Home Affiliate Marketing & Advertising Real-Time Bidding Advertising Explained

Real-Time Bidding Advertising Explained

by Adsterra Team
buy or sell your traffic via rtb

As disposable income and internet usage rise in countries like the United States, digital advertising with Real-Time Bidding techniques became more prevalent than ever. More businesses have adopted these programmatic ads techniques, so it’s safe to say that whether you’re an advertiser, publisher, or simply a marketer working with both parties, you must fully understand RTB.

In this article, we’ll break down this concept and tell you everything you need to know about real-time bidding. If this is your first time hearing about programmatic advertising, we recommend reading our Programmatic Advertising article to better understand this tech-driven industry before proceeding.

Table of Contents

What is real-time bidding (RTB)

Real-time bidding is the buying and selling of online ad impressions in real-time auctions that happen as the webpage loads. Ad exchanges and supply-side platforms often facilitate these auctions.

Looking for a reliable RTB ad network?

Who’s involved in real-time bidding

  • Demand side

To join an RTB dynamic auction, advertisers sign up with a demand-side platform. DSP systems streamline the process of purchasing ad inventory on ad exchange platforms by providing flexible impression pricing and real-time bidding ad campaign setup. To start using the DSP, advertisers must first register with them and then fund their personal account with a small fee.

  • Supply side

A supply-side platform (SSP) or sell-side platform helps web publishers and media owners manage their ad inventory, fill it with ads, and earn revenue.

On the publisher side, a supply-side platform connects them to ad networks and exchanges, which connects them to demand-side platforms (DSP) on the advertiser side.

Advertisers use this system to place digital ads in front of a specific target audience. SSPs send potential impressions to ad exchanges, where DSPs buy them on behalf of marketers based on targeting attributes and audience data.
Publishers can also maximize revenue by offering impressions to as many potential buyers as possible.

Unlike advertising networks that cater to advertisers, supply-side platforms cater to publishers (website, app, and media owners).
Supply-side platforms are often integrated into ad serving companies, and ad exchanges that work with both publishers (supply-side) and advertisers (demand side)

  • Ad exchange

An ad exchange is a tech platform where advertisers and publishers buy and sell ad space in real-time auctions. They’re most commonly used to sell inventory for display, video, and mobile ads. Ad networks, advertisers, and agencies typically buy ads from exchanges using demand-side platforms or their bidding technologies.

An ad exchange is essentially a large pool of ad impressions. Publishers toss their ad impressions into the ring, hoping to be purchased. Using demand-side platforms, buyers can choose which impressions they want to buy. These decisions are made in real-time based on information such as the user’s previous behavior, the time of day, the device type, the ad position, and other factors.

The difference between RTB and programmatic advertising

RTB and programmatic ad buying are often used interchangeably, so many believe they refer to the same thing. This is a common misunderstanding. Programmatic ad placement involves all buying activities that occur with the help of technology and offer separate platforms for supply (publishers) and demand (business owners) providers.

When we say RTB, we’re referring to a subset of programmatic ad trading that allows companies to buy ad spots by making CPM offers in a real-time bidding war.

Where is real-time bidding typically used?

RTB is typically used to sell premium spots with such high demands that it is difficult for publishers to sort through potential buyers. When combined with programmatic advertising, RTB allows website owners to increase the value of each impression by up to three times. However, choosing a secure platform is the first step in real-time bidding, whether you’re an advertiser or a media company owner.

Adsterra is a top-notch ad placement tool that connects publishers and advertisers from all over the world, offering secure bid placement, campaign, and ad inventory management solutions via OpenRTB.

Publishers and advertisers in real-time bidding (RTB)

Advertisers submit bids to DSP platforms, while publishers communicate through SSP platforms. The DSP stores User profiles, and third-party data from data providers. When a user enters the page, DSP makes a decision based on this information and also bids from advertisers, which includes the following points:
  • What is the best bid for a specific user? The highest bidder is the winner.
  • What would the ad’s content be
  • How much would it cost the advertiser? Naturally, the lower the number, the better.
As a result, publishers embed a dedicated pixel into their website, collecting information about users such as demographics, current interests, and purchasing intentions and sending it to the DSP every time they visit the page. Meanwhile, the DSP has lined up several advertisers waiting for their ads to be seen by users. Advertisers place bids per user to find the best one for their campaign with extreme precision. DSP launches an embedded decision machine to select the best pair with these user profiles and corresponding ads. SSP is notified immediately after a decision is made. SSP sends the ad code to the publisher, and the code is embedded in the page, and then the most relevant ad is displayed to the most appropriate user at the right time. The whole thing happens automatically in the blink of an eye.

What Are RTB Auctions?

There are four common auction types advertisers can participate in a real time bidding network.

Auction type #1. First-price

The first-price auction refers to an ad auction as we know it — the advertiser who bids the highest has to pay the bid and win the spot. This one is risky for business owners since they need to watch out for placing a bid that’s too high or too low.

First-price auctions aren’t the most popular form of RTB — they are used for private auctions with a small crowd of bidders.

Auction type #2. Second-price

This auction is similar to the previous considering that the person who offered the most lucrative bid wins — however, the winner doesn’t have to pay the price of the winning bid. Instead, an advertiser gets an ad spot at the cost of the second-highest bidder and a predetermined fee (for most platforms, it’s not higher than one cent).

To be considered in a second-price auction, an advertiser’s bid needs to go above the price floor set by the publisher.

Auction type #3. Guaranteed

This one is the early-bird-gets-the-worm type of auction. Essentially, a publisher sets a fixed CPM — whenever there’s a bidder ready to pay it, the auction is closed. It’s common for big brands to participate in guaranteed auctions.

