Compared to traditional media, digital is certainly fast moving, overtaking everything other than TV in about fifteen years, which is incredible. Within this fast moving space however the microclimate of real time bidding (RTB) is trading in dog years. Looking back over the last twelve months, the change is absolutely remarkable and it seemed that every couple of months the landscape shifted significantly. 2010 will be seen as a watershed year for the new display ecosystem with a huge amount of change, I’ve picked out five developments that we believe have been key.

1) Google puts its weight behind display

Twelve months ago, the exchange landscape was dominated by Right Media. The early marketplace pioneer, Right Media was way ahead in the space in terms of liquidity and actually smart demand side functionality. When Google started to really crank through the gears, the speed with which they have surpassed Right Media to become the dominant global player is truly astounding. Tapping in to the vast publisher base of Adsense and DFP meant publisher relationships were never going to be a problem and their vast account management resource with demand side partners has effortlessly created a liquid market. It was all summed up to me last week when Google had taken over all the escalator panels at Oxford Circus to promote their display advertising product. Within the same timeframe Right Media have scaled back their European support on both the demand side and publisher recruitment, and at this point are still not operating a real time marketplace.

2) Creative optimisation was the success story

One of the most the most successful new type of company in 2010 was the CPC remarketer (Criteo et al). Built out in the main on RTB infrastructure with creative optimisation at it’s core, this is remarketing at it’s most granular with consumers being not just retargeted but shown the last product that they viewed. With attractive CPC pricing and very high conversion rates, search heavy sectors such as retail and travel have invested heavily. More interesting for me is that this is the first ‘new’ product to come from the RTB ecosystem with most other activity being straight ad network style buying and optimisation.

3) Demand Side Platforms (DSP’s) finally arrived

First the SSP’s arrived in a flurry of VC money in 2009 announcing themselves as the saviour of publishers. This year it was the turn of the DSP’s offering more of the same but for the demand side. The pioneer was Invite Media followed by Appnexus and now Media Math, Turn and Data Xu. With banks of expensive, shiny, data centres humming in the Netherlands all are now beginning to staff their European offerings.

4) The data market didn’t reach Europe but data networks did

There has been a lot of excitement about the arrival of the data market in Europe. In an audience driven world with plenty of impressions to buy it has seemed to be the missing part of the puzzle. We’ve been holding our breath for twelve months for the onslaught of new entrants but they haven’t come or at least not how we expected them too. Perhaps the uncertainty over European privacy laws or simply waiting for the demand side to develop audience-buying skills has held things back but whatever it is we’re still holding our breath. Instead, interestingly, many data companies such as Media 6 Degrees and Bizo have taken a different course, either setting themselves up as a network or selling exclusively through a network in order to gain some easy UK traction. It will be interesting to see how this develops in 2011.

5) The infrastructure for European RTB was completed

All of these are interesting things that happened in 2010 but by far the biggest macro story is that the infrastructure for the new display market in Europe is complete. RTB is going to change everything, make no mistake, but Europe is a collection of idiosyncratic markets. It will develop in it’s own way and not follow the US lead script.

Big Predictions For 2011!

No retrospective look at the year could be complete without a set of predictions for the coming year. I’ve tried to keep them focused on the European market and they are based purely on our observations from being out in the market talking to publishers, agencies and advertisers. They are obviously by no means exhaustive and are broad in their scope rather than focusing on individual companies.

1) We will start to see the potential of RTB as a game changer

RTB is so new that nobody has really known how to sell it’s benefits to advertisers - whose budget this ultimately all relies upon! In 2010, RTB has in reality facilitated little more than the cheap purchase of media and access to retargeting technology for most media buyers giving them the chance to operate like an ad network. This model is broken and in 2011 this will change.

To take full advantage of RTB a new approach is needed involving more complex advertiser integrations, dynamic creative and granular bid strategies. It will be interesting to see the type of companies that drive this development and these strategies. Having a contract with a DSP simply give you the ability to buy impressions via RTB; to drive real value to advertisers in new ways there needs to be another layer of technology built out on top of DSP infrastructure that is customised to an advertiser and their sector. This is where Infectious sits with a combination of technology, data and service skills, all of which are critical to take full advantage of RTB for advertisers.

I expect by the end of this year there will be many more practical RTB case studies and success stories in the industry as a whole, rather than the current raft of theory and white papers.

2) Ad networks will have to become more transparent

The ad network model is not out of date but their black box approach is. Ad networks are threatened by this space and they are going to have to justify why they should be on media plans rather than a trading specialist, holding group offering or otherwise. Black box data segments and unnamed premium publisher relationships are not going to cut it going forward and so those that do have something unique are going to have to open up their technology to scrutiny and their inventory to purchase via RTB. In this era of transparency, those that do have something unique will continue to grow, some more of those that don’t will be bought or shut their doors.

3) CPC Remarketers will start to feel the squeeze

This has been one of the big success stories of 2010 but it will be interesting to see how this space develops in 2011. The creative technology that is core for this activity is being unbundled by a number of companies meaning that the barriers to entry for this activity are going to fall. This will mean smart media buyers will be able to integrate this activity into the wider digital mix without having to use a specialist company. With obviously high click through rates, large spenders will also start to question the CPC pricing model as being the best way to operate preferring the transparency and volume maximisation of CPM pricing.

4) Publishers will realise it’s their data that’s valuable

Premium publishers are agonizing about RTB. Many who have been persuaded to put some of their inventory up for sale have been disappointed by low CPM’s and poor quality ads. The problem is that their inventory on it’s own isn’t worth very much and it only starts to become valuable when the buyer is given some information on the impression and the user by the publisher. At it’s most basic, RTB simply facilitates a huge amount of information to be passed to buyers on the ad call. It’s therefore surprising that most impressions come through with very few if any data points attached to them. In this situation an ad on a new car site, which should be very valuable, is as valueless as a social media impression. In 2011 premium publishers will take control of their data and start to monetise it properly helped by some new companies that focus on this.

5) Search agencies will get involved

Most search focused agencies see this as a definite area for growth but most have done little more than spend some budget with a CPC remarketer in 2010. This should change in 2011 driven by the increased focus from Google on pushing their display portfolio but also because many of the search bid management tools will be releasing DSP functionality. Efficient Frontier were first but expect Marin, Kenshoo etc to follow suit. Given the ease then of buying display for companies using these tools it will be a natural progression to move in to display. However it will be interesting to see if search competencies can be easily translated across to display as the similarity ends in the fact that it’s bought via a platform.

Personally I’m looking forward to this year, things are starting to get really interesting and we’re moving beyond the initial hype to something much more real.

Martin Kelly (@martinkelly1) is Managing Partner of Infectious Media Ltd (@infectiousmedia)