Real-time bidding (RTB) is an online advertising concept that is hard to grasp for the programmatic advertising newbie because it might seem like it comprises a little too much components: from supply-side platform (SSP) and demand-side platform (DSP) to ad exchange (read here what ad exchange is) and ad network, all taking part in the auction, buying and selling ad inventory.

Over the past three years, the sale share of the real-time bidding in advertising has tripled in US, China, and the UK, according to Statista.com data. The Global Analysis and research provided by Auction predicts RTB in advertising $29 billions spend by the end of 2025. So now is just about the right time to find out what does RTB mean in advertising and how media buyers and sellers benefit from it.

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Digital advertising: A retrospective

Compared to traditional media buying, where agencies and publishers negotiate prices, programmatic technology is powered with machine-learning algorithms, cloud-software platforms that make the process of buying and selling as quickly as it is efficient.

In the 21st century, media buying evolved into an automated process called programmatic. Prior to this, advertisers had to negotiate with dozens of advertising systems about ad placement, the publishers had to look for advertisers to sell their inventory. In general, the advertiser had to take 42 steps before the ad impression was finally served to the user.

Real-time bidding online ads boldly marched into ad tech in order to eliminate human errors, facilitate buying media at a larger scale, reduce the paperwork and streamline processes.

RTB meaning is different from programmatic concept, RTB is a part of programmatic, it represents only one of the models of programmatic advertising, there are also direct ones, non-auction-based, where publishers contact advertisers directly (much more information about the programmatic ecosystem you can find here).

Real-time bidding introduction: unifying everyone

How could be real-time bidding definition wrapped up in simple words? In fact - this is a way of online ad purchasing that is facilitated by real-time bidding auction. The mechanics behind RTB auction are following: as a user opens the web browser and loads the target page he or she sees the ad banner - the product of the auction between advertisers wishing to serve an ad impression to this user, the one offering highest bid request wins. The whole process is automatized and takes no longer than 100 milliseconds to perform. Simple as that.

The whole real-time bidding model is like a universal system that ties together advertisers, publishers, and data providers together with a help of programmatic ecosystem components like DSPs that help advertiser buy ad inventory at lowest price and SSPs (much more information about what SSP is you can find here - Meet SSP: The Very Best Friend of a Digital Publisher) that represent publisher’s interests and help to sell their inventory at the highest price.

Real-time bidding guide for advertisers and marketers

To enter an RTB environment and start participating in dynamic auctions, advertisers should join a demand-side platform. DSP-systems simplify the process of ad inventory buying on a large number of advertising exchange platforms allowing the flexible price management for impressions and real-time bidding ad campaign set up. In order to start using DSP, an advertiser or marketer should register at DSP, pay a small fee to the DSP software provider to launch an ad campaign through the interface.

Real-time bidding how it works for advertisers inside DSP:

  • the demand-side platform allows to optimize ad campaigns;
  • set a targeting profile and choose a budget framework;
  • choose what kind of target audience has to be reached;
  • pick what kind of publisher websites are prioritized;
  • mark the ad inventory that should be blacklisted;
  • control how much money is to be spent in a day, how many ad impressions must be served and many other custom parameters.

Let’s find out what is an RTB network in deep.

So, on the other side of the programmatic reality, publishers use a software called a supply-side platform. It allows them to manage their digital advertising inventory and connect to demand partners through RTB.

Real-time bidding meaning that SSP packs the user data and sends a request to the ad exchange. A bid request sent by the SSP to the ad exchange is like saying, “Hey look, this person has entered my page. Who wants to display advertising here? How much are you ready to pay?”

The publisher’s bid request is actually a code that contains information about the user. In the bid request, the publisher’s SSP specifies the minimum price that will be accepted for this ad impression and the currency in which transaction will be accepted.

