ONLINE ADVERTISING & REAL-TIME BIDDING BENCHMARKS, INSIGHTS, & ADVICE
TABLE OF CONTENTS 3
Introduction
12
Top Benefits from Online Ads
4
Executive Summary
13
RTB Awareness & Usage
5
Research Methodology
15
Understand How RTB Works
6
Marketing Medium Eff ectiveness ectiveness
16
Perception of RTB E ff ectiveness ectiveness
8
Online Advertising Landscape
17
Future Plans to Use RTB
9
Online Display Advertising Importance
18
RTB Vendor Landscape
10
Average Monthly Budget Spend
20
Analyst Bottom Line
11
Geographical Targets for Online Ads
21
Acknowledgements
INTRODUCTION Online display advertising has and continues to be a staple for digital marketers. marketers. For many years, advertisers purchased online advertising much like they purchase traditional print advertising: select a media property, buy space and schedule the advertising to run. In the past few years, a new approach for buying and selling online advertising has emerged: emerged: real-time bidding (RTB). This approach uses technology to sell online advertising through an exchange, where advertisements are purchased – and served – on demand. While online advertising has always had far more immediacy than print advertising, with RTB, that immediacy immediacy becomes almost instantaneous. Furthermore, the platforms that support support RTB don’t just blindly serve up ads online: they o ff er er the ad buyer the opportunity to purchase impressions for a specific audience across a broad spectrum of websites that have ad inventory to sell. RTB promises online ad buyers substantially more e fficiency and eff ectiveness, ectiveness, and Demand Metric conducted research, sponsored by AcuityAds, to understand the impact RTB is having on the online advertising advertising landscape. The goals for the study were to gain a better understanding of the online display advertising landscape, and the adoption, use and impact that RTB is having on it. Thank you to all those those who participated in the survey. We really appreciate your input!
Jerry Rackley, Chief Analyst Demand Metric
[email protected] | + 1 (405) 213 0050
EXECUTIVE SUMMARY A survey was used to collect the data for this study, and its analysis provides these key findings: !
!
!
!
A substantially bigger percentage of large companies (70 %) use online display advertising than do small (54 %) and mediumsized (53 %) companies, and large companies ascribe more importance to it. Online display advertising delivers a wide range of benefits, the most important of which is the ability to target consumers, followed closely by measurability. measurability. As a solution, RTB enhances both of these benefit benefit areas, yet the awareness of RTB is low, with only 11 % of respondents currently using it and 58 % having not heard of it prior to this survey. Better awareness and understanding of RTB stand in the way of broader adoption. Of those who claim a moderate to advanced understanding of RTB, 67 % of them perceive that online ca mpaigns with RTB are slightly to much more e ff ective, ective, compared to just 42 % of all RTB users in the survey. survey. The RTB market is still emerging eme rging and maturing. It’s a relatively level playing field for vendors at present, and price has not yet become the major di ff erentiator erentiator in their o ff erings. erings.
This report details the results and insights from the analysis of the study data.
RESEARCH METHODOLOGY The Demand Metric 2013 Online Display Advertising Survey was administered online over a period of June 20 th to July 5 th, 2013. During this period, almost 350 responses were collected, 317 of which were complete and not duplicates and were therefore included in the analysis. All members of the Demand Metric community community received email invitations to participate in the survey, and participation was encouraged through a random draw incentive for an iPad Mini. While respondent email addresses were collected collected in order to facilitate the prize drawing, no identifying information was considered in the analysis of the survey data. Summarized below is the basic information that was collected about survey respondents to enable filtering and analysis of data: Number of Employees: ! ! ! ! ! !
Zero to 25 (40%) 26 to 100 100 (19% (19%)) 101 to 250 (10%) (10%) 251 to 1,000 (15%) 1,001 to to 10,000 10,000 (12%) Over 10,000 (4%)
Primary Job Role of Respondent: Pres Presid ide ent, nt, CE CEO O or Ow Own ner (22 (22%) Marketing Management (44%) Market Marketing ing Consul Consultan tantt (11%) (11%) Sales Management (6%) Other (17%)
Type of Organization: ! ! ! ! !
Private ate Sector (60 (60%) Ad Agency Agency (6%) Marketing Marketing Agency Agency (12%) Non-Profit (8%) Other (14%)
MARKETING MEDIUM EFFECTIVENESS 60% said Email Marketing was a ‘most’ eff ective ective marketing medium, followed by 58% for Word of Mouth.
