Real-time bidding (RTB) is difficult to understand if you are a newbie in the world of the programmatic advertising. That’s why we’re going to clarify what RTB is and explain how it works and then discuss how RTB helps digital marketers achieve unthinkable goals in their advertising efforts.
Whether you are a marketer who is just starting with a digital advertising and want your brand to reach wider audiences, a company that wants to implement RTB into its marketing strategy, or an advertiser seeking solutions for higher ROI, you need to care about real-time bidding.
The Meaning of RTB in Digital Marketing
Compared to traditional media buying where agencies and publishers negotiate prices, programmatic technology introduced machine-learning algorithms, cloud-software platforms to make the process of buying and selling ads fully automated and efficient. Empowered by humans, this technology was programmed to process information in milliseconds, analyze and aggregate it, and draw calculations and even predictions from the data. In the 21st century, media buying evolved into an automated process called programmatic.
Programmatic technology appeared to eliminate human errors, facilitate buying media at a larger scale, reduce the paperwork and streamline processes. Real-time bidding is a type of programmatic buying — they’re not the same thing.
In a nutshell, real-time bidding is an automated auction empowered by machines that allow selling and buying online inventory on a per-impression basis in real time, instantaneously. Digital publishers use the supply-side platform (SSP) (quick guide to what is SSP) to make their inventory available for selling, and advertisers use the demand-side platform (DSP) (quick guide to what is DSP) to pick valuable impressions from the vast pool of inventory. Supply and demand meet up in a digital marketplace called ad exchange, and that's where all the transactions happen.
The 10 Main Benefits of RTB Auctions for Marketers
- Advertising campaigns of any size and budget capabilities: Any kind of media buyer, from a small, local business owner to an international, multimillion-dollar company can run RTB campaigns.
- 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 partners allows media buyers to choose the best inventory and premium audiences.
- Impressions at affordable prices: Marketers optimize their advertising budget by setting price floors and daily or monthly spend limits for a campaign. In this way, marketers can always be sure they buy impressions that go along with their financial objectives.
- Audience buying: With RTB auctions, marketers actually buy 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.
- Reaching the right audiences in the right time and context: Through RTB auctions, marketers deliver consistent messages to the relevant public. It is possible to target consumers according to their age, gender, social and marital status, behavior and interests, location, device, operating system, part of the day, and even the weather at the region where they reside.
- Eliminating wasted impressions: With precise 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). In this way, marketers pay only for impressions that bring value.
- Impression-by-impression purchasing: Rather than buying 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.
- Bid optimization tools and algorithms: RTB helps to minimize expenditures by finding the most effective keywords and focus exclusively on them.
- 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 most engagement and which websites are performing better, and receive granular reports and statistics. From such robust data, marketers draw insights and optimize their future campaigns for even better revenues.
- Running multiple campaigns simultaneously: Media buyers plug into multiple ad exchanges, SSPs and ad networks and manage these campaigns synchronously through a single interface.
How RTB Works
To enter an RTB environment and start participating in dynamic auctions, advertisers should use a software called a demand-side platform. DSPs can be acquired from the technology provider, and marketers should pay a platform fee to use this piece of software. Through the DSP interface, media buyers stock ad creatives, optimize campaign settings, set a targeting profile and choose a budget framework. Most importantly, the DSP will be connected to all major sources of supply to provide an advertiser with an instant access to the pool of inventory.
When setting up a DSP, advertisers must provide it with detailed data, such as what kind of target audience has to be reached, what kind of publisher websites are prioritized and which ones are blacklisted, how much money is to be spent in a day, and so on. DSPs are built with marketers in mind; therefore, they operate to buy impressions that bring the most value at the lowest price possible.
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.
So what actually happens when a user enters the publisher's website and the page begins to load? When an internet visitor enters the page, the user’s browser sends a publisher information about this user, which is stored in the user’s computer with the help of HTTP cookies. Next, a publisher's SSP packs the 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 the maximum information about the user. In the bid request, the publisher’s SSP specifies the minimum price that will be accepted for this impression and the currency in which transaction will be accepted.
When the bid request lands in the ad exchange, multiple DSPs start to process it. If the impression is valuable and resembles the targeting options and budgeting settings of the advertiser, the DSP would bid on it by sending a bid response. DSPs would specify the price that is ready to be paid for the impression. The advertiser’s 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 one. The winning bid gets the ad space, and the publisher’s ad server serves the ad creative on the web page in front of that user. The process takes milliseconds — just as long for the web page to load.
Real-time Bidding for Your Marketing Goals
With opportunities presented by real-time bidding, brands, media buyers and marketers can finally display relevant messages to their target audiences. RTB revolutionized online advertising, offering the possibility to purchase independently every impression rather than paying hundreds of dollars for a pack of a thousand impressions that bring minimum or no real value. Want to start buying ads on RTB auctions? Don’t know where to start? Explore our RTB products at https://smartyads.com/real-time-bidding or contact us at email@example.com, and receive a free consultation!