Why DSPs Are Applying AI to Programmatic Bidding

Why DSPs Are Applying AI to Programmatic Bidding

Ad buyers want less friction in determining ad rates

An interview with:
Tim Sims
Senior Vice President, Inventory Partnerships
The Trade Desk

The marketing applications for artificial intelligence (AI) remain narrow. But demand-side platform (DSP) The Trade Desk is aiming to apply AI to real-time bidding. Tim Sims, senior vice president at The Trade Desk, spoke with eMarketer’s Ross Benes about how ad buying is becoming more automated.

eMarketer:

What made you want to invest in building AI tools into your system?

Tim Sims:

Really just the sheer size of programmatic bidding. We look at 9 million queries per second. If you put that in the context of other mature marketplaces like Nasdaq or the New York Stock Exchange, it’s astronomical.

The sheer size of that bidding creates opportunities. The enormous amount of data exhaust that comes from 9 million queries per second allows us to plan against what would happen. We take all of that information and utilize it for forecasting. The other opportunity we have is utilizing that data to create more AI decisions, where the platform takes control to find the best execution path for a particular campaign. In some cases today, that's done in a manual fashion.

eMarketer:

This sounds like supply path optimization, a technique that DSPs use to increase their probabilities of winning a given bid and reduce their exposure to duplicative inventory and arbitrage.

Tim Sims:

Supply path optimization is definitely a component. It's really about evaluating as many data points as possible to find the most effective outcome for that particular advertiser at that point in time. But there are more components to [AI bidding], like price and performance.

eMarketer:

How is AI used to evaluate prices of programmatic auctions?

Tim Sims:

There has been a move toward first-price auctions. It has become even more important for the buy side to find an effective marketplace. AI can be used to find the market rate for that impression.

eMarketer:

Do you think the move to first-price auctions has affected ad rates?

Tim Sims:

The initial effect of first-price auctions over the past six to nine months, as more people look into it, is that you've likely seen an increase in CPMs across the entire ecosystem. What we need to do on the buy side is find the market rate.

Interview conducted on June 13, 2018

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