Marketing Mediums by Eff ectiveness ectiveness 200 180 160 140
189 186 163
120 100 80 60 40 20 0
111
108
99
97
85
82 55
45
While the focus of this study was online display advertising, it was necessary to get the big picture with respect to perception of e ff ectiveness ectiveness of a broad range of promotional marketing mediums. mediums. To do this, the survey asked respondents to identify, from a list of possible choices, any of the mediums that have been most e ff ective. ective. An “Other” category allowed respondents to enter any mediums not listed. Virtually all of these mediums can have an online component or influence. For example, an email marketing campaign can link to a website that also serves up advertising. Online advertising and content can trigger Word of mouth referrals, and online display a dvertising through social media is growing rapidly.
MARKETING MEDIUM EFFECTIVENESS – BY SIZE
Marketing Medium Eff ectiveness ectiveness – By Size of Company
80% 60%
71% 56%
40%
50%
59%
60% 49%
48%
Social
WOM
20% 0% WOM
Email
Social
Email
53%
49%
This analysis of marketing medium e ff ectiveness ectiveness looked at the data by size of company to determine if there are diff erences, erences, and indeed there are. It is interesting, although perhaps not surprising, that small companies (defined here as 100 or fewer employees) rank Word of Mouth as the top marketing medium. Few will argue that it is highly e ff ective, ective, with a perceived low cost, but the perception is also that it is di fficult to control. In the digital age, Word of Mouth and social media are virtually one and the same. Medium-sized companies (between 101 and 1,000 employees) rank Word of Mouth third, and it ranks ninth on this list for large companies (over 1,000 1, 000 employees). Whitepapers appear third on the list of e ff ective ective marketing mediums for large companies, and case studies (not shown) rank fourth. This may result from larger companies executing content marketing strategies, a strategy which many small and medium companies are still learning about and embracing. Both whitepapers and case studies are proven and excellent fulfillment collateral for online display ads and promotions.
ONLINE DISPLAY ADVERTISING LANDSCAPE Online Display Ad Usage by Company Size
How widely used is online advertising? advertising? The study survey asked the following question to find out:
80% 70%
70%
60% 50%
54%
53%
“Do you use or purchase online display advertising, either for your organization or on behalf of a client?” The results of this question were:
40%
Yes: 56%
No: 44%
30% The usage of online display advertising varies significantly between small or medium and large companies, as this chart illustrates.
20% 10% 0% Small
Medium
Large
The study did not gather data to understand why large companies use online display advertising more than small or medium-sized companies; the data only tells us that they do.
ONLINE DISPLAY ADVERTISING IMPORTANCE Only 49% of small companies, compared to 63% of large companies deem online advertising as important.
Importance by Company Size 70% 60%
63%
50% 40%
49%
53%
After evaluating usage, the survey asked survey participants to indicate how important online display advertising is as a component of their marketing or lead generation plans. Only 8% of respondents indicated that it was not important; for all other respondents, it had some degree of importance, which varied by company size.
30% 20%
The following graph depicts the percentage of respondents, by company size, indicating that online display advertising is “important” or “very important” as a component of their marketing or lead generation plans.
10% 0% Small
Medium
Large
Large companies, the biggest users of online display advertising, ascribe more importance to it as well.
AVERAGE MONTHLY BUDGET FOR ONLINE ADS Monthly Online Display Advertising Spend Budget $50K-100K 8%
$100K+ 3%
How much are companies spending on online advertising? 37% of companies are spending more than $10,000 per month.
2 Teams, 2 Managers
1 Team
To go deeper on this topic of usage and importance, the study analyzed the reported average monthly budget allocations for online display advertising.
$20K-50K 11%
$10K-20K 15%
< $10K 63% 2 Teams, 1 Manager
This data again shows that large companies are the most active in the online display advertising market space. Probably by virtue of their size and resources, large companies are spending much more for online display advertising: 52% are spending spending on average over over $20,000 per month. By contrast, 77% of small companies companies and 63% of medium companies are spending on average less than $10,000 per month for online display advertising.
GEOGRAPHICAL TARGETS FOR ONLINE ADVERTISING Geographical Targets of Online Advertising 100% 90% 80%
87%
70%
To continue looking at the online display advertising landscape, the survey asked respondents to indicate in which geographies they are targeting the online display ad impressions they are buying.
60% 50% 40% 30% 20% 10% 0%
What geographical regions are companies targeting with online display advertisements?
It is not surprising that North America is the leading geography in which online advertising is targeted.
27% 16%
13%
10%
When large companies are viewed separately from the aggregate data, they exceed the averages in the graph for each geography, most notably with 95% of large company respondents reporting they target North America with their advertising.
