Premium ad space going once, going twice…sold! Except in this case, there are multiple simultaneous competing auctions happening in milliseconds, and everything is automated. Here’s where Real-Time Bidding comes in. It’s the method for deciding which ad is best to show on a page, ensuring top results every time. Today, we’ll be answering “what is RTB?” and diving into how it powers modern programmatic advertising.
What is RTB?
RTB stands for Real-Time Bidding. RTB is a programmatic advertising method of buying and selling a publisher’s ad inventory in a real-time auction. It’s kind of like those auctions you’ve seen in movies where a group of fancy people offer the highest amount of money possible to get their hands on a precious antique. But this time, it’s ad inventory that’s being auction.
Now that you’ve uncovered the RTB meaning, let’s see how it works.
How does RTB work?
RTB works as an auction-based system that enables advertisers to bid on a publisher’s ad space helping both parties maximize their results. Naturally, this whole process involves different players from the programmatic ecosystem to make it happen:
- Publishers: A publisher is a person or company that manages a website or an app. These platforms have available ad space that can be sold to advertisers.
- Advertisers: These are the brands or agencies (a.k.a. “the buyers” in this scenario) that want to reach specific audiences through targeted ads by purchasing ad inventory from publishers.
- Supply-Side Platforms (SSP): The SSPs are the platforms that publishers use to manage their ad inventory. It connects their inventory to multiple demand sources and runs real-time auctions to get the best possible price for each impression.
- Demand-Side Platforms (DSP): The DSP is the platform advertisers use to set up their campaigns, including their goals, budgets, and audiences. Once the campaign is set, the DSP automatically bids on impressions that match those criteria, across many websites.
- Ad Exchanges: The Ad Exchanges are the digital marketplaces where the buying and selling of ad inventory takes place.
Let’s see step-by-step how the Supply Side Platforms (SSP), the Ad Exchanges, and the Demand Side Platforms (DSP) work together for RTB to do its magic:
RTB Step-By-Step
Step One – The ad request is triggered
When the user opens a webpage, it sends out an automatic ad request through the ad server that connects to an SSP. These are in charge of efficiently selling the ad inventory using RTB to the highest bidder.
Step Two – The bid request gets sent to the Ad Exchange
The SSP makes a bid request for the available ad inventory in an Ad Exchange, where multiple advertisers can place their bids.
Step Three – Advertisers evaluate each impression
The Advertisers, who previously set up their campaigns on a DSP that connects to the Ad Exchange, analyze the available ad impression to see if their targeting criteria matches the ad request.
Step Four – The real-time auction takes place
If the ad impression matches the advertiser’s criteria, they participate in a real-time auction among other advertisers who are also bidding for that ad space.
Step Five – The system serves the winning ad
The advertiser who placed the highest bid wins the auction and gets their ad displayed in the available ad slot in a flash.
It’s important to note that bids are typically expressed as CPM (cost per thousand impressions), not per single impression. For example, if an advertiser bids a CPM of 1.5€, they are offering 1.5€ for 1,000 impressions, which equals 0.0015€ per individual impression.
How does RTB benefit Publishers?
Sell ad inventory at scale and monetize unsold inventory efficiently
With RTB, publishers can replace the hassle of manual negotiations to sell ad inventory for an automated process. This allows them to sell their ad space at scale, while monetizing inventory that can otherwise remain unsold or undervalued.
Ad relevance and enhanced user experience
RTB auctions use real user data, which helps ensure advertisers show ads to those most likely to convert. Smart targeting helps find the best placement for an ad. In return, this enables publishers to serve relevant ads to their audience, providing a more personalized user experience.
Transparency and better inventory control
You, as a publisher, are the ringleader when it comes to your ad space. RTB provides actionable data to adjust your strategy to maximize yield and generate more value for advertisers. It also allows you to be in control of who you sell your inventory to and determine your own floor price.
How does RTB benefit Advertisers:
Smart targeting and brand safety
RTB helps ensure digital advertising campaigns reach their ideal audience by leveraging user data during the bidding process. This enables advertisers to deliver ads in brand-safe environments while protecting their brand perception
Higher conversion rate and ROI
The effectiveness of Real-Time Bidding relies on reaching the right people, those who are most likely to engage with the advertiser’s efforts, at scale. This leads to higher conversion rates and therefore a higher return on investment (ROI) in the campaigns.
Data-driven optimization
Advertisers gain access to actionable data that allows them to adjust their budget, targeting, and overall campaign strategy to improve performance in real time and maximize results. Let’s make every ad impression count!
Discover next steps to unlock the power of RTB
Real-Time Bidding (RTB) makes the process of programmatic media buying more efficient. It does it by allowing publishers and advertisers to buy and sell ad inventory at scale and maximize results. It automates what in the early days of programmatic advertising was entirely manual work, boosting your results based on real data.
Now you know what RTB stands for and the role it plays behind the magic of programmatic advertising. You’re all set to continue exploring opportunities! Contact our experts to learn more about our Single Tag header bidding technology powered by RTB to boost your results!
