Real-Time Bidding: Everything You Need To Know

Real-time bidding or RTB is how ad inventory gets bought and sold, based on impressions. The whole operation can be likened to how financial markets work because RTB takes place on ad exchange platforms. This dynamic bidding process lets advertisers bid on the impressions; if the bid’s won, the buyer’s ad will be shown immediately on the publisher’s site.

The popularity of RTB can be explained by the benefits it provides to all parties involved in the process. Everyone—the advertiser (buyer), publishers and ad agencies—comes out a winner.

Online ad campaigns can see the following benefits from RTB:

  • More bang for your buck
  • Yield management
  • Actionable data
  • Retargeting opportunities
  • Creative optimization
  • Improved overall performance

Two of the biggest and most well-known ad exchanges currently available are Google’s DoubleClick ad exchange and Facebook’s FBX. Both are real-time exchanges that let advertisers buy ads on the exchanges that target users based on their prior, online browsing history.

Though RTB had big years in the past, some are optimistic that the best is still to come for this bidding process in 2014. They believe that rich media ads will take center stage, defined by ad copy that’s flexible and targeted. Even social media sites will be more accommodating to RTB by making their inventory (read: first- and third-party audience lists) accessible to ad exchanges. Demand side platforms or DSPs may just offer new metrics for the impact of direct conversions as well as the visibility of display ads on a company’s brand recognition.

But that’s not all. The CPM bidding model may see reform in 2014, so that biddable video sees cheaper and more direct conversion possibilities. Finally, private marketplace deals become more commonplace, meaning publishers get to make more of their premium content available to more advertisers.

Already a big deal in the advertising world right now, RTB is only set to get hotter in the near future.

Everything you need to know about Real-Time-Bidding

Everything You Need to Know About Real Time Bidding

Real Time Bidding (RTB) allows website owners to sell ad impressions (views) through an advertising exchange platform. Each impression is sold as it becomes available, in real time. The platform allows advertisers to automatically adjust their bid based on changing market conditions, and allows for performance feedback. Find out how it works, and how you can get started.

What is Real Time Bidding?

  • The RTB ecosystem has three parts:
    • Advertisers: Buyers
      • Demand Side Platform (DSP)
      • Tool that automates the purchasing of online advertising on behalf of the advertisers
      • DSP’s set buying parameters of campaigns and monitor campaign performance.
      • Exchanges: These are compared to the stock exchange, but for advertisers.
        • Software tool that connects advertisers and publishers
          • Facilitates the purchase of display inventory in real time through auctions.
            • Auctions take place in the milliseconds before a page loads.
        • Through these auctions, the publisher can maximize the price for their inventory while advertisers can purchase individual impressions at prices that reflect each impression’s value to the campaign.
      • Publishers: Website owners: Sellers
        • The publisher provides the inventory.
        • Some publishers may use Supply Side Platforms (SSP) to help better manage and sell their inventory.
          • SSP is similar to DSP.
          • Advertisers use SSPs to maximize their impression sales price, while marketers use DSPs.
    • RTB allows you to bid for ad space on a publisher’s website so your ad is possibly displayed when the website loads.
      • Maximum price is set before bidding begins.
      • Win impressions at $0.01 above the highest bidder.
        • If “Advertiser A” bids $2.00 CPM and “Advertiser B” bids $1.50 CPM, “Advertiser A” will win the impression at $1.51 CPM
          • CPM refers to “Cost per Thousand” impressions
            • An impression is each time your ad is displayed, not clicked.
      • Advertisers can place value on each opportunity to buy an ad in real time.
        • This maximizes their advertising spending.
    • RTB is being used more and more on premium inventory due to advertiser demand and the higher revenues it is yielding for publishers.

    RTB simplified:

    1. Publisher provides inventory to ad exchange, who is responsible for holding an auction. The DSP bids on behalf of the advertisers.
    2. The bid’s value is based on the value of the impression, as determined by the advertiser’s parameters set within the DSP. The bidding process ensures each impression is sold at a maximum price 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.

    Who does RTB Benefit?

    • Agencies
      • More control over the performance of the campaign
      • More efficient spending
      • Better, more targeted results for clients
    • Advertisers
      • More narrowed targeting
      • No more wasted impressions
    • Publishers
      • Much higher revenue on inventory since buyers maximize the value of impressions

    How does RTB Benefit?

    • Spending becomes more efficient
      • Since impressions are significantly more targeted, the spend goes much further and campaign goals are reached quicker.
    • Discover new trends
      • Since you can now learn about your campaign at the impression level, you can discover trends and insights in a new way – both for your best and worst customers.

    Sources

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    Discussion

    One Comment to “Real-Time Bidding: Everything You Need To Know”

    1. Thanks for writing this article, really need to learn more about advertising wisely.
      As an indie game developer with a super limited budget, need to squeeze every $ I can 🙂

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