TOP BENEFITS FROM ONLINE ADVERTISING Top Benefits from Online Advertising 90% 80% 70%
82% 72%
60% 50%
54%
40% 30% 20% 10% 0% Targeted
Measurable
ROI
Regardless of size, companies in the survey agree that the ability to target their advertising is the top benefit of online advertising. This benefit coincides with with one of the primary advantages of RTB, but as this report will discuss, the awareness of RTB is low. The logical conclusion to draw from this data is that many companies c ompanies are missing the opportunity to more precisely target their online advertising by not using RTB. RTB improves the targeting of online advertising impressions at the impression level, not at the website level. During the RTB auction process, which occurs in the the milliseconds before an impression occurs (the page with the ad loads), a prospective ad viewer’s demographic and psychographic profiles are evaluated, improving the precision with which impressions impressions are served. The RTB process works not just for a single website with a d inventory, but across an broad spectrum of websites, extending the reach of an advertisers impressions as well – the third most important benefit for large companies. Lower cost did not make the top three benefits list for any company size segment, but it was fourth for all segments.
RTB AWARENESS AND USAGE Do people know what real-time bidding (RTB) is and how it works? 58% had not heard about it until just now.
RTB Awareness and Usage Our organization is purchasing MOST of our online display ads using RTB Our organization is purchasing SOME of our online display ads using RTB
2% Within this online display advertising landscape, to what degree is RTB in use and what kind ki nd of impact is it having?
9%
I was aware of RTB but our organization is not using it
The survey anticipated that RTB might be a new concept to many participants, so a question was constructed to provide a brief description and test awareness of it:
31%
I had not heard of RTB before now
58% 0%
20%
40%
60%
“For online display advertising, Real Time Bidding (RTB) allows display inventory to be purchased by the individual impression through a bidding system that unfolds in the milliseconds before a consumer consumer loads a web page. Before reading this definition, which statement best described your awareness of RTB?” Here are the results for all survey participants.
RTB AWARENESS BY COMPANY SIZE 60% of participants in large companies knew what RTB is compared to just 36% in small companies.
No Previous Awareness of RTB 70% 60%
64%
50%
54%
40%
40%
Considering that 60% of the survey participants identified themselves as belonging to a private company – exactly the types of companies that are using online display ads – the usage of RTB is low at 11%. Given that 58% of survey survey participants reported no previous awareness of RTB, the low reported usage is not surprising.
30% Even though RTB is not new, it appears that prospective users remain largely unaware of RTB.
20% 10% 0%
Small
Medium
Large
To provide more context about the awareness of RTB, Google reports that there are currently about 12,000 global monthly searches for “real time bidding”. Compare this search volume to a more familiar term associated with online advertising, “pay per click”, which currently receives 165,000 global monthly searches. The study data suggests suggests that RTB may at present just have a foothold in terms of awareness among those who could use it.
UNDERSTANDING HOW RTB WORKS It stands to reason that product/service companies, who each have something to sell, might have more awareness of RTB. This segment represents represents the largest largest set of responses to the survey, comprising 60% of the total.
Understanding of How RTB Works Product/Service Companies
Everyone Else
70%
In terms of the importance of online display advertising, 92% of this segment’s respondents indicated that online display advertising was anywhere from somewhat to very important as a component of their marketing or lead generation plans. Their awareness of RTB was average, but what about their understanding? understanding? The survey asked respondents who are currently using RTB to rate their understanding of it, providing response choices of “None”, “Basic”, “Moderate” and “Advanced”.
60% 60% 50% 40%
41%
30% 25%
20% 10%
28%
26% 15%
5% 0%
0% None
Basic
Moderate
Advanced
There is one other segment that merits a review when it comes to RTB usage: respondents who indicated indicated that their role is marketing executive, director or manager. This was the largest “Role” segment in the survey, with 44% of respondents identifying themselves in this way. All of these respondents are purchasing at least some of their online display ads using RTB: no one in this segment segment reported not using RTB.
REAL-TIME BIDDING (RTB) EFFECTIVENESS Perception of Eff ectiveness ectiveness of Online Ads Much less eff ective, ective, 5% Slightly less eff ective, ective, 9%
Much more eff ective, ective, 19% No diff erence, erence, 19% Slightly more eff ective, ective, 48%
67% of those who are using RTB perceive that it is slightly or much more eff ective ective than not using RTB. This study asked those respondents who reported some usage of RTB to rate the e ff ectiveness ectiveness of online display campaigns implemented with and without RTB. Understanding how RTB works does indeed change how its eff ectiveness ectiveness is perceived. Of those respondents respondents reporting a “Moderate” or “Advanced” understanding, 67% perceive that online campaigns with RTB are slightly or much more eff ective ective than those without. Compare this to 42% from the full set of responses, and the connection between understanding and perception of eff ectiveness ectiveness is impossible to miss.