When the bid request lands in the ad exchange, multiple DSPs (much more information about what DSP is you can find here - What is DSP?) start to process it. If the ad impression is valuable and it matches the targeting options and budgeting settings of the advertiser, the DSP would bid on it by sending a bid response through the RTB protocol.

DSPs specifies the price that is ready to be paid for the ad impression. The DSP also sends the link to the ad creative in the bid response and mentions its parameters. After the publisher’s SSP collects all the bids responses, it analyzes them and chooses the highest. The following list represents what is a real-time bidding platform in terms of marketing benefits.

So, what is RTB in marketing? 10 proofs it works

  1. Ad campaigns of any size and budget capabilities: Today RTB is used by various media buyers, from small, local business owners with $100 ad budgets to international, multimillion-dollar companies.
  2. Exposure to a range of publishers: Through the RTB ecosystem, media buyers connect with a multitude of digital publishers, app developers, blog and website owners — locally and worldwide. Accessing such a large pool of supply-side platform partners allows choosing the best ad inventory and premium audiences.
  3. Ad impressions at affordable prices: Marketers optimize their advertising budget by setting price floors and daily or monthly spend limits for a campaign. This way, marketers can always be sure they buy ad impressions that go along with their financial objectives.
  4. Audience buying: With RTB auctions, marketers actually buy the publisher’s niche audiences thanks to cookie matching. The system uses first- and third-party data to analyze audience segments and build the profile of the target group.
  5. Reaching the right audiences at the right time and context: Through RTB bidding auctions, marketers deliver consistent messages to the relevant public. It is possible to enhance user visiting, targeting according to their age, gender, social, and marital status, behavior and interests, location, device, etc.
  6. Eliminating wasted ad impressions: With precise RTB targeting, marketers are able to show ads to people who are interested in their product or service and most likely to perform the desired action (click, call, subscribe or buy). This way, marketers pay only for impressions that bring value.
  7. Impression-by-impression purchasing: Rather than buying ad impressions in bulk and never knowing where they will appear and what will be the engagement rate, marketers bid on one impression at a time. DSP analyzes every impression by given parameters and offers a different price for it depending on its value.
  8. Bid optimization algorithm. Real-time bidding helps to minimize expenditures since it adjusts the bid according to the auction conditions in real-time. This helps to win a targeted impression. 
  9. Obtaining real-time actionable data: Over the course of the RTB campaign, marketers can analyze which strategies work and which fail, understand which creative drives the most engagement and which websites are performing better, and receive granular reports and statistics. From such robust data, marketers draw insights into how their real-time bidding campaign performs, optimize their future campaigns for even better revenues.
  10. Running multiple real-time bidding campaigns: One DSP connects to the multitude of supply partners: SSPs, ad networks, and ad exchanges. This way, advertiser can access a diversity of supply parties through a single DSP interface running one, two, or more DSP ad campaigns at the same time.

Real-time bidding: how to achieve your goals?

With opportunities presented by real-time bidding, brands, media buyers and marketers can finally display relevant messages to their target audiences. RTB has revolutionized online advertising, offering the possibility to purchase independently every ad impression rather than paying hundreds of dollars for a pack of a thousand impressions that bring minimum or no real value.

Successful RTB advertising is what SmartyAds specializes on. RTB for us it is a universal tool with a help of which every publisher can sell ad inventory to the most interested media buyer who is willing to pay the highest price and guarantee advertisers their ad is served to the right customer at the best traffic quality publisher’s site.

The examples of real-time bidding impeccable performance along with our deep expertise in online advertising allow us providing our clients with innovative programmatic advertising RTB products that established the highest effectiveness in ad tech. Our experienced professionals are eager to assist and support you in every stage of growing your RTB marketing campaign, from opening your personal account to tuning and optimizing your existing ad strategy in our system.

Ready to monetize your online business on open RTB auctions? Contact us and make your ad campaigns uber fast and uber effective.

 
Written by
Irina Kovalenko, CMO of SmartyAds
February 2018