HOW REAL TIME BIDDING, DSPS, SSPS, AND AD EXCHANGES WORK

Let’s say you’re online one day and decide to do a little shoe shopping. You navigate to your favorite store, check out a pair of boots, add something to your cart and just as you’re about to checkout, the phone rings and you get distracted.  By the time you’re done talking to your friend, it’s late and you decide to buy the shoes later.

Then, the next day, you check to see who won the big game last night and you notice an ad from the shoe store you were on last night.  Not only is it an ad for the store, but the exact pair of boots you were looking at are in the ad!  Weird.  You decide to check your email and see that your mom sent you a link to a news article. You go to read the article and staring you in the face on the page is another ad for the same pair of boots, this time tempting you with a 10% discount!

How did the ads know you were shopping for shoes last night, and how did they wind up on all those different sites?  The answer is, probably through an ad exchange.

Ad Exchanges have been around for a few years, but have exploded in importance in the last year.  Along with Demand Side Platforms (DSPs) and Supply Side Platforms (SSPs), Ad Exchanges are dramatically changing the way digital media is bought and sold. If you are a digital marketer or publisher, it is a very exciting time to be working in the industry.

What makes these companies so innovative is how they allow buyers and sellers to value inventory on an impression by impression basis and in real-time.  That’s right, real time.  That means that when you clicked on your mom’s link to the news article and your browser requested an ad from the news site, the publisher put that ad up for auction on an exchange, marketers bid on that impression, and it was served to your browser in about 50 milliseconds, so fast it was indistinguishable from the time it took any other image on the page to render.  Welcome to the world of real-time bidding, or RTB, where marketers value each impression as it is created and the Ad Exchange is where it all happens.

source: http://www.adopsinsider.com/

New insights into Real Time Bidding

THE PROBLEM

Traditional online display advertising is inefficient.

For Advertisers, the cpm model of buying impressions in bulk is lacking because you are purchasing impressions for the same price per unit, even though each one has a different value to your campaign.

For Publishers, traditional display is inefficient because up to 70 % of their inventory is left unsold or sold for next to nothing. Further, for many small publishers, also known as ‘long tail sites’, there isn’t a sales team which can properly sell their quality, targeted inventory, leaving them wanting more from display.

As you can see, display advertising needs a shakeup to provide more value to both advertisers and publishers.

THE SOLUTION: REAL-TIME BIDDING

RTB allows display inventory to be purchased by the individual impression through a bidding system that unfolds in the milliseconds before a webpage is loaded by a consumer. The targeting and cost efficiency opportunities presented by RTB are making it a revolutionary force in the online advertising landscape.

HOW DOES RTB WORK?

There are 3 prominent players in the RTB landscape:

The Demand Side Platform

The Demand Side Platform (DSP) is a tool that automates the purchasing of online advertising on behalf of advertisers. Advertisers use DSPs to set the buying parameters of their campaigns and to monitor campaign performance.

The Publisher

The publisher provides the inventory. Originally, real-time bidding was only used on unsold remnant inventory, however it is being increasingly used on premium inventory due to advertiser demand and the higher revenues it is yielding for publishers. Some publishers may use Supply Side Platforms, or SSPs, to help better manage and sell their inventory.

The Ad Exchange

Ad Exchanges are often compared to stock exchanges, however an ad exchange is really a software tool that connects advertisers and publishers, facilitating the purchase of display inventory in real-time through auctions that take place in the milliseconds before a page loads. It is through these auctions that publishers are able to maximize the price for their inventory, while advertisers are able to purchase individual impressions at prices that reflect each impression’s value to the campaign.

The Real Time Bidding Process

At its most basic form, the RTB process unfolds like this:

1. The publisher provides its inventory to an Ad Exchange, who is responsible for holding an auction, during which the DSPs, on behalf of the advertisers, will place a bid on each impression.
2. The value of the bid is based on the value of that impression, as determined by the advertiser’s parameters with the DSP. The bidding process ensures that each impression is sold at the maximum price, as dictated by real time market demand.
3. Once the bidding is completed, the winner is chosen and the ad is served on the publisher’s website.

