Real-Time Bidding caused a sensation in the digital advertising industry but it's still extremely intricate for understanding. RTB is the most beneficial technology for all Ad Tech players nowadays. In this article, we'll highlight the most requested questions: what is RTB and how it works, RTB participants and how can RTB become beneficial for your business.
Reading time is 5 minutes, so let's have a useful break.
WHAT IS REAL TIME BIDDING (RTB)?
Real-Time Bidding (RTB) represents the process of valuing and bidding online for an ad impression in real-time. The process takes place online, via the online media marketplaces, where exchanges are made between the seller and the buyer.
In simple words, RTB is an exchange where three parties meet: advertiser, publisher, and user. Advertisers decide how much they are willing to pay for the display of advertising to a specific user. Publishers sell ad space on their websites based on an auction in real-time.
Bids occur in real-time: a chain of actions preceding the display of advertising to a specific user occurs within a fraction of a second while the page is loading.
RTB vs PROGRAMMATIC
Programmatic and real-time bidding (RTB) are often confused or attempted to be used interchangeably. Indeed, one of them is almost the same as the other, however, we still focus on the word “almost”. So, let's dissolve a tangle of misunderstandings.
Programmatic is an automated ad purchase format. It includes any automated purchase of advertising inventory through auction bidding or directly by agreement with advertising sites.
RTB is one of the types of programmatic, the essence of which is an ultra-high-speed auction based on audience data. Thus, RTB is a method of programmatic ad buying. There are many other programmatic methods, such as Private Marketplace, Automated Performance or Spot Buying.
Buying channels continue to evolve for a better connection between advertisers and publishers. That’s why important to understand the difference and maintain efficiency for better buying processes.
Let’s get back to Real-Time Bidding and sort out who are the main players in this game.
The interests of publishers are represented by SSPs (Supply Side Platforms). The main SSP goal is to increase the website’s income by offering its inventory to the largest number of advertisers and selling it at the highest possible price.
Advertisers work through DSPs (Demand Side Platforms), which provide the possibility of purchasing advertising from many sources, provide precise targeting, connect external data sources and allow flexible price management. (check out our Full DSP guide here)
There are also DMPs (Data Management Platforms) that accumulate data about users, their behavior, history of visiting websites, as well as phrases that they recently searched for in search engines.
HOW DOES RTB WORK
The real-time bidding process is so fast and subtle that it looks like magic. Lots of complex steps occur in a short period of time and we hope this explanation helps you to understand how the RTB process operates.
At the moment when the user loads the web page, the request is simultaneously sent to all partners connected to the publisher. Thus, all SSP, DSP and advertising networks immediately receive an offer to buy advertising.
Let's find out how RTB works in 8 easy steps:
- The user enters the website.
- The website sends a request to display ads to SSPs or Ad exchanges/Ad Networks.
- SSP places information about the request on the Ad exchange, in which the DSP participates.
- DSP will check the received user-id information in their own databases. (DSPs can also purchase data from a DMP).
- DSP makes a bet (if the user meets the requirements of the advertiser) Based on data specified in the SSP lot; own DSP data; data from DMP.
- SSP selects the highest bid from the offered options. Then it leaves the same bet (first-price model) or reduces it to the size of the previous bet and adds 0.1$ (second-price model).
- The website receives advertising from the auction winner and shows it to the user who has been targeted.
- The user sees the most relevant ads for him.
The mechanism seems complicated but the whole process takes less than 500 milliseconds (at such a time a person closes his eyes when he blinks).
Today, RTB is the most targeted, and therefore the most thought-out technology in the AdTech industry. Innovative algorithms and technologies allow all the parties to meet their goals. RTB advertising is beneficial for all participants.
- Buying impressions only for the target audience - users who are most interested in the offers
- The ability to show the most personalized advertising for a particular user, which ensures a greater interest
- Centralized campaign management, which simplifies the tasks
- Flexible and precise targeting that improves performance
- The ability to manage bids based on the value of an impression to a specific user, rather than pay the same cost per thousand impressions
- Increased revenue, because the auction will display an ad with a higher bid
- A better chance of making a profit and less of a negative reaction from users due to relevance to the interests of the audience
- No financial risks, because if everyone offers a price lower than the threshold, ordinary ads will be displayed
- See ads that are relevant to their interests and may be useful
- Can reset their virtual profile by simply clearing the cookies
We underlined the primary points about how using RTB is beneficial for advertisers, publishers, and users.
Real-time bidding presents a number of advantages when compared to the more traditional forms of advertising. RTB integrates, mechanizes and improves a value chain that has been disjunct, manual and uneconomical. It eases the process of running campaigns for both publishers and advertisers, accelerating the process and making it less labor-intensive, thus allowing for greater efficiency of the ads. This enhancement in efficiency and speed improves the return on investment for both parties involved in the advertising process.
The advertising industry is constantly responding to market challenges and uses high technology. Sometimes it seems that technologies are ahead of time. It is important to use strategies properly, combine them and choose the most relevant to your business goals. Then your advertisement will be a well-aimed blow to the target.