What is OpenRTB in ad networks

The triumph of data

Programmatic Advertising: Auctioned advertising space

Despite the new General Data Protection Regulation, there is no way around data-driven, personalized advertising in the online advertising industry.

There was no doubt at the leading online marketing fair Dmexco: Programmatic Advertising has prevailed. While big brands, smart campaigns or new narrative formats in the media played central roles in previous years, there was essentially only one topic this year: Who has the best data and can best translate it into sales success? The advertising business now runs mainly via real-time auctions, so-called programmatic advertising. While a website is loading, the customer's data is analyzed in the background and offered on an auction platform.

The website operator signals, for example, that he can deliver advertisements to a 30- to 35-year-old man who is interested in single-board computers and Korean pop music using a 2016 iPhone. In a split second, interested parties can bid on this advertising space. The winner of the automatic bidding process then delivers his advertising, which ultimately appears on the customer's screen.

In 2017 alone, according to the Federal Association of the Digital Economy, 835 million euros were generated with programmatic advertising - an increase of 40 percent compared to the previous year. 38 percent of display advertising, i.e. advertising with graphic banners, is already sold in this way in this country.

Sports shoes everywhere!

The development is supported, among other things, by the increasing importance of mobile Internet use. There is simply much less space on the screen of a smartphone than on a desktop screen. In order to still reap the money that the production of content costs, the solution of many market participants is: The advertising campaign must be fed with more and more data.

This is particularly visible in what is known as “retargeting”: Anyone who browses through the offerings of an online shop and is interested in a certain sports shoe, for example, but ultimately does not buy it, will then see advertisements for precisely this sports shoe on a variety of websites.

There are few limits to the imagination: For example, adtech providers are already systematically recording localized weather reports in order to find out whether they should offer users cough drops or swimwear. You can estimate where the customer is from his IP address.

The big cookie comparison

Most of the time, the advertising industry does not leave it with such vague assignments. For example, if a retailer delivers advertising on their website, they can access the complete order history of their own customers and adjust the recommended products accordingly.

If the retailer also uses a cookie from advertising networks on their own website, they can track their customers across the Internet with an advertising campaign - not only on different websites, but even on different devices. All you have to do is match the corresponding cookie IDs.

For example, if a real-time marketplace advertises that a customer is accessing a website with a specific Doubleclick cookie ID, the retailer can compare this information with their own data. The advertising for the said sports shoe will then no longer only appear in the PC browser, but also on the smartphone and tablet.

The results for advertisers are enormous. The mail order company Otto presented the successes of its latest efforts in the programmatic market at the Dmexco. The mail order company was able to reduce its costs per click by 38 percent, while the ads led to 11 percent more purchases. The result: the retailer doubled the reach of its campaigns.

Real-time trading with advertising spaces

In order for the mass business with personalized advertising to function, a complex technical and business infrastructure is necessary. The website operators make their offers available on so-called “supply side platforms” (“SSP” for short). Advertisers, on the other hand, collect their inquiries on “Demand Side Platforms” (DSP). In between, the so-called ad exchanges mediate, which enable inventory to be purchased from various publishers in real time. The necessary data comes from a data management platform (DMP) into which information from various data sources is fed.

The basic requirement is a well-formatted advertising world. The Interactive Advertising Bureau (IAB) defines the ad formats permitted worldwide. The association has created the Open Real-Time Bidding (OpenRTB) protocol for the interaction between SSP, DSP and DMP. Corporations like Google operate their own marketplaces with proprietary protocols.

However, programmatic advertising also has disadvantages, as many advertising customers discovered last year: If the advertising delivered is mainly based on who is on the other side of the screen, the context in which the advertising appears is in the background.

For example, many of the world's largest advertisers temporarily stopped their campaigns on the YouTube video platform after it became known that advertisements from reputable brands appeared alongside videos from terrorist sympathizers. YouTube has now defused the problem and most advertisers have returned.

Another problem is the rampant advertising fraud. This is how fraudsters repeatedly manage to mislead and sell advertising playgrounds. The supply chains for advertising banners are so long and opaque that even major players in the industry do not promise their customers that they can offer a fraud-free product. Adobe promises its customers that a maximum of three percent of the budget paid will flow into the pockets of fraudsters.

Advertising barrier GDPR

The General Data Protection Regulation (GDPR) is an obstacle to growth. The online marketing group in the BVDW blames the new European regulations for having to lower its growth forecast for 2018 from ten to seven percent - a luxury problem, because seven percent is still a solid plus that is in the range of previous years.

The German advertising industry is now trying to prepare for emergencies with its own comprehensive data solutions. For example, Allianz, Daimler, Deutsche Telekom, Deutsche Bank, Lufthansa and the media group Axel Springer launched the Verimi network solution to share login and customer data in a GDPR-compliant manner. So far, however, the solution has received little response from end customers. The competing solution NetID, which includes ProSiebenSat1, RTL, 1 & 1 and Zalando, is due to go online in mid-October.

German data solutions

The advantage for customers of both solutions: anyone who logs in to one of the participating services can also use the services of the other participants at the same time and only has to enter payment data once. The advantage for the industry: The common data pool enables advertising campaigns to be optimized centrally and to counterbalance the large Internet companies Google, Amazon, Facebook and Apple.

Meanwhile, an attack on the entire programmatic advertising system has come from the USA. The privacy-oriented browser manufacturer Brave has lodged complaints with several European data protection authorities. These are intended to scrutinize the data transfer in programmatic advertising at Google and other advertising service providers. "Every time a personalized ad is displayed, intimate data about the user is sent to dozens or hundreds of companies," writes Brave manager Johnny Ryan: It is therefore a "privacy-free zone". According to Brave, programmatic advertising violates various provisions of the General Data Protection Regulation (GDPR). Article 5 of the regulation requires particular care when processing personal data, while Article 22 sets out hurdles for the automated processing of such data. Although the complaint mentions that the business was adjusted in the course of the GDPR, in the 32-page explanation Ryan doubts that the customers are actually sufficiently informed about the extent and consequences of the data transfer. ([email protected])

Brave's complaint: ct.de/yrqa