With high growth and intense competition, news organisations need to stay on top of the latest developments to be competitive in the data-driven marketing era. Digital media poses business challenges, but it also requires news groups to understand key pieces of technology and terminology.

While the basic proposition of matching advertisers with audiences remains unchanged, in the digital world serving up highly targeted advertising has developed into the incredibly fast interchange of data and ad inventory between interconnected elements of advertising services platforms.  In plain English, as Ben Kneen at Ad Ops Insider says, incredibly powerful computers are running at companies such as Google’s DoubleClick and its rival Atlas that allow the buying and selling of highly targeted ads in milliseconds.

To get a strategic view of these ad technologies, we take a look at the challenges and opportunities for news organisations brought about by real-time bidding (or programmatic buying, as it is also known) in a discussion with digital advertising expert, Rodney Mayers, Chief Revenue Officer of data publishing company Proximic.

Initially one of the biggest challenges is understanding the terminology and the bewildering array of acronyms. This guide will help you make sense of it all.

Ad Exchanges – Just like a stock exchange, ad exchanges serve as an open online advertising market for buyers (publishers) and sellers (advertisers) to connect. Search advertising has captured a lot of the growth in digital advertising in the past decade fueling the development of search engines. While ruling the search engine market in many countries, Google acquired ad exchange DoubleClick, which rapidly became the biggest player amongst real-time ad networks. Google’s ad exchange helps advertisers to run display ad campaigns across the Google Content Network and on YouTube. By leveraging this platform, advertisers and publishers find it easier to manage and monitor ad campaigns in a multitude of formats and across thousands of websites.

Recently, major media companies such as Hearst and Condé Nast  and broadcaster NBC, all in the US, have launched their own private ad exchanges, enticing buyers with ever-more detailed data that advertisers can use to more accurately target the publishers’ audiences.

Data Management Platforms (DMPs) – Companies use DMPs to collect and analyse huge amounts of data from many different sources. DMPs are now so powerful that companies can track users and customers who visit from banners, Facebook pages, Tweets, mobile, video and even offline applications. They collect and analyse data from cookies, small files that keep website settings and also record user behaviour. For example, DMPs can allow e-commerce sites, publishers and advertisers to find out how many users who bought a big screen TV online also searched for high-end digital cameras in the past week.

DMPs consolidate user data into a centralised platform. They can be used not only for buying ad impressions, but also to help publishers achieve the long-term goal of attracting predefined targetable audiences. DMPs can help publishers gain more precise information about their audiences, which is useful not only in helping to sell more targeted, more effective advertising, but also in providing greater insight into the needs and interests of their readers or viewers.

DMPs can provide extremely useful insights, however publishers shouldn’t be misled into thinking that they are the sole source of useful audience data. “While DMPs do an admirable job creating segments based on data collected across multiple sites, publishers have their own treasure trove of data that often is under-leveraged for ad sales purposes,” says John Strabley, a media analyst writing for Business 2 Community.

Real-Time Bidding (RTB) – Based on campaign goals and audience profiles, real-time bidding allows ad buyers to bid for each and every impression. This dynamic transformation is called a “bidder” which can be built into any of the above platforms. For publishers, they can keep track of all their bids and build a picture of demand down to the advertiser level. However, one thing publishers should keep in mind is that data leakage is a potential risk in RTB platforms. Other parties using DSPs (Demand Side Platforms – see below) can read the stream of pages that come through in bid requests and use that to gain intelligence on their competitors.

Real-time bidding platforms still tend to be small relative to the total online advertising market, representing just $1.1 bn out of the total online advertising market, according to technology analysis firm IDC.

Supply-Side Platforms (SSPs) – SSPs provide publishers with an effective way to measure the monetization of mobile and website attention. Attention data includes a range of statistics such as how much time visitors spend on a site, the number of pages or pieces of content a visitor views per session and the percentage of return visitors to your site. SSPs allow publishers to jump into the ad exchange to make their inventory available and optimize selling of their online media space. More practically, they help publishers sell their inventory at a higher price because publishers can demonstrate more clearly how their content performs to advertisers.

