Innovation in online advertising: How real-time bidding will affect media companies

You are browsing for lampshades on a department store’s website. You grow bored, and surf across to the website of your favourite daily newspaper. Mysteriously, the lampshades follow you: an advertisement for the same brand appears next to the article you are reading. Welcome to the world of real-time bidding, a cleverer and nosier way of selling advertising that is beginning to shake up the online media business.A decade ago online display advertisements, or “banners” as they were often known, were booming. Companies paid huge sums to appear on news websites. But, as the number of ads increased, people stopped noticing them. Now, for every 1,000 display ads that pop up, less than two are clicked on. Prices have slumped. Some media firms, notably News Corporation, have concluded that online ads will never bring in enough money to support a newspaper. Meanwhile search advertising, which reaches people when they seem to be interested in something, has grown from 1% of American online ad spending in 2000 to almost half, turning Google into a $172 billion company.

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