Programmatic, Real-time and Predictive: Display is Ready for Primetime

Search has been the Cal Ripken of online marketing—its “Iron Horse”—a dominant and consistent player that can always be found on the media plan, having commanded a large share of the online media budget for years. Search earned its prominence through clear-cut consumer intent data collected when consumers are clearly and explicitly looking for something they want.

But search isn’t the only channel capable of targeting on intent these days, as display algorithms are utilizing more data points for advanced targeting and improved performance. With Forrester Research predicting that by 2016, display spending will have tripled since 2011, while search merely doubles, it seems like display is ready for primetime.

As display transitioned to a real-time targeted medium, it was greatly informed by search. Real-time bidding (RTB), in the simplest terms, is about buying and selling display ads in a fashion similar to search, relying on the familiar auction-based bidding process and the immediate ad-serving environment. While search is arguably limited to keyword data, display takes all the accessible data points surrounding the unique user into consideration, which allows for smarter targeting technology. Like search, display offers geo and time-of-day targeting, and it can utilize keywords, but it also allows buyers to partition their targets, identifying the most engaged groups and building audience models that can find more targetable consumers. Furthermore, display’s bidding decisions take place in real-time, whereas search bids are somewhat asynchronous.

Predictive and precise

Display technology has developed so marketers can now look across the bid opportunities received on a daily basis and calculate how many impressions the advertiser will win, and the cost of those impressions. This allows buyers to see how incremental increases in bid price can drive more wins in real-time marketplaces, which in turn will increase the probability of conversions. Predictive media planning is now in play. If marketers want to average a $5 cost-per-action, they can look along the curve to see how many conversions they will get at that rate.

Programmatic and real-time display buying are already working to achieve efficiency and to uncover inventory that drives a high return on investment. Adding in predictive media planning unlocks further benefits for the marketer. First and foremost, marketers will be able to adapt on the fly. While marketers approach online advertising today with a specific budget and timeframe, the new world of display moves beyond a fixed number of ad impressions at a steady CPM. Instead, like search inventory, efficient ad serving fluctuates depending on the marketer’s changing needs, and the traffic and demand of sites where media is running. As a result, marketers will be able to allocate and optimize budget more effectively across key periods of their campaigns.

Changing agency relationships

The agency world is still reliant on contracts with vendors and monthly allotments of budget. With an adaptive display methodology, agencies can give their partners different benchmarks that speak better to the performance goal of a campaign, such as a conversion target, rather than a monthly end-date.

Forecasting is hugely beneficial here as well. A lot of the time, media budget is divided among multiple partners who each get a piece and fight to prove they can perform in the short-term. But with an improved understanding of performance in relation to bid price, advertisers can look at the bigger picture and what they’ll achieve with incremental spend—an additional $10,000 with one partner may very well create a bigger return than dividing that money among several.

This creates an opportunity to explore open budgets and new agency/vendor models in the display space. Rather than chasing as many conversions as possible in a 30-day period, an advertiser can build a long-term relationship with ad serving partners, tasking partners with a certain number of conversions per month or quarter. If the CPA is acceptable, the budget stays open, and advertisers know what they’re paying for each online conversion.

Changes in display technology and buying practices are leading to a shift, which could finally end search’s iron man streak. Search isn’t losing any of its appeal, so its reign at the top isn’t ending because of injury. It’s simply the fact that display technology has reached a point where it offers marketers a high spend-to-return ratio while simultaneously targeting consumers across the Web. This is what marketers have always wanted, and display has finally caught up.

Christopher Hansen is president of Netmining.

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