Reflections On Real-Time Bidding & Search Retargeting In 2012

Looking back, 2012 was a big year for both real-time bidding (RTB) as well as search retargeting. According to a recent report by eMarketer, RTB display ad spend was estimated to grow 98% in 2012 from 2011 levels. My guess is that many in our industry (me included) feel that estimate is low.

As 2012 wraps up, it is a good time to take stock of what we learned and also to make observations that can carry us into 2013. Here are some of my thoughts as I think back over 2012:

Real Time Bidding Is Safe For Brands

As I look back over Simpli.fi’s 10 largest campaigns for 2012, I see that 9 of the 10 were for national brands. These high-volume campaigns delivered on sites that not only made it through Simpli.fi’s proprietary brand safety screens, but also in many cases, the brand safety screens of third-party ad verification companies. The effective cost-per-click (eCPC) for these campaigns varied from $0.46 to $3.31.

Clearly, brands are now finding a large volume of brand-safe inventory through real-time bidding, as well as an economical way to precisely target their audiences. Brand adoption of RTB advertising is a trend that I expect to accelerate in 2013.

Site Quality Matters For Performance Marketers & Brand Marketers

Many performance marketers initially approached RTB with the strategy of buying impressions targeted to their audience at very low CPMs. While that strategy can work in some cases, a more reliable way of beating cost-per-action (CPA) goals is to bid high for the right impressions.

A study performed by Simpli.fi on successful CPA campaigns (defined as those that delivered CPAs at less than 50% of the advertisers’ CPA targets) found that the CPMs paid on these campaigns were 90% above the average CPM on our platform.

In both site retargeting and search retargeting, when our algorithms find the right user on the right page at the right time, it makes sense to submit a high bid and win that impression.

Fixed Audience Segments Are A Relic From The Pre-RTB World

RTB revolutionized the online advertising by enabling advertisers to bid separately for each impression. However, while advertisers are now buying inventory one-impression-at-a-time, many are still buying audience segments in bulk, paying a single, fixed price for hundreds of thousands of users (or more) who have been categorized into an opaque segment.

Similarly, some advertisers are targeting their own site visitors as a monolithic segment, even though visitors to different pages on their sites may be interested in different products and have highly differentiated values.

Worse still, they are spending time and money to create these segments, which just detract value from their own data. Search marketers would never bid the same price on a bundle of keywords without knowing how each individual keyword performed.

Thankfully, the light is going on for display marketers who are waking up to the benefits of targeting against unstructured (or element level) data.

Data Freshness (Recency In Search Retargeting) Is A Big Driver Of Campaign Performance

While it varies from vertical to vertical, and indeed from keyword to keyword, recency is critical to driving both click-through-rates (CTRs) and CPAs. For example, in a recent month, we found that CTRs for search retargeting campaigns were 61% higher when the impressions were served within 24 hours of the user searching on the targeted keyword.

Similarly, recency is a highly relevant factor when optimizing search retargeting campaigns to CPA goals. Campaigns for products with short consideration cycles, such as business travel, will typically do better with short recency settings.

If we retarget a user 2 weeks after he has searched on “Chicago hotel,” it is likely that he will already have made his reservation. However, if we retarget a user 2 weeks after he has searched on “Toyota dealer,” then, there may still be a good opportunity to influence his actions.

Recency is an important parameter that both manual and algorithmic optimizations should consider.

2012 was a big year for real-time bidding, and also a big year for search marketers getting involved in display advertising. In 2013, I expect the lines to blur further, with more search marketers leveraging their analytic skills into the world of programmatic display.