Demand-Side Platforms (DSPs) – DSPs work together with ad exchanges and SSPs. These three elements support real-time bidding because they give buyers and sellers the ability to “value inventory on an impression-by-impression in real-time,” says Ben Kneen on his site, Adopsinsider.com. According to Kneen, the interplay of these systems enables targeted ads to be bid on and served to a browser in about 50 milliseconds.

DSPs submit a bid to the SSP along with an ad based on their valuation of a specific impression, determined from data about the user. The SSP picks the winning bid and serves up the ad. It is this complicated interplay of user data and bidding servers, the DSPs, SSPs and ad exchanges, that enables the near-instantaneous delivery of targeted advertising to users.

For news organisations, the key thing to remember is that the increasingly sophisticated use of user data is allowing the ever-increasing targeting of advertising. We’ll be looking at how to develop your advertising strategy in upcoming editions of the Digital Briefing.

Resources online:

• How Real Time Bidding, DSPs, SSPs, and Ad Exchanges Work by Ben Kneen at Ad Ops Insider
• Diagramming the SSP, DSP and RTB redirect path by Ben Kneen at Ad Ops Insider
• What is the difference between DSPs and SSPs? on Quora
• Demand Side Platform and why you should care by Marc Pocelli

Indonesians have enthusiastically embraced online socialising and appear to have little concern about privacy – they are especially interested in connecting with one another and sharing opinions and ideas on Facebook and Twitter. Similar to other Asian countries making the democratic transition, Indonesia has only recently opened up the market for social media, which has rapidly become the most popular platform for the public to engage in political discussions and community affairs. Soon after the market was liberalised, political activists began to use it to criticise policy and mobilise people. However, it is not just political activists who have embraced social media; politicians and political candidates are leveraging these networks to mobilize people around their campaigns and during elections.

To take advantage of the growth in social media, two digital agencies – Tridaya and Mediawave – have created Politicalwave.com, which specializes in monitoring and analyzing the conversations about political issues on social networks. Recently they have been tracking the electability of and ‘buzz’ – the level of online conversation – for candidates in the race to become Jakarta’s governor. In addition to monitoring social media, the service also breaks down the amount of activity surrounding candidates by medium, looking at coverage on news sites as well. At the bottom of the site, they have a real-time feed of social media activity, blog posts and news coverage about the candidates. Politicalwave provides visitors with clear visualisations of the trends the service is monitoring.

Social media analysis has been around for a while, but applying the methods not just to the buzz about products and brands but also politics and political conversations is a relatively new and still evolving practice. In Twitter-mad Britain, the service Tweetminster analyses the tweets of hundreds of MPs who use the social network. The political analysis start-up has moved from new media darling to a potent force for traditional media, forging partnerships with Reuters and the PR firm Freud Communications. Earlier this year, the Washington Post launched a service, dubbed the MentionMachine, to monitor the buzz around presidential candidates earlier this year as well, showing that social media analysis is being adopted even by traditional news organisations.

Once social media use becomes common not only amongst the public but also political figures and elected officials, it generates large amounts of data that can be analysed and can bring a new perspective to political research. It might improve or, at the very least, add to traditional forms of measuring political sentiment such as polls. The real-time nature of social media measurement can capture the public mood at more regular intervals than traditional polling.  The rise of such services also reflects the broader trend of how social networking has quickly become a potent, though sometimes unpredictable, political force. Social media monitoring also provides opportunities for news outlets to provide services for their audiences and also for their own journalists to help keep track of the buzz of political conversations on social networks. In fact, such services might just become the political polls of the 21st Century.

