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There was a time, pre-digital and the modern web, when media planning and buying was, in simplistic terms, a relatively straightforward reach-and-frequency exercise. Google changed all that. In came pay-per-click and a whole new world of auction-based needs in terms of tools and talent - brand and agency side. It seemed only a matter of time before this same bid model pervaded the online display space.

With far too much inventory that lacks the supply-and-demand control of offline media such as television and press, ad networks initially thrived collecting remnant inventory, aggregating and profiling it via various behavioural algorithms before packaging it and pushing it out to buyers. But with so much inventory, both premium and 'long tail', cost per thousand impressions was driven down overall.

Enter real-time bidding (RTB) and the role of exchanges and demand-side platforms (DSPs) - a system that allows digital advertisers to manage multiple ad and data exchange accounts through one interface. Publishers and media owners now have the ability to attract better prices for their premium impressions by creating auction rules around their inventory. At the same time, agencies can minimise wastage inherent in mass blind network buys despite all of the apparent targeting abilities. RTB user segmentation is almost infinitely granular as it works on a by-user basis whereby each impression can be bid for.

'There has been major growth in the past six months with RTB, and the UK is catching up rapidly - the influx of US platforms into the UK has catalysed this and made it much easier to run all activity on an RTB basis,' says Tim Cross, display director at performance marketing agency Netbooster, which uses Google's Invite Media platform to display ads.

Leading the way

Pierre Naggar, managing director EU at DSP Turn, says the UK and the Netherlands are the most advanced, with a number of players in the RTB sector. 'Both these markets had a significant increase in volumes last year and we expect that 2012 will be the year of consolidation,' he says.

He adds: 'France and Germany are probably 12 months behind the UK and the Netherlands because local publishers are still a bit reluctant to make traffic available through exchanges.'

It is easy to see why RTB has gained ground so rapidly. In a nutshell, brands can get more for their money because with RTB, instead of assigning an arbitrary value to a bunch of impressions, the market will decide what each impression is worth, based on demand. 'This can be based on many different variables, the key being that brands can pay based on the value to them of each impression,' adds Cross.

Take-up is growing in sectors such as retail, particularly for those brands with a varied product base where one size does not necessarily fit all as far as the value of ad impressions is concerned. Travel and finance brands are exploring RTB's potential too, primarily due to the intensely competitive nature of these markets. Finance brands have also been quicker to leverage their customer data when it comes to compliance, allowing them to bid more intelligently and deliver further efficiencies.

AppNexus vs AdEx

So who is in the RTB market in terms of exchanges, and how are they developing their products? We asked Julian Ireland, head of strategy and digital planning at media agency the7stars, to assess how two key players stack up against each other. Ireland looked at Microsoft's AppNexus (previously AdECN) and Google's Invite Media (also known as Ad Exchange). Both platforms were reviewed using 10 criteria: current scale, business strategy, inventory, impression volume, category restrictions, agency support, user friendliness, DSP support, the uniqueness of features and future development opportunities.

Google uses its own technology, built on DoubleClick Ad Exchange (AdEx), while Microsoft uses AppNexus technology, effectively outsourcing its RTB capability. Microsoft narrowly emerged as the winner, scoring higher than Google when it came to agency support and current scale. The search engine, meanwhile, impressed with its level of user-friendliness and its business strategy - namely the available extent of integration with the rest of its technology and products, such as AdWords and DoubleClick for Advertisers.

Google's AdEx primarily acts as an exchange for a large number of publishers and long-tail sites, while Microsoft is focused on commercialising its own properties and portals by increasing demand, but the similarities between the two are telling. 'Both Microsoft and Google exercise tight control over the creative that can run on their exchanges, as well as hiding some domains, effectively rendering properties blind to buyers,' says Ben Downing, head of biddable media at Arena Media.

In Google's case, this is requested by publishers wishing to hide their availability on the exchange. Microsoft is obscuring the availability and pricing of specific domains and properties, but in both cases this is due to a fear of cannibalising direct sales prices.

Creative challenge

Downing adds that while the predictions for RTB's growth in the UK look impressive, delivering more premium ads beyond vanilla banners is a challenge. 'We're working hard to make expandable ads, video and even takeovers available to our advertisers via RTB,' he says. 'Our agency relationships have also helped us to use private exchanges to unlock premium publishers and ad placements, which are more attractive to advertisers looking to deliver campaigns beyond direct-response mechanics and metrics.'

The pace of change in the industry will also be crucial to Microsoft and Google's offering and is testing brands and agencies alike. Geoff Smith, head of activation at AOD UK, part of the Vivaki Nerve Center, says that with new inventory, data and technology providers rapidly coming to the market, and with traditional companies altering their products and services to take advantage of the migration to RTB, the ad exchange world has never been more complicated.

'Working with a good trade desk filters out a lot of the initial pain, but advertisers still need to invest time in understanding where the potential for growth and innovation lies in order to get the jump on the competition,' Smith says.

The RTB offerings from Microsoft and Google are at an early stage, in the UK at least, but it is clear that the more savvy publishers are starting to understand their true value - not just to commercialise their remnant inventory, but also to leverage data and technology to sell access to key audiences at a premium.

With RTB, never before has an agency or advertiser had so much control over such a large volume of inventory, while being able to optimise this in a granular way. The ability to find an audience is nothing new, but it is the ability to do so at scale, combined with highly accurate targeting, transparency and buying at a fair market value, that ultimately is driving the step-change in performance for many brands.

RTB platforms