FUTURE PLANS FOR REAL-TIME BIDDING (RTB) Future Plans to Use RTB
Any independent analysis of the market for RTB will indicate that as a solution, RTB is growing. Forecasting the growth of the RTB market was never never a goal of this study. study. What was researched at a basic level was consideration: what plans exist to use (or not to use) RTB in the future? Each survey respondent was given the opportunity to provide input by selecting a statement that best described future plans for using RTB, and 74% of the replies were “We have no immediate plans to try and use RTB”. Given the low level of awareness of RTB, this result is expected.
In the near future, 32% No immediate plans 68%
However, it seems unreasonable that those who had not heard of RTB prior to taking this survey could have plans to use it. The most helpful helpful view of consideration, therefore, therefore, should come from those respondents who were aware of RTB, but are not currently using it. Almost one-third of survey participants who are not currently using RTB but are aware of it have plans to use it in the near future. This is a fairly robust consideration ratio, in line with a solution that is growing and gaining traction in the market.
RTB VENDOR LANDSCAPE & MARKET MATURITY The RTB vendor landscape is an emerging one. The survey participants were asked to identify any RTB vendors they were aware of, from a list provided provided to them. In addition, there was an “Other” option that allowed respondents to fill in the blank with vendors not on the provided list. The purpose of the question was simply to test awareness, not determine market share.
Awareness of RTB Vendors 60% 50% 49%
40%
These results depict a market where one vendor enjoys a higher level of awareness, but almost all vendors have meaningful degrees of recognition. The typical pattern for a market like this is, as expansion slows, consolidation accelerates.
30% 20% 20% 20%
10%
18%
16%
14%
14%
12% 8%
0%
8%
8%
4%
The primary vendor challenge in the market today is awareness, both of the RTB solution category and for visibility as a vendor who provides it. Vendors are battling solution solution ignorance more than they are competing with each other at present. As the market matures, matures, this will change, vendors will acquire and be acquired, and the level l evel of competition will increase.
RTB VENDOR LANDSCAPE & MARKET MATURITY One other indicator of this this market’s maturity is cost. This survey asked participants to identify the online advertising benefits that are most important to them.
Awareness of RTB Vendors 60%
Price, or low cost, was not identified as a top three benefit for any size company. It ranked fourth on the list of benefits for all size companies. Price always matters, matters, but in emerging emerging markets, it tends to matter less.
50% 49%
40% 30%
As markets mature, vendors consolidate and the distinction between solutions starts to blur, price becomes a bigger issue in vendor selection. selection. Up till now, at least, this doesn’t doesn’t seem to be the case for the RTB market.
20% 20% 20%
10%
18%
16%
14%
14%
12% 8%
0%
8%
8%
4%
ANALYST BOTTOM LINE When it comes to online display advertising, the most important benefit it provides is the ability to target customers through this channel. As a solution, RTB excels at delivering a level of targeting precision that this survey survey reveals is highly coveted in online advertising. Yet, the awareness of the RTB solution, understanding understanding of how it works and usage, are relatively low. Given that twothirds of those who have a moderate to advanced understanding of how RTB works perceive that it outperforms online campaigns where RTB is not in use, it’s evident that there’s a knowledge gap. RTB isn’t an ideal solution for everyone, but it’s certainly right for more companies than are currently currently aware of or using it. Over half of the survey participants reported that online display advertising was important or very important as a component of their marketing or lead generation plans. Of this segment, a full 77% either had not heard of RTB before this this survey, or were aware of but not using it. The recommendation for these companies is to gain a better understanding of what RTB can do, as it is almost certain that some of these companies are missing opportunities. As for the vendors, the the task in the market now is educational. It is natural for vendors to compete with each other for business. Given the current state of RTB awareness, the vendors that do the best job of teaching, educating and being helpful about RTB and its benefits stand to gain the most in the long run. Focusing on competing with each other instead of helping helping educate the market is unproductive at present. Investing in high quality content that is easy to find is the best best path to success and establishing market share, share, as customers will reward vendors who help them the most with their business.
ACKNOWLEDGEMENTS Demand Metric is grateful for those members of the Demand Metric community that took the time to provide their input to this study. Demand Metric thanks AcuityAds, the sponsor sponsor for this study. AcuityAds is real-time bidding (RTB). Its advanced RTB platform is powered by proprietary machine learning technology that allows advertisers to hyper-target their digital consumers across online display, video and mobile campaigns. In less than 3 years, AcuityAds has grown from 7 people crammed into one room, to over 50 people North America wide. It’s been proven by Fortune 500 companies across North America to connect with the right consumers, in the right places, at the right times and for the right price.
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