More than half of Asia’s internet users are in China, which has an online population of 513 million. Yet the internet penetration rate is not that high, only 38.3% at the end of last year. Compare that to 78% on average in western European countries. The necessary internet infrastructure is not yet in place in many areas of rural China. China is not alone in Asia when it comes to relatively low rates of internet use. Many other countries – such as India and Indonesia – also struggling with low internet penetration. Yet in all these developing markets mobile is on the rise, as it offers an affordable way to access the internet, especially in markets where desktops are often priced out of reach. With mobile use growing so fast across the region, it’s no wonder that businesses are following. By 2015, the Asia-Pacific region is expected to account for a third of all global mobile ad spend, $6.92 billion.

Another interesting phenomenon is that Asian users are more likely to use banking services and to shop online with their mobile devices. 62% of users check their bank balances on their mobile phones, and 41% use them to make online purchases, significantly higher numbers than in the US and Europe. Asian mobile users downloaded some 5 bn apps in 2011, generating $871m in revenue. Mobile is also closing the information gap between urban and rural consumers, connecting rural users to services like bill payments for the first time.

Moreover, Asian online advertising spend reached US$24.8 billion in 2011, second only to the US with $34.5 million. China’s internet advertising is expected to have an annual growth of 32.1 percent in the next five years. In terms of advertising and marketing, the impact of social networks is also noticeable. Asians are already highly engaged in social networks and as this trend intensifies, social media is likely to become the primary way for companies to engage with customers. But brands need to think carefully and define their strategies before engaging in social networking. ADMA cautions that: “Although 60 percent of social networkers say that social networks are a good place to learn about brands, 50 percent also say they don’t want to be bothered by brands.” ADMA also cautioned readers to note the fragmentation of online activities between different nations.

With the trend towards mobile gathering pace, mobile and social media are important elements in any Asian news business’s digital strategy.

The challenge for Facebook, for example, is two-fold. While India might be sprinting ahead of the rest of the world in terms of market size, Facebook captures much lower revenue per user outside of its US base. Before it floated on the market, Facebook revealed its revenue per user statistics: In the US and Canada, it earns $9.51, but in Europe, it earns only $4.86 per user. In Asia, that figure drops to $1.79 and even lower for the “rest of the world”, a mere $1.42. Some, but not all, of that difference in revenue per user is down to lower per capita incomes.

Another reason for the lower revenue is that Facebook users in rapidly developing economies access the site on mobile at much higher rates than in North America, and Facebook has been struggling to generate revenue on mobile at levels approaching what it makes from computer users. Nowhere is this a bigger challenge for Facebook than in India.

Targeting young people, Facebook has grown rapidly in India, at a pace of 22 percent every six months. Toward the end of 2014, India will equal, if not exceed, the US when both countries are expected to have 170 million to 175 million members.

India’s wired internet infrastructure is poor, so users have little choice but to turn to the mobile web. It is estimated that 30 percent of Facebook users there access it via mobile devices. And although there is a huge market for mobile ads in social media, Facebook itself is not sure whether its mobile business is working, even in developed countries such as US and UK. Currently, Facebook does not generate any meaningful revenue via mobile.

Like many other internet companies, not to mention news organisations, Facebook is looking for a way to monetise its huge and growing mobile audience. The social network has just started to introduce ads to its mobile version, including sponsored updates in users’ Facebook news feeds. Controversially, Facebook is also considering using ad targeting based on its users’ mobile app usage.

Facebook has to figure out how to turn its millions of comments, recommendations and likes into revenue. In addition to ads, it is exploring ways to allow people to buy clothing, furniture, music, a book, other content or goods when a friend has liked it. All you would need to do is click, and Facebook would direct you to where you can buy the item as part of an affiliate sales program. Facebook could become the ultimate social shopping engine, giving Amazon’s recommendation system and e-commerce juggernaut a run for its money.

