The real dream of any advertiser is to grab the attention of the right person at the right time. A new approach to online advertising, known as real-time bidding, could help make that vision easier to achieve.
Real-time bidding involves auctioning off the opportunity to show an online display advertisement to a specific type of user at a precise moment. A San Francisco-based startup called Triggit recently scored $4.2 million in funding from two venture capital firms, Foundry Group and Spark Capital, based on the promise of its real-time bidding platform.
“Every person has a different value to different advertisers,” says Zach Coelius, Triggit’s CEO. He points to the advertising auction system used by Google for search keyword. People searching for particular keywords are bracketed together as likely having similar intentions. With display advertising, he says, the interests of the person visiting a page is less clear, and it’s more difficult to match an ad to the ideal user. It is increasingly possible to gather information about a user by looking at her browser’s cookies–tiny files that show which sites she has visited. But matching this information to advertising is a still relatively crude process.
Real-time bidding lets advertisers bid against each other to show advertising users based on different pieces of information about that person and their behavior. Bids and counter-bids are made in the microseconds before the winning ad is served up on a page.
Triggit’s technology processes about 15 billion Web impressions a day. The company works with 10 companies that provide data on Web users’ demographics and interests based on tracking the sites they visit online, and offers inventory from nine online ad exchanges.
When setting the price for a particular advertising opportunity, Triggit considers the user’s browsing history, the type of site currently being visited, and other details. The company then works out how much money the ads on a particular website are worth, and sets a price. An ad is automatically auctioned quickly enough to serve the ad to the user without perceived delay.
Coelius says his company has developed intellectual property in several areas: algorithms that deal with large-scale data and extract insights from it, technology that allows Triggit to process billions of impressions per day, and its user interface for advertisers. The company began to build its current technology in 2009. It received some of its initial funding from founders of Urchin, a company that was acquired by Google.
Coelius says real-time bidding helps advertisers deliver ads more effectively and drives up the prices that publishers can command for their ad inventory.
Seth Levine, a technology investor and managing director at Foundry Group, which recently invested in Triggit, says that real-time bidding is a new technology, and its potential impact isn’t yet clear. However, he believes that it promises “pretty groundbreaking” benefits to publishers and advertisers, particularly in cases when publishers have good data on the users of their sites alongside high-value content.
Levine was attracted to investing in Triggit because of the company’s ability to scale its technology to process a very large number of advertising impressions. “I don’t think all demand-side platforms are created equal, with the same ability to handle the firehose,” he says.
“We’re getting closer to buying people rather than buying dumb impressions,” says Marissa Gluck, founder and managing partner of the Los Angeles-based consulting firm Radar Research. She sees companies like Triggit as part of a growing trend, but adds that real-time bidding requires clever technology to work effectively and efficiently.
Gluck believes that advertisers and publishers will welcome real-time bidding. But while the benefits are clear for advertisers, she says, “the larger question is how they affect publishers.” Though companies like Triggit claim to help publishers by increasing their ability to sell inventory that might otherwise go unused, Gluck believes it’s too soon to say for sure whether real-time bidding will help publishers make more money.