WHAT ARE THE BENEFITS OF RTB?

What are the benefits for agencies?

• Increased control over campaign performance
• Increased spending efficiencies
• Better results delivered for clients

What are the benefits for advertisers?

• Enhanced consumer targeting capabilities
• More cost effective reach and frequency
• Near elimination of wasted impressions and ad dollars

What are the benefits for publishers?

• Delivers higher revenues on inventory through opening that inventory to a buying market designed to maximize the value of each individual impression.

As you can see, real time bidding presents some amazing benefits for both buyers and sellers of online display advertising – are you taking advantage?

Reason for Indian Rupee Depreciation

Why is the Indian Rupee Depreciating?

The Indian Rupee has depreciated to an all time low with respect to the US Dollar. On 28th August 2013, the Indian rupee had gone down to 68.825 against the Dollar but the situation was somewhat revived by the Reserve Bank of India that decided to open a special window for helping state owned oil companies – Indian Oil Corp Ltd., Bharat Petroleum Corp and Hindustan Petroleum Corp.

The beneficiaries will be able to buy dollars through this window till further notice is provided. These companies, together, require about 8.5 billion dollars every month to import oil and it is expected that this will help them meet the requirements. This has had an immediate effect as is evident from the fact that the INR has started at 67 against the USD at the early proceedings in the Interbank Foreign Exchange Market. The question, however, is why this is happening. There are several reasons that can be enumerated in such a scenario:

Basic law of economics

As per the rudimentary laws of economics if the demand for USD in India exceeds its supply then its worth will go up and that of the INR will come down in that respect. It may be that importers are the major entities who are in need of the dollar for making their payments. Another possibility here could be that the Foreign Institutional Investors are withdrawing their investments in the country and taking them elsewhere.

This can create a shortfall in supply of the dollar in India. In fact, of late, the FIIs have been heading to greener pastures like Singapore owing to the greater operational efficiency and lesser bureaucratic problems that have unsettled the Indian business fraternity and hampered its overall economic growth.

This situation can only be addressed by exporters who can bring in dollars in the system. If somehow the FIIs can be wooed back, then this imbalance can also be addressed to a certain extent.

Price of crude oil

The worth of crude oil has been a major bane for India since it has to bring in the majority of its requirement from outside the country. The demand for oil in India has been going up every year and this has led to the present situation. All over the world, the price of oil is given in dollars. This implies that as and when the demand for oil increases in India or there is an increase in oil prices in the global market, there also arises a need for more dollars to pay the suppliers. This also results in a situation where the worth of the INR decreases significantly in comparison to the dollar.

Performance of dollar with respect to other currencies

The central banks across Japan and countries in the Eurozone have been bringing out a lot of money and this has meant that both Yen and Euro have lost their value. Compared to this the US Federal Reserve is giving hints that it will end the fiscal stimulus so that the dollar becomes stronger with respect to other currencies such as the Indian Rupee at least for the time being. Till now in 2013, the US dollar index has become stronger by 1.91%.

In an interview with the Economic Times, the CO-CIO of Birla SunLife Mutual Fund, Mahesh Patil has stated that the increase in worth of USD is the major reason behind the depreciation of the INR. The Federal Reserve’s decision to reduce its Quantitative Easing has also contributed to the present situation as every asset class has been affected by the decision.

Volatility in the equity market

The equity markets in India have been volatile for a certain period of time. This has put the FIIs into a dilemma as to whether they should be investing in India or not. In recent times their investments have touched an unprecedented level and so if they pull out then the inflow will go down as well.

As per a report in Business Today, the international investors in India have withdrawn to the tune of INR 44,162 crore during June 2013 and this is a record amount. This has also created a current account deficit (CAD) that is only increasing, thus contributing significantly to the depreciation of the INR.

Effects of equity market problems on investors

Now if the INR becomes weak then it will affect the investors who are putting their money in India. For the first time ever since 2012 the FIIs have been reduced to net sellers of debt based securities. The main reason behind this is the present state of the INR. The expenses incurred in hedging the unpredictable INR are reducing the yield differential that is the main area of profit for these investors.

