Small, unobtrusive, unspectacular and yet revolutionary. The first banner advertisement went online on 27th October 1994. The digital advertisement placed by the telecommunications company AT&T was the foundation stone for the first form of online marketing.
A lot has been achieved since then. Back then, advertisements were sent in the post on a CD-ROM by the advertisers to the operators of the website, whereas now billions of pop-up advertisements are traded every day on global marketplaces in real time. The technical term for this sector is real-time advertising (RTA), or sometimes programmatic advertising. In RTA, advertising spaces are automatically bought and sold online in a matter of milliseconds. While advertisers usually buy advertising spaces through an auction process, visitors to a website can be shown individually tailored banner adverts.
Now it appears that the data and budget streams for the individual market players in the largely automated value creation process of the kind that is used by many companies that act as intermediaries can no longer be overlooked.
Ebiquity: only 15 cents per Euro of advertising is effective
To begin with, the technology behind real-time advertising promised huge efficiency advantages for advertisers, marketers and advertising recipients, but it is now increasingly steering the programmatic market into a crisis of transparency. Now it appears that the data and budget streams for the individual market players in the largely automated value creation process of the kind that is used by many companies that act as intermediaries can no longer be overlooked. The media consulting firm Ebiquity determined in a recent study that for every euro spent in the programmatic market, only 15 cents is promotionally effective. For small and medium-sized companies in particular, for whom having their own programmatic technology setup would not be financially viable and who are therefore dependent on partners, the risks outweigh the opportunities that would once have been opened up by real-time advertising.
Back to an efficient future - OTTO develops ORBID and the ORBIDDER
However, these problematic developments should not distract from the fundamental benefits of purchasing programmatic media. No other channel in the entire marketing environment offers this kind of technological foundation to adjust pop-up advertisements in real time depending on the user. This is what is required for an advertiser to reach (potential) customers at exactly the right moment, while the recipient benefits from adverts that are relevant to their interests.
Increases of between 55 and 75% in key performance indicators have been achieved since ORBID management came into use.
In order to make RTA transparent again and to emphasise its technological advantages, OTTO has for some time been developing its own programmatic technologies. This is why we have been using ORBID, a fully automated management tool, since March 2018, which recognises expensive intermediaries on the marketplaces and books online advertising spaces only where the best price can be expected. ORBID moreover ensures that ostensibly only those users who would find the adverts helpful during the buying process receive the pop-up advertisements. This is how OTTO is helping to make advertising seem less irritating, a criticism that is repeatedly - and unfortunately often justly - levelled at online marketing. This newly gained efficiency is also reflected in OTTO’s online marketing figures. Increases of between 55 and 75% in key performance indicators have been achieved since ORBID management came into use.
Even if recognising intermediaries is the right approach to adopt, this can only be the first step towards a healthy RTA market. With the ORBIDDER project, OTTO is continuing to work on an infrastructure technology that facilitates a direct connection between the ORBID manager and the advertisement inventory of German marketers. Intermediary service providers that do not contribute any added value will be excluded. As a result, OTTO will be in a position to make every euro invested in advertising promotionally effective. Marketers that use the ORBIDDERsystem will see their situation improve as well, in that they will be able to retain their advertising turnover without further deductions.
Transparency for OTTO and OTTO partners
Processes are being designed and technologies implemented as part of the ORBID and ORBIDDER projects that will guarantee a high degree of transparency and efficiency in the increasingly opaque RTA market. OTTO is currently working on various concepts to make these technological benefits available to its platform partners as well. The aim is to give all interested partners the opportunity to position their media budget simply and efficiently using OTTO technologies. They will also not need to worry about even one cent disappearing into the depths of the RTA market.