As we’ve noted before, audiences are moving to mobile, but advertising revenues often lag behind the growth of digital platforms. News organisations need to make sure that they don’t cede this important digital space to search engines and social networks when it comes to developing new revenue. News organisations also need to explore the idea of moving beyond advertising to affiliate sales and other transactional business models to add to their digital revenue.

South African journalists are already using social media to promote and distribute their work, but they also need to tap audiences in social media for their expertise and experiences. It will help journalists reach out to new audiences and deepen their relationship with existing viewers and readers.

Recent research conducted by Ipsos GmbH, TNS Infratest and the Mobile Marketing Association found that 63% of South African smartphone users access social networks daily. The most popular social network is Facebook, which has about 4.2-million users, followed closely by LinkedIn and Twitter with around 1.1-million South African users. Undoubtedly, the medium plays a crucial role in setting and shaping news agenda.

According to a 2011 report from Pew Research Center’s Project for Excellence in Journalism looking at how people found and engaged with news and information in the US: “If searching for news was the most important development of the last decade, sharing news may be among the most important of the next.” The same could be said for internet users worldwide. Many people use social networks not only to connect with friends but also to filter and find news and information that is of interest to them. Their social networks become an editorial filter through which they see the world, a filter defined not by the editorial voice of a publication but rather shared interests with their friends and other contacts on social networks.

In its 2012 State of the News Media report, Pew suggested that we should keep this activity in perspective. Certainly, social networks are being used as pathways to news, but that doesn’t mean that users are completely foregoing more traditional ways of finding news.

… these social media news consumers have not given up other methods of getting news, such as going directly to websites, using apps or through search. In other words, social media are additional paths to news, not replacements for more traditional ones.

Even so, Facebook pages are now often the most popular pages for the top news sites. Media experts in South Africa have realized that the traditional media have been overtaken by social media outlets.  Wadim Schreiner, owner of Media Tenor South Africa, notes:

Standing titles like the Sunday Times, City Press as well as Mail & Guardian were quoted less by other media. While Facebook was quoted around 70 times by traditional media in 2010 and Twitter just over 50 times, Twitter scored 500 mentions and Facebook just over 400 in 2011.

Today, journalism needs to understand audience engagement and participation. A more engaged audience is a more loyal audience, and as the sources of information increase in the digital era, loyalty has to be a key strategic goal for news organisations. News outlets need to realise that their website is the central hub in a network of sites and services that will help them reach new audiences and build a more loyal audience. Audiences are finding news and discussing it with their friends on Facebook and other social media.

“What is concerning about the figures is less the fact that social media is being seen as a news source than that Twitter is itself becoming the news,” said Schreiner. He was worried that small but vocal groups on social networks like Twitter, could distort the news agenda. This isn’t a new phenomenon and as social media increases, journalists will need to understand how political parties, politicians, campaign groups and other interests use social media. Such groups have realised that social media can help them achieve their social and political goals. Rather than bemoaning this new development, journalists simply need to increase their awareness of these activities and the sophistication with which they report them.

Social media also offers a precise way of identifying and reaching out to potential audiences. It not only helps reporters and journalists to build an audience, but also helps to maintain and attract audiences through constant engagement. Many reporters have built up a rapport with key “tweeps”, contacts on Twitter, in areas they focus on. These key tweeps share a lot of news sources with a set of their own followers, which a reporter can count on to listen to and pass on their message. As audiences and political activity move online, journalists need to be at the front of this trend so they can stay relevant, reach new audiences and deepen the loyalty of current audiences.

In India, the mobile handset market witnessed 6 percent growth in the first quarter of 2012, while the smartphone market surged by 17 percent, says market research firm Gartner. Nielsen also found that as Indian mobile users switch to smartphones, they spend more time consuming content than making calls or sending text messages, which brings new opportunities for content creators, including news organisations, as well as advertisers.

New patterns of smartphone use also present challenges and opportunities for news publishers and advertisers. For advertisers, new ad technology such as real-time bidding gives them more control and an ability to target their audience. It also gives publishers more opportunities for monetization by letting them sell ad space through competitive auctions.

