Addressing Digital-Out-of-Home Real Time Bidding
Addressing the Digital-Out-of-Home
Open RTB Controversy
By Adam Green, SVP and GM, Broadsign Reach
Real-time bidding (RTB) is not a new concept to the online and mobile advertising community, but for digital-out-of-home (DOOH), it’s much newer and for many media owners, it’s completely uncharted territory. DOOH has made great strides in its move to programmatic with more omnichannel DSPs like Adobe, Verizon Media, Media Math and The Trade Desk recently launching new DOOH inventory. However, much of the programmatic activity is still fairly “programmanual,” with a lot of manual work on the buy and sell sides to set up a campaign in private deals or with bespoke data targeting. There’s certainly nothing wrong with operating this way, but these programmanual transactions don’t allow DOOH publishers or buyers to capitalize on the full benefits of transacting programmatically. Enter open auction RTB.
“Open auction” stirs up a range of reactions among publishers from excitement to suspicion. On the one hand, it presents new opportunities, promising to help publishers increase their bottom line by getting their inventory in front of a larger audience of buyers who may not have otherwise seen it. On the other hand, there’s fear that DOOH’s move to RTB may drive down inventory value as we first saw with the embrace of RTB in online and mobile advertising. Working for us is that DOOH inventory is limited which provides positive pressure on any auction, and the inventory that has been digitized tends to be premium which provides further insurance against falling prices. Another concern is that open RTB will give publishers less control over their inventory. In actuality, all of the creative approval, price floors and other controls are still present in open auctions, while the presence of more bidders allows publishers to get more value out of their screens.
In casual conversations with publishers, I’ve often overheard open RTB compared to the stock market – an analogy that can be off-putting to buyers and sellers as it conjures images of volatility and predatory traders. However, programmatic DOOH trading on an open exchange doesn’t have to be a free-for-all where everybody sees every price and bid. We believe it should operate more like an auction house. The SSP builds the house, runs it and maintains it, and publishers show up with inventory to sell while buyers turn up to bid on it.
Auction houses have both private rooms and auction halls. Private rooms might be used to sell to buyers who don’t want the volatility of the open hall and are willing to pay a premium for that privilege, which is how much of programmatic DOOH currently operates. However, the technology is available today to support a more auction hall-type environment, where DOOH buyers can bid what they see fit for what they deem the most valuable inventory for their audience. For example, billboards front and center in Times Square are highly sought after by a number of brands. In this case, the DSP might bring the publisher’s Times Square inventory to the auction house, determine a starting bid, and let qualified buyers start a bidding war.
Open RTB, in this respect, actually gives publishers more autonomy over their inventory and allows sales teams to maximize their screen value by providing the tools needed to cook up any number of constructs offering buyers a first, second or last look at a slice of DOOH inventory. It’s what I like to call waterfall management. If a private buyer wanted to get an exclusive first look at the best available Times Square slot, say lunchtime during the week, the publisher could offer an exclusive first look at the inventory in exchange for a premium above-the-floor CPM. If that buyer declines, the publisher could have someone waiting in the wings with a different incentive. And if the first or second buyer doesn’t take it, the inventory can be pushed to open auction to get the best price buyers are willing to pay.
Embracing any sort of change can be difficult, but with open RTB, the ROI is clear for DOOH publishers. Though there’s some initial hesitation about the format, it’s largely based on misconceptions, and the advantages that publishers stand to gain in the transition to open RTB far outweigh any concerns. Open RTB will make it easier for publishers to stack deals on top of one another and ring the most value out of their inventory, while also revealing its real market value. Only by moving more DOOH inventory to an open auction can DOOH publishers and advertisers see the benefits that programmatic promised the industry in the first place.