Auction type #4. Waterfall

If no bidders clear the price floor, the only option for publishers is to hold multiple auctions at once, ensuring that more people bid and that the odds of selling an impression are increased.

Advantages of real-time bidding

  • Buying target traffic instead of ad space on the website

The ability to buy target traffic is the most crucial benefit for advertisers when using RTB to buy impressions.
The RTB server network sends an offer to buy an impression to the advertiser’s ad server in the form of a message (request). At the same time, the advertiser provides the user with unique information (country, user-agent, IP address, device type, operating system, demographic, and other available data). This information aids in more precise targeting and reduces the number of ineffective displays.
By purchasing traffic based on set parameters, real-time bidding protects advertisers from non-targeted traffic.
The ability to target a specific audience rather than all website visitors makes testing and optimizing the campaign cheaper, preserving the advertiser’s budget and ultimately increasing profits. In other words, it’s more likely target users visit the landing page and learn more. If they trust the advertiser’s product/service quality, they’ll probably convert.

  • Saving money and time at the ad campaign testing stage

It’s never easy to figure out which ad platforms feature your target audience. So typically, advertisers use a RON campaign to test a traffic source or a new offer. With real-time bidding, you can test an ad network’s entire platform. Advertisers can significantly reduce the costs of testing a new campaign and save time by purchasing better-targeted traffic at the auction.

  • Easy RTB campaign scaling

As part of the global campaign, you can connect new GEOs, test out languages on landing pages.

  • Using user data for retargeting

You can use the user data you’ve already collected to launch retargeting campaigns alongside new campaigns. By connecting many ad networks instead of just one, advertisers can cover their target audience as quickly as possible when using RTB to launch retargeting.

  • Purchasing traffic quickly and easily

Advertisers used to have to personally negotiate the placement of their ads with dozens of ad systems and grids. Each system had its own user interface, settings, rules, and working conditions, among other things. This required a lot of effort and time. By using RTB, advertisers can avoid studying the interfaces of countless ad networks and wasting time on negotiations.

  • Access to premium ad inventory

Reaching out to top ad inventory providers would be nearly impossible without the help of ad exchanges. Real-time bidding ad platforms help business owners connect with top publishers in their niche, ensuring that millions with relevant interests see their ads.

  • A diverse set of ad-filtering options

Advertisers have a better chance of finding 100% matching audiences thanks to many publishers participating in an ad exchange. Most ad exchange platforms allow business owners to set up detailed campaign settings, ensuring that a brand manager does not pay for ads that aren’t relevant to them. As a result, real-time bidding allows advertisers to narrow target audiences, improve ad copy, and avoid paying for wasted impressions.

  • Complete control

Real-time bidding is much more convenient than fixed-price programmatic ad models because it allows you to pay for every impression. Advertisers can ensure that they only pay for placement if it generates new conversions in this way. When the bid loses traction and no longer effectively appeals to potential customers, they can close it.

  • Facilitates integrated marketing efforts

Most ad exchange platforms can be linked to SEO and content management software. You can link RTB performance reports to PPC, social media, video, and other campaigns. Using a single dashboard to track all marketing efforts gives business owners a bird’s-eye view of their marketing strategy and allows them to assess its effectiveness more precisely.

  • Ad expenses optimization

Advertisers determine the price they are willing to pay for an impression at the auction, and they can raise bids by a minimum of one cent. This allows them to reduce the cost of attracting the final client and use their budget better.

  • Dynamic tracking of the productivity of each purchased impression

Advertisers can quickly generate analytical reports on the impressions they bought and track their effectiveness. They can also use various types of software to analyze and forecast future bids, among other things.

  • Suitable for performance campaigns

RTB is great for companies that evaluate efficiency based on ROI or by the number of registrations or signups.

  • Low entry threshold

You don’t require lots of investments to start launching campaigns through RTB. You can set up your first campaign even on a tiny budget.
To effectively use that budget, you should ask for help from the ad network until you get the hang of it. For example, Adsterra’s managers offer such services.

Disadvantages of real-time bidding

  • User data confidentiality issues

RTB raises concerns about the security of user data. Not all information is collected and processed with their permission.

  • No guarantee of a successful deal

It’s not enough to buy a lot of traffic for a campaign to be effective. The number of users who complete the target action determines the campaign’s profitability. It isn’t easy to start buying the right traffic without prior experience and expertise.

Things to consider when launching RTB campaign

It’s essential to seek specialized help for a successful RTB start, especially if you’re unfamiliar with your current ad network or are experimenting with a new product. RTB is ideal for media agencies and large mass-market companies that frequently launch the same promotions. At Adsterra’s managed service, you’ll get some help with traffic testing and creatives, and even with landing pages. Our managers will offer to guide your campaign through all stages, propelling your product into new markets and maintaining conversions from clicks to purchases, registrations to deposits, and so on.

Final thoughts

Real-time bidding has numerous advantages, including creating and scaling highly profitable campaigns. For many advertisers, real-time bidding provides the ability to quickly purchase large volumes of target traffic, optimize ad expenses, and save time, effort, and money on testing and optimizing. When it comes to speed, flexibility, and scalability, Adsterra is the ideal RTB network for advertisers and publishers. You can easily optimize and effectively use your ad budget with our solutions. Adsterra provides:
  • Integration via OpenRTB, XML, and JSON
  • Various ad formats, including Popunders, In-Page Push, and Social Bar 248 GEOs
  • Support for mobile devices and desktop PCs
  • Advanced targeting.
In just a few simple steps, you can integrate with RTB Adsterra: send your request, provide your documents, and gain access to more billions of impressions via RTB.

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