NEED FOR SPEED: Why the Online Ad Industry Is Converging on Equinix

Tejaswini Tilak

Thousands of advertising agencies and online media outlets negotiate billions of online display ads every day, 24 hours a day. In August, eMarketer estimated real-time bidding (RTB) on online display advertising would reach $3.34 billion in the U.S. alone in 2013-an almost 74% jump over last year. IDC predicts RTB spending worldwide will reach $20.8 billion by 2017, accounting for 28% of all online display advertising sales.

The benefits of RTB for ad buyers and publishers are unmistakable. Ad buyers like RTB because it improves their ROI per impression, especially when it’s effectively combined with real-time analytics to improve audience targeting. Ad sellers use RTB exchanges to reach more buyers for unsold inventory, which can raise their revenues per impression.

In a perfect RTB world, fair market value is set and ads are sold in less than 100 milliseconds, according to Google DoubleClick developer specs. This isn’t much time when you consider all the behind-the-scenes workflows and third-party data about prospective audiences that buyers must analyze before deciding if and how much to bid. Analyzing all that data for millions of transactions takes time.

What qualifies as acceptable speed for an RTB process is a continuously shrinking target. Consider that Google DoubleClick’s specs state its ad exchange will begin throttling ad buyers and demand-side-platforms (DSPs) that consistently fail to respond within 100ms. Google DoubleClick sets this max time limit based on how many milliseconds it takes for 85% of bidders to respond. This time cap has gotten progressively smaller as average bidding speed improves.

When you break down how time is used in the RTB process, you find that 80% to 90% of the sub-100ms duration is consumed by network latency (DNS lookup, making network connections or “hops,” and network congestion). Given the capabilities of high-performance servers today, actual CPU time is insignificant. So, RTB exchange participants wanting to raise transaction volumes and/or divert more to analytics should target network latency as the prime area for improvement.

Slashing network latency was BrightRoll’s solution for boosting bid rates on its video RTB ad exchange. In a 2013 trial, BrightRoll showed it could slash network latency by more than 80% and reduce unpredictability in bid times by taking its RTB traffic off the public Internet. BrightRoll did this by launching its VideoRTB+ platform within Equinix data centers. BrightRoll invited DSPs and other advertising partners to connect directly to its exchange platform using VideoRTB+, improving ad bid rates by 48% (see table).

Connection Type Average Network Latency Worst-case Latency Successful Ad Response Rate
Public networks 2.087 milliseconds ≈60 milliseconds 2.38%
BrightRoll VideoRTB+ 0.399 milliseconds 0.495 milliseconds 3.52%
Improvement gain 80.90% 99.20% 47.90%

 

Companies engaged in programmatic advertising should consider placing their RTB computing infrastructure in data centers where trading partners (ad networks, ad exchanges, DSPs, data providers, etc.) are already conducting business. By connecting to key trading partners via cross connects, companies gain several advantages:

  • Dramatically reduced latency
  • Reductions in bandwidth costs
  • Higher security for transaction by virtue of being on a private network

As programmatic advertising and RTB exchanges continue to evolve, it’s clear that time is money. This is not too different from how transaction speed has evolved to shape financial markets. As MediaPost editor Joe Mandese pointed out in his recent RTBlog, there’s a reason the real estate above and below the NASDAQ is so expensive: it’s because traders are seeking to reduce data transmission times for high-frequency stock trading. For RTB advertising participants, removing latency inherent in transmitting data across public networks gives ad buyers more time to analyze data to improve the precision and success rates of their bids.

Equinix’s Ad-IX (Advertising Internet Exchanges) ecosystems are home to leading companies in the display advertising industry. At least 85 advertising technology companies have colocated in one or more Equinix data centers around the world. The list of advertising participants within Equinix is growing fast and historically has nearly doubled every year.

If you’re interested in joining the Ad-IX ecosystem to connect faster to partners in the advertising industry, please contact Ad-IX@equinix.com.

 

Tejaswini Tilak
Tejaswini Tilak Senior Director, Solution Marketing Asia-Pacific