What is RTB (real-time bidding)?

Real-time bidding is an integral part of programmatic advertising. It automizes processes and transactions connected with buying and selling of ads. The method is based on an instant automatic auction where advertisers bid over a single ad impression on websites. Real-time bidding algorithms are designed to optimize mentioned transactions and ease the pricing processes. Moreover, final ad impressions rates are established automatically according to specific criteria, including size, ad placement, information about the targeted audience and given website. RTB is a technology that starts the auction process and closes it with the best deals on behalf of publishers. Sounds tempting? How does this magical method work? Let’s find out!

Real-time bidding system consists of the following integral parts:

Supply Side Platform (SSP) – it’s a platform based on automated ad technology (AdTech) and it serves publishers. So, using this platform, publishers can effortlessly sell, optimize and manage ad inventory on their websites. SSPs connect with DSPs, ad exchange, ad networks to facilitate transactions on behalf of publishers.

Demand Side Platform (DSP) – is an automated ad technology (AdTech). Thanks to DSP, advertisers can manage buying ad inventory from multiple data platforms and control their campaigns from just one place. DSP user interface allows storing settings such as targeting, frequency capping and placement. What’s more, it enables budget and performance reporting, giving comprehensive databases, which are delivered though an approachable and clear interface. Thus, data they show can be used to develop targeting and improve selection of platforms for running campaigns.

Ad exchange – this technological platform aids transactional processes between advertisers and publishers. It means that the ad inventory purchase occurs through an ad exchange, where publishers sell and advertisers buy ad impressions.

What are the benefits of RTB?

For publishers:

Due to opening auctions to a variety of buyers, there is a greater possibility of getting the best matching ad. Moreover, the design of real-time bidding algorithms allows transaction optimization, so publishers get the best payment per impression. To add, RTB offers publishers a chance to charge more as they gain access to the data of who is buying which inventory and can utilize this knowledge to establish premium ad prices accordingly. As a result, RTB increases publishers’ ad revenue and fill rate significantly.

For advertisers:

Thanks to RTB, advertisers get more streamlined and efficient ad buying with a guarantee of well-adjusted targeting and the best-fit inventory. As a result, advertisers can show their ads to the most relevant audience, increasing the chance of reaching potential buyers. It gives a greater possibility of gaining significant brand recognition and thus, satisfying selling results. Finally, RTB allows getting better transactions and, thus, higher ROI.

Difference between programmatic and RTB

RTB, as well as programmatic, operates on fully automated processes. However, the first one is the subtype of the second. And it doesn’t work interchangeably, as RTB is primarily based on auction processes, whereas programmatic – not necessarily. Programmatic advertising may use RTB in transaction processing, but doesn’t have to. There are programmatic deals that work on the basis of set prices that are established in advance, so they don’t need auctions to start and close the agreement processes. In that case, auction methodology refers to Programmatic Direct or Programmatic Guaranteed.

How RTB works?

• The real-time bidding process starts when a user visits a website;
• A website has a slot JavaScript code, which requires a creative ad from the ad server – meaning an ad request is established;
• Ad request embraces various factors such as user demographics, browser type, geolocalization, device, operating system, ad format and many more. All this is scanned through during website loading;
• Bidders establish the value of the ad request and offer final versions to the auction. It means that they determine how much they want to pay for a given ad impression and adjust targeting parameters such as website domain, localization, and user data;
• After evaluating previously mentioned data, bidders create and send a markup of an ad they wish to display. The price of the offer and its markup are included in an object, which is an offer response (bid response);
• Next, ad exchange receives all requests, where many advertisers can bid over one ad impression at once;
• The bidder offering the highest rate gets the ad impression of a given ad. There are several models of how an auction should be settled. Currently, the most popular is the first-price auction. For this kind of bidding, a final price equals the winning bid;
• A notification enclosing the final price is sent from the ad exchange to the winning DSP. It occurs through the server-to-server request or ad markups;
• Ad markup with ad creative of the winning DSP server is retrieved and sent directly to the browser, where the ad can be finally displayed to a user;
• The whole process occurs within a time of 150-200 milliseconds.

Another explore-worthy method of selling advertising inventory similar to RTB is header bidding. If you want your business to grow, you should definitely consider future-oriented solutions that will guarantee you success in the industry. No doubts that RTB is one of them. If you want to generate income through real-time bidding, you can join optAd360 and see how it works hands-on. Check out optAd360 requirements before signing up. We are looking forward to meeting you and becoming partners!