Real time bidding refers to the buying and selling of online ad impressions through real time auctions that occur in the time it takes a webpage to load. Those auctions are often facilitated by ad exchanges or supply-side platforms.
Real time bidding is distinguishable from static auctions by how it is a per-impression way of bidding whereas static auctions are groups of up to several thousand impressions. RTB is promoted as being is more effective than static auctions for both advertisers and publishers in terms of advertising inventory sold, though the results of course vary by execution and local conditions.
Why does it matter?
Historically, advertisers used websites as a proxy for their ads. If they wanted to reach sports fans, they would buy ads on a sports-related site, for example. The advent of RTB has enabled them to target their ads to specific users.
How does it work?
A typical transaction begins with a user visiting a website. This triggers a bid request that can include various pieces of data such as the user’s demographic information, browsing history, location, and the page being loaded. The request goes from the publisher to an ad exchange, which submits it and the accompanying data to multiple advertisers who automatically submit bids in real time to place their ads. Advertisers bid on each ad impression as it is served. The impression goes to the highest bidder and their ad is served on the page. This process is repeated for every ad slot on the page. Real time bidding transactions typically happen within 100 milliseconds from the moment the ad exchange received the request.
Real time bidding is distinguishable from static auctions by how it is a per-impression way of bidding whereas static auctions are groups of up to several thousand impressions. RTB is promoted as being is more effective than static auctions for both advertisers and publishers in terms of advertising inventory sold, though the results of course vary by execution and local conditions.
Why does it matter?
Historically, advertisers used websites as a proxy for their ads. If they wanted to reach sports fans, they would buy ads on a sports-related site, for example. The advent of RTB has enabled them to target their ads to specific users.
How does it work?
A typical transaction begins with a user visiting a website. This triggers a bid request that can include various pieces of data such as the user’s demographic information, browsing history, location, and the page being loaded. The request goes from the publisher to an ad exchange, which submits it and the accompanying data to multiple advertisers who automatically submit bids in real time to place their ads. Advertisers bid on each ad impression as it is served. The impression goes to the highest bidder and their ad is served on the page. This process is repeated for every ad slot on the page. Real time bidding transactions typically happen within 100 milliseconds from the moment the ad exchange received the request.
Visual process of RTB
The bidding happens autonomously and advertisers set maximum bids and budgets for an advertising campaign. The criteria for bidding on particular types of consumers can be very complex, taking into account everything from very detailed behavioral profiles to conversion data. Probabilistic models can be used to determine the probability for a click or a conversion given the user history data (aka user journey). This probability can be used to determine the size of the bid for the respective advertising slot.
The main parties involved
Demand side platform (DSP): DSPs are technology platforms that advertisers use to automate the buying of ad space and monitor their campaigns.
Supply side platform (SSP)/publishers: Publishers provide the inventory to serve ads. In a programmatic setting, they go through SSPs to help them sell and better manage their inventory. SSPs are DSPs' counterparts on the supply side.
Ad exchanges: These can be understood as stock exchanges, in the sense that they facilitate the buying and selling of inventory through real-time auctions. Some of the biggest and most popular ad exchanges include DoubleClick by Google, among many others.
Why is real-time bidding good for advertisers?
Some major publishers are wary of RTB because they feel it enables advertisers to pay them less for their inventory. Increasingly, however, they’re becoming more comfortable with it as exchanges and supply-side platforms enable them to control the minimum prices at which their inventory is sold, often called price floors. This enables publishers to open their ads up to an auction, but to set a reserve price that must be met in order for a transaction to take place.
Interesting facts about RTB and its future:
· In 2007, the three largest ad exchanges – DoubleClick, AdECN, and RightMedia – were all bought by Google, Microsoft, and Yahoo! respectively.
· It’s estimated that by 2017, more than 40% of total mobile and online display advertising will be RTB-based. (IDC)
· RTB will be the fastest growing segment of digital advertising in coming years, with global spending on RTB projected to reach $13.9b in 2017.
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