However, Vishal Bali, Regional Managing Director of Nielsen’s telecom industry group, noted that we are seeing significant resistance among smartphone users towards mobile advertising. As smartphone usage and the app space begin to mature, publishers need to look for new ways to monetize beyond the single ad network system. In particular they need to think about how to maintain the availability of various ad formats on different screen sizes.

“Indonesia continues to show strong growth rates as one of the most mobile-centric markets in this region. Smartphone adoption will continue to ramp up quickly — with Android leading the way — allowing brands even more creative and engaging opportunities to connect with their audiences,” said Phalgun Raju, InMobile regional director and general manager for Southeast Asia, Hong Kong and Taiwan, in a press statement.

The Indonesian advertising market is still dominated by television, which captured 78% of  the country’s advertising spend last year. However, mobile advertising impressions are growing rapidly, promising future growth in revenues. According to InMobile, the Indonesian mobile ad market grew by 99% year-over-year, from 13.6 billion in May 2011 to 27 billion ad impressions delivered in May 2012.

In terms of digital advertising, Indonesia is all about mobile. The country almost has as many mobile phones, 200 m, as it has people, 240 m. Most of the computers are in offices and schools, so for many in Indonesia, they connect to the Internet via their mobile devices.

Nokia phones delivered 56% of ad impressions in Indonesia, followed by Android-powered handsets with a 9.7% of impressions. Blackberry maker RIM and Apple delivered 4% and 3% of ad impressions, respectively. Even though the mobile advertising market in Indonesia is currently dominated by ads on feature phones, revenues are expected to shift from SMS-based ads to application-based formats as more users shift to smartphones. Although over 70% of the phones in the market are feature phones with a price below US$100 or US$150, sales of smartphones are experiencing rapid growth and are expected to surpass feature phones in the next generation.

 The growth of smartphones is expected to allow advertisers to build up more effective connections with audiences, with more highly targeted campaigns. Before the next wave in mobile advertising innovation, Indonesia will need to build an advanced telecommunication infrastructure. Slow connections will hinder the roll-out of application-based advertising.

News organisations should monitor this developing trend. Too often, news outlets have waited too long to adopt advances in advertising, leaving them to technology and telecommunications companies. By the time the markets reach significant size, news organisations often struggle after to play catch up after ceding these markets to new advertising players such as Google and other search engines or even tech companies like Apple.

While Facebook is dominant in most markets around the world, Odnoklassniki reached 38.1% of the Russian online audience in 2011, according to TNS, far more than Facebook’s reach of 24.7% of Russia’s internet users. Odnoklassniki also has a relatively higher concentration of users in the 25-35 age bracket in Russia, making it attractive for companies wanting to reach young consumers.

In addition to its domestic dominance, foreign users constitute an important share of the audience. According to Live Internet, Odnoklassniki attracts 29 million unique users monthly, and is particularly popular among the worldwide Russian diaspora. The site claims to serve 1 million users from the United States as well as 80% of the Russian-language population of Australia. In an effort to continue its international growth, Alexander Izryadnov, an executive at the Mail.Ru Group the parent company for the service, also announced that Odnoklassniki will offer localized versions to its Uzbek, Armenian, Georgian and Moldovan audiences by the end of 2012.

Today, a significant trend for social networks is that most of the traffic goes not to the website, but to the mobile version. Mali.ru group noted that the mobile version of the Russian site is even more popular than the web version among its diaspora users. The daily audience of the iPhone version of the site grew from 10,000 to 250,000 over the course of 2011.

With the international growth of Odnoklassniki, it demonstrates how Russian social networks can be a channel to help news organisations tap diaspora audiences, just as Facebook can do this for news organisations in countries where it dominates. The development also suggests that in order to leverage more audience on the social media, news organisations needs to employ a wider range of marketing strategies, including social media strategies, rather than focusing solely on their site.