India, in fact, is not the only emerging market where the currency has taken a hit. The situation is similar in countries like Indonesia, Brazil and Thailand. The bond markets in several countries like India are also taking a hit as the FIIs are withdrawing en masse. The exchange traded funds are also being redeemed as the global business fraternity is looking to cut down on risks.

Poor current account deficit

One of the main reasons behind the Indian government’s inability to arrest the fall of the national currency is the critical current account deficit. In the 2012-13 fiscal India’s CAD was measured at 4.8 per cent of the GDP. The government has been unable to come up with any new destinations for exporting its products and this has also hampered the growth in this sector. There are other crucial reasons here like the lack of one window for clearance purposes and procedural delays. Even areas where India has traditionally done well on this front have fared badly this time around.

Withdrawal of investors

Recently ArcelorMittal and Posco decided to pull out from their projects in India. Posco did not go ahead with a steel plant worth INR 30,000 crore that was supposed to be built in Karnataka and ArcelorMittal withdrew from setting up a steel plant in Odisha that was supposed to cost around 52,000 crore. There were lot of delays and problems related to acquiring land for the project. In fact in 2012-13 the Indian companies have spent more outside India compared to FIIs in India.

Downgrading of Indian stocks

Goldman Sachs, one of the leading banks in the world, has rated Indian stocks as being underweight. It has also asked investors to be careful given the concerns surrounding the recovery of the growth of Indian economy.

Condition of import bill

India’s import bill has been going up of late and most of this can be attributed to gold. This has also hampered India’s efforts to arrest the slide of the INR. Gold alone takes up more than 10 per cent of India’s import bill – in April 2013, 141 tons of gold were imported and it went up to 162 during May. The government took some measures that restricted gold imports to 31 tons during June but once again in the first 25 days in July the imports went up to 45 tons.

Contraction of Indian economy

The various important sectors of Indian economy such as manufacturing, mining and agriculture have seen poor growth in 2013 and this has made them less appealing propositions for the investors. During June 2013, the aggregate industrial production in India reduced by 2.2 per cent and in July 2013 the RBI predicted that in the present fiscal there would be a growth of 5.5% which was lesser than its previous prediction of 5.7%.

Future prospects of INR

In spite of all that has been said above it will be foolish to write off the INR completely and say it shall not rise from the mire. Experts are saying that the government needs to take some short and medium term steps that will help the economy get back on its feet yet again. It is only through continued efforts that the Indian government will be able to retrieve the situation. However, it will take a Herculean effort to help the INR get back to the 55 mark.

Soucre : http://www.mapsofindia.com

India's Rupee Keeps Falling and the Trade Deficit Keeps Widenin

Drop in India's rupee since the start of the latest quarter: -13.7%

It’s standard macro-economics: When a country’s currency declines, its exporters should soon get a boost as the lower currency makes their goods more competitive. By that rule, India should be enjoying an export boom. Since the start of May, the currency has dropped 23 percent, making it one of the world’s worst performers. Sure enough, exports did go up in July, rising 11.6 percent year-on-year, the best increase in more than 12 months.

Consumers worldwide shouldn’t expect to see a surge in Made-in-India products in the coming months, however. The July increase comes after a period of weakness: India’s exports dropped 1.8 percent in the 2012-13 fiscal year. And while the currency has been steadily weakening for two years, the decline of the rupee hasn’t helped narrow India’s current-account deficit. Instead, the trade gap has just gotten bigger, hitting 9 percent of gross domestic product in the first quarter. “The sustained and large depreciation of the [rupee] since mid-2011 does not appear to have had any near-term impact on the current-account deficit,” Mumbai-based Goldman Sachs economist Tushar Poddar wrote in a report published on Aug. 26. Chances of a short-term rebound driven by a weaker currency are “doubtful,” he added.

