The Unique Position of Hyperlocal Publishers in a Real-Time Bidding World

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your_ad_hereReal-Time Bidding (RTB) has been a rapidly growing phenomenon in the digital media market for the past few years. According to eMarketer, RTB by definition is a digital advertising technology that lets marketers buy and publishers sell display ads dynamically, in real time, on an impression-by-impression basis — it is truly getting down to the atomic level of digital media buying. This display advertising buying technology has grown from a $396MM market in 2010 to a projected $7 Billion in 2016, representing 28% of digital display advertising.

A major impetus of this new technology was the vast supply of publisher ad impressions and the need for publishers to monetize ad impressions beyond what their own selling efforts could achieve. Traditionally, ad networks filled this need by clustering relevant publishers together, allowing marketers to more efficiently reach their target market segments. But, the revolutionary introduction of ad exchanges (Right Media was the first ad exchange and invented the segment) and data targeting companies like Bluekai and Exelate paved the way for marketers to examine publisher ad inventory at the impression level and match it to a target profile they created from the use of first and/or third party data.

In this rapidly evolving world, publishers become relegated to a supply of cookies for marketers to target versus an audience targetable through the association of the publisher’s content and audience profiles — like, for example, reaching sports enthusiasts via a sports site. The net effect is a decidedly buyers’ market where the advertising value of a publisher’s content is diminished.  It is leaving many publishers scrambling to develop strategies around how best to play in this market by protecting their data and maximizing revenue.  Further, it has put significant downward pressure on publisher CPMs along the way.

What Are The Implications For Local/Hyperlocal Publishers?
There has been little speculation on how RTB could play out in the local (or even hyperlocal) level for publishers. Marketers can currently use geo-targeting data (mainly through a user’s IP address) as yet another data overlay for a geographically desirable audience. However, most sophisticated marketers know the downside of IP-based geo-targeting: relying on a user’s IP to determine location can produce inaccuracies of as much as 30-50 miles from the real location. The tighter the geography you are looking to target, the more amplified this problem becomes.

Advances in mobile GPS technologies have honed the accuracy of location based targeting, but this represents a different market segment altogether, and is different than targeting local markets based on where people live.

These IP-based targeting challenges represent a unique opportunity for local and hyperlocal publishers. After all, by definition, hyperlocal (community-based) publishers represent audiences within extremely tight geographies. As a result, they can be a highly effective way to target users that IP-based geo-targeting could miss. This dynamic gives local and hyperlocal publishers unique leverage in a world that uses data over publisher content for targeting.

Another big rallying cry in the RTB market is for more transparency, so that the marketer can know what exactly they are buying — especially as it relates to the content surrounding their ad message. The consistency of local content can help deliver more transparency to these buys.

In order for local publishers to unlock more value of their ad inventory in this real time bidding environment, three things are needed:

1. Aggregation: Most of the RTB buying now is by national brands. They require scale for an offering to be worth their while. Thoughtful aggregation and organization of local content and websites can deliver this for national brands looking to target multiple markets.

2. Greater Efficiency: Executing local ad buys across multiple websites can be extremely inefficient for media buyers. RTB is all about efficiency. Buyers need to be able to buy multiple markets with potentially different ad messaging for each market more efficiently than talking to multiple publishers, negotiating rates, issuing insertion orders, et cetera. Today’s RTB world enables this to happen.

3. More Transparency: Marketers and media buyers want to know what they are getting for their investment.  In this quantifiable world of RTB, it is easy to report on the numbers (impressions, clicks, conversions) but marketers want to know what is behind those numbers and they have been consistently beating this drum.  For example, exactly what websites did my ads appear, who responded, et cetera?

The above dynamics need to be in place for local/hyperlocal publishers to participate more effectively in this rapidly growing world of RTB.

Dick O’Hare is the CEO and founder of Local Yokel Media.