Programmatic advertising is swiftly taking over the digital marketing space. According to data by Statista, the share of programmatic advertising in 2021 was $418 billion and is expected to reach $725 billion by 2026. To understand how it works, you can read our guide on programmatic advertising before proceeding with this article.
Real-time bidding (RTB definition) is one of the most popular advertising methods. The number of businesses going for it is increasing yearly with a CAGR of 32%. If this is the first time you hear about it, it can be confusing. And we’re here to provide you with a detailed guide.
You’ll learn the answers to the questions: “What does RTB stand for in meaning?”, “How does it work?”, “How can I use it to maximize ROI?”, and more.
What is real-time bidding (RTB)?
At a very basic level, real-time bidding is a process for buying online advertising inventory. It allows media buyers to programmatically bid for ad placements on publishers’ sites in real time, as opposed to buying them in bulk via traditional methods.
RTB is performed through an automated auction-based system, where potential buyers and sellers of ad space are connected in an open marketplace. The winner of the auction gets the ad space. The process occurs almost instantly in real time and is fully automated.
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What’s real-time bidding vs programmatic advertising?
Knowing what RTB is about includes understanding how it is different from programmatic advertising space. Programmatic uses both auction-based and non-auction models while RTB is only about auctions.
Ultimately, it’s designed for selling and buying top traffic and ad inventory. However, the algorithm is being criticized for operating poor-quality assets as well. The use of this tool is under the responsibility of its providers.
What is real-time bidding in marketing?
It is the driving factor behind the majority of ad campaigns. Through it, advertisers can buy (publishers can sell) ad inventory, place their ads, and get results and success instantly.
RTB works on the basis of bidding per ad space. The entire process of auctioning occurs in milliseconds when the webpage is loading. The advertisers can set predefined parameters, like target audience, demographic, purchase intentions, etc., before the auction starts. Once the bidding is finished, the ads are displayed as soon as the website loads.
There are multiple stakeholders in the auctions, each managing different sides which are connected programmatically.
Supply-side platform
RTB is a helpful means for advertisers to buy and publishers to sell ad inventory facilitated by a supply-side platform (software). Such a platform connects publishers with multiple ad exchanges, demand-side platforms, and ad networks at the same time. It also lets multiple publishers sell ad impressions to a broader audience of clients and make the bidding range usable for maximizing the suppliers’ revenue.
Demand-side platform
A demand side platform (DSP) facilitates buying ad space. From the advertiser’s side, this is a typical platform for buying traffic. The advertiser uploads advertising materials (link to the landing page, creative) and sets the targeting criteria (GEO, browsers, languages, devices, OS, etc.). Thus, a huge number of different ad campaigns for different advertising formats and targets are consolidated within one system. Such a platform can also buy traffic directly from webmasters.
To participate in the real-time bidding process, advertisers need to sign up with a demand-side platform and pay a small fee to fund their accounts. DSPs facilitate the bidding process for the advertisers by providing them with flexible price of advertising space and setting up RTB campaigns.
Ad Exchange
An Ad Exchange is a platform where publishers and advertisers buy and sell ad space respectively in real time. The majority of the ad inventory includes and sells display, video, and mobile ad impressions.
SSPs put the ad slots from their publishers on амs. Hence, an Ad Exchange is the biggest pool of ad slots to choose from. An advertiser gets a specific ad slot taking into account individual parameters, like user behavior, location, time of day, etc.
How does RTB work?
The RTB process involves publishers, advertisers, SSPs, and DSPs working simultaneously to complete the auction within milliseconds. For better understanding, let’s look at how it runs:
- When people click on a page in their browser, the ad slots on that page start loading. During this time, the publisher sends the available slots to the SSPs (supply side).
- The information about the ad slot, the user, and what page they are on is sent to an ad exchange. The user’s previous behavior, time of day, type of device, etc., are the factors and rules that decide the price of the slot being auctioned and the highest bidder.
- The SSPs look at the data like demographic, location, etc., through website cookies and determine what ads might be relevant.
- DSPs help advertisers bid for ad slots effectively, define maximum bids, etc.
- SSPs look at the bids on the exchange and choose the winning bid based on their relevance with regards to the highest bid size, content, the bid request amounts, and other parameters.
- The auction is completed, and the ad is displayed on the web page instantly.
- The entire process occurs while the webpage is loading.
How much does real-time bidding cost?
The cost of real-time bidding can vary greatly depending on the type of ad space you’re planning to buy. Generally, you can expect to pay anywhere from a few cents to several dollars out of your budget per thousand impression (CPM) or per click (CPC). It can vary according to various factors, such as:
- Keywords in the ad,
- Target audience demographic,
- Location of the audience,
- Interests of the user,
- Scale of the ad campaign,
- Websites the ad will be displayed on, etc.
Why is it important?
Publishers and advertisers interested in real-time bidding find it practical and effective.
Regarding advertisers, it helps show consumers more relevant ads and access more targeted and efficient buying. It also allows to focus on the most pertinent inventory results and, as a sequence, gives higher ROI.
Talking about publishers, RTB works best for increasing revenue and fill rates thanks to broadening the range of potential buyers in an auction. Also, evaluating who’s buying what allows publishers to optimize ad campaigns and charge more for premium placements.
Benefits of real-time bidding for advertisers
The main benefit of RTB is the increased efficiency of the buying process. It gives more control and helps reduce irrelevant impressions thanks to better targeting. As a result, you get optimized budget and effective ROI, spend less time, but get multi-device compatibility with minimized fraud risks.
Benefits of real-time bidding for publishers
RTB is a way for publishers to find sources worth working with. It helps make choices based on latency, demand, ad space availability, and also bid rates. Due to it, the publisher may take complete control over the process and specify and match advertisers and their purchasing capacity.
Conclusion
The number of internet users is increasing, and targeting their interests and data collection is becoming more streamlined for companies. With its precision, RTB advertising is going to gain more popularity as it is less time-consuming and more targeted in its ad placement compared to simply buying ad space.
With affordable cost of entry and automation, real time bidding makes it a very lucrative system for multiple advertisers. With Adsterra, you can gain access to millions of high-quality and premium ad inventory in just a few steps. Please fill in this questionnaire if you need to buy premium traffic, or this one if you want to sell traffic in large amounts.
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