Real Time Bidding

Let’s go through the important topic i.e. RTB that is being discussed too much in Online advertising nowadays…and is an actual fact as RTB is a reality that is changing the way online advertising is purchased.

What is RTB (Real Time Bidding)?

To so many RTB sounds so complex but it’s nothing but a myth and is a technology that makes life easier for players of advertising: advertisers, advertising agencies, boards, publishers, media agencies.

DEFINITION: Real time bidding is an automated process that enables buying and selling digital advertising inventory in real time. Advertisers bid on each impression and if the bid is won the ad is displayed on the publishers site. The traditional method of display advertising involved manual negotiation where the brokers played a vital role in deciding the prices of inventory to be sold. In RTB the role of brokers is taken care by SSP and DSP.

The concept of RTB or real-time bidding, was first popularized by Google in the development of AdWords where he pointed to the fact of buying auction keywords based targeted queries.
This technique is now widely used in the field of ad exchanges and shall mean the buy and sell display advertising space to bids based formats, targeting criteria and predefined budgets.

It covers two key concepts:

  • “Real-time” purchasing is done in real time, usually in less than 150 ms
  • “Bidding” is purchase advertising auction, which has a large impact on the ROI.

To have introduction about SSP and DSP, Click Here!

Why RTB?

Best answer to this will be through showing the drawbacks of traditional display advertising from the eyes of advertiser and publisher both:

  • For Advertisers , the traditional online display adveritising lacked efficiency as most of the impressions had to be purchased at same price per unit , irrespective of their value to the campaign. Due to this even for impressions which had less impact on the campaign more price had to be paid.
  • For Publishers , the traditional advertising resulted in more than half of the inventory left unsold or if sold it was done for very low price.

It’s a great help to both advertiser and publisher and so getting more famous and well known technology.

RTB working in brief:

The process starts as soon as the consumer browses through the publisher’s website.
What actually happens is the Ad Space in publisher’s inventory is sent across thorugh SSP to the Ad Exchange and DSP. DSP then determines the key characteristics of the impression like demographic information, browsing history, location, and the page being loaded and tries to analyse if that impression is suitable for the advertiser. If it finds it suitable then it examines how much the advertiser can bid for that and then revert back with it’s bid value to the SSP through Ad Exchange. SSP receives the bid value from all the advertiser’s DSP and then finds out which advertiser is bidding the highest value. As soon as the SSP finds it highest bider it immediately transfers the ad space to the browser of the user and the ad is served on the publisher’s website.

Step wise process:(Basic)

  1. The user enters a web page
  2. The ad space available on the site is auctioned
  3. Buyers offers some bid value for the space
  4. The buyer who pays the highest wins the space (Normally)
  5. Ad of the buyer(advertiser) who wins is shown

Advantages:

  • Bid for only what you need:

RTB enables advertisers to place bids only on those inventory which is best for their campaign.This results in minimizing the wastage of media spend on those impressions which aren’t targeting the desired audience.Moreover through RTB , impressions are bought on an individual basis which means paying only for the impression which is relevant for the campaign .

  • Publishers can reach out to more advertisers:

Ad Exchanges in RTB enables publishers to reach out to lot more advertisers.This ensures that publishers make most of their inventory by selling it to the highest bidder.

  • Reduced Pricing of Inventory :

Through RTB , the pricing of the impressions is determined by supply and demand. So, now there isn’t any requirement of manual pricing negotiation between the publisher and advertiser.Reduced pricing and better targeting lead to better results for advertisers.

4 thoughts on “Real Time Bidding

  1. Really when someone doesn’t know after that its up to other
    users that they will help, so here it occurs.

  2. Shaurya

    First of all this site is GREAT!!! I don’t think there is any such consolidated source even on web.

    Now a few questions, are there any known mechanisms of programatically optimizing the bid. What is the typical job/workflow of a specialist who runs a campaign to ensure it’s budget is consumed.

    • Hey Shaurya,

      There is no hard and fast rule to do it, the practice comes with experience. But yes programmatic buying is a game of bids i.e. money so need to plan accordingly. If the campaign is of 10 days the budget has to be equally divided and you can always set your daywise budget in every platform.

      There are number of steps that needs to be followed, will make sure to upload this topic sooner

  3. Ashraf

    On what logic bidder works?

    Suppose i have an cpc campaign @ 0.02 cent and having a CTR 4%, so how the bidder work and what cpm value it calculate to win the inventory on RTB.

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