newer types of media,” Way says.

Practices around programmatic buying have become increasingly lucrative. At the IAB Technology Advertising Marketplace in June, Chip Scovic, Google’s head of media platforms, noted that the industry had grown from “a few thousand dollars” in recent years to a $2 billion industry in 2012.

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