One culprit is rising prices inside India, with the consumer price index jumping 9.6 percent in July. India’s high inflation undercuts the competitiveness gains from depreciation, says Indranil Pan, chief economist at Kotak Mahindra Bank in Mumbai. “Exports are unlikely to get any significant boost,” he says. “Any benefit [from the weak rupee] will be offset by the fact that there is a huge inflation problem in India, and the cost of manufacturing is very high for local companies.” Rising costs of raw materials are making business challenging for Rajesh Mehta, chairman of Rajesh Exports, a Bangalore-based producer of gold and diamond jewelry. “There is no big benefit for exporters,” he says. “A stronger and a stable currency is always better for businesses.”

STORY: India’s Rupee Slides to a Record Low

For Indian exports to boom, local exporters need trading partners with healthy economies. There aren’t many of those around, making an export-led recovery difficult, according to Raghuram Rajan, the chief economic adviser who in September will take over as the country’s central bank governor. “The whole world is in a slow-growth phase, and it is going to be hard to increase market share in this environment,” Rajan told Bloomberg Businessweek in a March interview. “It is harder than in normal times.”

India’s structural problems also make it harder for local exporters to cash in on the weak rupee. Although information technology outsourcers such as Tata Consultancy Services (TCS:IN) and Infosys (INFY) have grown, thanks to low-cost workers in Bangalore and other Indian cities, the country’s manufacturers have suffered from India’s sorry history of underinvesting in ports, roads and other infrastructure. The “infrastructure deficit,” says Moody’s Investors Services sovereign analyst Atsi Sheth, “lowers growth potential and discourages foreign direct investment.” That’s one reason India, unlike China and other Asian neighbors, is not a big exporter of computers, consumer electronics, toys, or sporting goods.

There are grounds for optimism. The government is aware of the structural problems and wants to make large investments to improve infrastructure in a manufacturing “industrial corridor” between Delhi and Mumbai. Higher costs in China, meanwhile, are leading some labor-intensive manufacturers to look for alternatives in Asia, creating “a huge opportunity for India,” says Said S. Gopalakrishnan, president of the Confederation of Indian Industry. To take advantage of the opening, he says, India needs to revise rules that make it difficult for large employers to hire and fire workers. “Labor regulations must be placed back on the table for mass manufacturing,” he says.

STORY: India's Economic Woes Spread to Southeast Asia

With national elections due next year, though, such politically charged reforms are unlikely. Instead, Prime Minister Manmohan Singh and the ruling Congress Party are focusing on ways to win over voters in the countryside. The government won a victory on Aug. 26 with the lower house of Parliament approving a plan to provide subsidized grain to two-thirds of India’s 1.2 billion people. That might help Congress stay in power next year, but it also increases concerns that the government is backtracking on promises to cut the budget deficit. Over the past five months, there have been “clear signs of a reversal” in India’s austerity program, DBS warned in an Aug. 27 note, with second-quarter expenditures up more than 28 percent year on year, compared to a budgeted 16.4 percent increase.

Source : http://www.businessweek.com

Reason For Indian Rupee to Fall Against US Dollar

Indian Rupee has depreciated almost 50% in last 2 years. Since quite a couple of days it has been falling fanatically. I am all curious about a lot of thing in this matter. I have a lot of question to be answered:

·         Who defines the currency rates

·         Why is India Rupee Falling

·         What is the impact of this depreciation to Indian economy and common man

There are certain banks which are allowed to exchange different currencies of the world. These banks define the rate of each currency based on simple economic calculation “Demand and Supply”. Now if Demand of Dollar is more compared to Indian Rupee then INR will depreciate and vice versa.

These are the two factors that derive the Demand of a currency.

1)      Economic situation of the country

2)      Export and Import Deficit

But more importantly speculation plays a major in deriving price.

If we take India as an example we import oil from different nations but the payment is done in US Dollar.  We can earn this dollar by either exporting goods to different countries or by buying it from banks.  If we have to buy the dollars from bank then it will depreciate our Rupee value.

Now the most important question is what the impact of these currency fluctuations is in our day to day life. Well Again the answer is all the things that are directly dependent on Imports would become costlier and all the things that are dependent on Exports would be Cheaper. Example Oil, Gold, Telephones etc will become costlier and Services to US and textile industries would thrive from this situation.

Source: http://www.trafficchallan.co.in