Real-Time Bidding (better known as RTB) is an increasingly important part of advertising networks and to help you understand the benefits and the downfalls, I have put together this catchall introduction. If you would like to understand RTB’s role in a programmatic system, or a general introduction to the subject, take a look at my Introduction to Programmatic Marketing & RTB article.
What is Real Time Bidding (RTB)
RTB is pretty simple if you understand the mechanics of an ad auction. When advertising inventory is bought via programmatic system using real-time software, it is known as real time buying. But, to buy the inventory, you must first win a bid. RTB systems are set up as silent auctions, where you (the advertiser) place a bid for the inventory you are interested in purchasing. Other advertisers across the globe are also bidding on these open spaces and whoever bids the highest wins.
How Publishers Use RTB
The publisher has a simple role in this process. Publishers create space on their platform to place ads (display inventory) and then connect their platform to a Publishing Network (or DSP). Once connected, the publishing network uploads the publisher’s open inventory to their database. Their database is parsed visualized by a Supply Side Platform where a groups of advertisers view/bid and buy the openings. All of this happens within a matter of milliseconds and generates automatic income for the publishers.
With any disruptive/ innovative technology, there are always pitfalls. Publishers initially were hesitant to adopt this system because of they lost control of the content on their sites. After placing their inventory into a publisher network, they no longer could have full control over the inventory that appears on their platforms. Luckily publishing networks and advertisers alike have taken upon themselves to only display relevant content, which can actually enhance the user experience.
Also, publishers still struggle with the lack of predictable income. The issue with real time bidding is that the prices are never the same. One day you could be making $4CPM on your site, and the next day you could be making $1. It is all demand on other advertisers bidding for space on your website. Supply and Demand can be both a wonder and awful thing.
In the prehistoric Mad Men era of advertising (where websites weren’t even a thing.. but you get the point), publishers needed to individually find advertisers to place ads on their platforms, negotiate pricing, sign contracts and a whole lot of other pain staking activities. RTB networks give publishers plug and play profitability without days off their lives. These streamlined systems allow relevant inventory to be shown at higher frequencies to the publisher’s users. This means more potential profit the freedom to put their own ads in the space whenever they want.
As the internet continues to take over the world, RTB systems will only become more advanced. Targeting options become increasingly pinpointed, ads more relevant and conversions rates increase. If you are a publisher, I suggest getting used to these systems as soon as possible, because they aren’t going anywhere.
For More on Programmatic marketing, explore different topics in my Introduction to Programmatic Marketing & RTB series.