• by Tyler Loechner , Staff Writer @mp_tyler, November 17, 2014

Real-Time Daily spoke with Valentino Volonghi, chief technology officer of AdRoll, a large retargeting firm, about the programmatic ad industry, the tech underneath it all and the growing pool of data that marketers have to work with. Volonghi shares his predictions on the future and puts Big Data into perspective (the Library of Congress has nothing on some of these data pools.)

Real-Time Daily: How has RTB technology evolved over the past five years?

Valentino Volonghi: There are multiple different ways in which RTB in general has changed. The two main points are:

Increasing competition among the main exchanges: This means that your algorithms have to improve or else you could lose out on valuable impressions and waste money on worthless ones. Prices increase rapidly in this competitive environment. We’ve seen significant increase in CPMs over the past year, and this means that the cost of buying the wrong impression has also gone up.

Private Market Places (PMP) deals and inventory access: It has become increasingly important as the pricing trend continues to have first-look access to premium inventory. PMP deals have become a great way to improve the quality and availability of impressions for our customers. Managing an increasing number of deals, though, becomes problematic without access to the tools that allow you to analyze the performance of your campaigns across the multitude of private deals on the exchanges.

RTD: Where does RTB tech evolve from here, over the next five years? Give me your conservative predictions and your bold predictions.

Volonghi: My bold prediction: Over the next five years, more and more inventory will be sold through major exchanges as opposed to smaller ones. Owning your own small publisher network is not going to be a significant differentiator, and eventually the publishers will be punished by a less liquid market.

We already see how some exchanges try to monetize their traffic by flooring the bids in non-liquid auctions; as more bidders evolve their data platforms, everyone will be able to see these trends and take advantage of them to increase their profits and lower publisher returns. Liquid exchanges are going to benefit both advertisers and publishers, and eventually everyone will realize that it’s a lot better to sell inventory to a large audience of buyers.

At the same time, in the next five years every RTB company will have to cross the bridge to buying media via native APIs as well as via RTB if they want to continue to offer the best reach and prices to their customers. Many RTB vendors today have fairly sophisticated algorithms to determine in real-time which geographical markets and which exchanges should be the focus of campaign budgets. With the integration of native ads APIs, the mismatch between a real-time platform like RTB and the batch platform that is the native API will introduce complexity.

RTD: Does retargeting technology need to reinvent itself? Does it rely too much on the cookie? If so, how does it need to be reinvented?

Volonghi: The biggest disruption that can come to RTB companies would be the large social networks building walled gardens of identity by heavily investing in their own programmatic offerings. As I mentioned earlier, it will be increasingly important to integrate the existing RTB infrastructure and technology with the native ad APIs that give access to the full potential of a network’s identity map.

At the same time, every company is going to have to create their own identity map to allow cross-channel attribution and measurement to take place. It will be interesting to watch it develop over the next few years.

RTD: You say you manage 1.5 terabytes of data per day. Can you put it into perspective for us non-technical engineers?

Volonghi: We actually manage 90 TB of data per day. To put this in perspective, every day our machines process over 60 billion events. A typical day across all major U.S. stock exchanges was made up of 500 million trades. Days of turmoil are around 1 billion trades — and all the exchanges combined only put out about 6 billion data points per day. 90TB of data is around 90 times bigger than the volume generated by all the big exchanges.

RTD: Is the amount of data managed per day rapidly growing? What was it three years ago? Ten years ago?

Volonghi: A few months ago we were at 50TB per day, last year we were processing 10TB each day, and a few years ago we were at only a few GBs per day. The trend is increasing rapidly because more inventory is coming online but also because we use more and more data from the exchanges to power our prediction algorithms to buy on them.

Our current total data stored amounts to over 10PB for the past 12 months, the entire digital collection of all HD videos of the Library of Congress and all the documents is half that size.

RTD: How much of a role does the underlying technology of RTB systems play into the larger conversations of ad fraud, the “speed” of the trades, the data used to target consumer, etc.?

Volonghi: The real issues of RTB come with scale: as the size of your audience grows to billions of monthly active cookies, with customers from many different verticals and different sizes coming from everywhere in the world who all want to buy traffic as efficiently as possible across all inventory sources.

There are a lot of levers to optimize for, and humans are typically really bad at making these types of decisions within such tight deadlines. [For example], our technology tries to lighten the burden by automating all of those levers, trying to maximize the time that our service teams can spend with the customers, and advising advertisers on the best strategy for their campaigns and broader marketing strategy for their brands.

RTD: Chief Technology Officer and Chief Marketing Officer. Are those two roles really converging? How, or how not?

Volonghi: It’s certainly becoming a stronger relationship, as the needs of the CMO to properly attribute marketing spend across the multiple channels is becoming a much more intricate web of different integrations and technologies.

The role of the CTO and CMO, however, remain separate now that technology is becoming so complex. To make everything cost effective and scalable, it requires dedicated vision, investment, and attention. Given that the CMO is the main customer of all the advertising and data technologies being developed today, it would be very unwise for the CTO to not listen very carefully to what the CMO’s needs are.