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What You Need to Know About Real Time Bidding: The Future of Programmatic Advertising

Jan 7, 2015

There is no doubt that real-time bidding has significantly changed the face of online advertising. However, there may still be some confusion regarding what it actually is. To make sure we are all on the same page, let’s break it down:

So what exactly is RTB?

Real-time bidding (RTB) refers to the buying and selling of online ad impressions through real-time auctions that take place during a webpage’s loading time. These auctions are often facilitated by ad exchanges or supply-side platforms (SSPs).

How does RTB work?

The process is rather simple: As an ad impression is served in a user’s browser, the ad exchange receives information about the page on which the ad is to appear and the user viewing it. The exchange then auctions it off to the advertiser who is willing to pay the highest price for it, and the winning bidder’s ad is then instantly loaded into the webpage. Advertisers typically use demand-side platforms (DSPs) to help them decide which ad impressions to purchase and how much to bid on them. The decision is based on various factors, such as the sites they appear on and the previous behavior of the users loading them. For example, ASOS might recognize that a user has previously visited their site, to look at a specific dress. It may therefore be prepared to pay more than Amazon or Best Buy to serve ads to that user. The price of impressions is determined in real time based on what buyers are willing to pay, hence the name “real-time bidding.”

Why Is RTB Important?

The emergence of real-time bidding (RTB) has allowed advertisers to target their ads to specific users rather than relying on websites as a proxy, which was the case before.The emergence of real-time bidding (RTB) has allowed advertisers to target their ads to specific users rather than relying on websites as a proxy, which was the case before.

Why is real-time bidding good for advertisers?

In one word: Efficiency. With RTB, ad buyers no longer need to work directly with publishers or ad networks to negotiate ad prices and to traffic ads. Using exchanges and other ad technology, they can access a vast range of inventory across a wide range of sites and carefully select only the impressions they find most valuable. Not only does that reduce the number of impressions wasted on the wrong users, but it also minimizes the need for costly and sometimes unreliable human ad buyers

Is RTB also good for publishers?

While some leading publishers were initially cautious about real-time bidding (RTB) due to concerns about receiving lower payments for their inventory, they have gradually grown more accustomed to it. Reason being, that exchanges and supply-side platforms have provided them with greater control over the minimum prices at which their inventory is sold, often referred to as "price floors. This enables publishers to open their ads up to an auction, and at the same time set a reserve price that must be met in order for a transaction to take place. As a result, costs are often cheaper than some traditional advertising forms, such as Google AdWords. All of these make RTB a win-win situation for everyone.

As a technology-driven company that offers real time bidding solutions, we recognize the continuous growth of this marketing approach, while marketers are becoming more and more familiar with it.

If you would like to have that upper hand and ride the RTB wave, simply e-mail us. Our experts will be pleased to assist you, utilizing our practical knowledge and state-of-the-art technology to make sure you are on top of the real time bidding game. Contact us at [email protected].