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Dominic Trigg, managing director Europe, Rocket Fuel.

The sophistication of online advertising has risen well beyond anyone’s expectations in the past few years. Data has become the dominant force as those selling ad inventory continue to lay bare their offerings to the advertising exchanges, to be priced and traded in real time.

The power has swung back to ad buyers, who can now effectively target, bid and buy consumer ‘eyeballs’ by the millisecond, based on live audience information.

But this sophistication has brought with it massive complexity. Via most exchanges, ad planners have a selection of 12 audience attributes to choose from, with a total 145,710 segments of data available on which they can base their bid decisions.

And, if that choice isn’t enough, the number of different possible combinations therein, equates to 504,216,244,224,000,000,000,000,000, or 504 septillion. In fact, if it took a planner 10 seconds to review each option it would take 119,764,735,724,180,000,000 lifetimes to make the decision. What’s more, this is all before we even start looking at first party data that brands may also consider factoring into their campaigns.

Of course no one in their right mind is really attempting this gargantuan task, by manually reviewing data to make their choices. And yet, as heavy users of the exchange environment, Rocket Fuel still witnesses a large proportion of manual bidding taking place.

Usually this will manifest in the use of specific round-number bid prices for ad inventory and other ‘blunt’ tactics in what is now a very precise environment. What this means is advertisers are ignoring the potential of ‘big data’ to ensure they are reaching the right people. They are using tactics suitable for the purchasing of print advertising to buy in the age of digital.

Although adding up the data combinations available to today’s ad buyers is a fairly flippant demonstration, it does serve to illustrate the futility of manual bidding in an exchange marketplace. No human being can possibly digest all the data required to make an intelligent choice about whether, and how much, to bid in the millisecond time window when a piece of inventory is valuable.

As with many businesses before, we are witnessing the industrialisation of online advertising - or the rise of the advertising machines - and by and large, it’s time for humans to step aside.

Rather than being the intelligent arbiter at the centre of the targeting process, ad planners will increasingly become the hand directing and guiding the intelligent machines that can truly operate and succeed in this environment.

Complex algorithms and artificial intelligence are shaping the future of the online advertising market, to the extent that manual bidding will soon be swept away altogether.

As this process becomes obsolete, agencies wishing to trade effectively and offer their clients the best return will soon have no choice but to harness the most powerful technology available on the open market.

Agencies that aren’t adapting to the new world of online advertising will find competing increasingly difficult. Those who choose to ignore the writing on the wall risk being overrun as the machines rise and start to eat their breakfast.

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Published 29 November, 2012 by NMA Staff

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