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What Is Real-Time Bidding (RTB), and Why Does It Matter?

1080 753 Bartosz Bielecki

From this article you will learn:
What Real-Time Bidding is
What a DSP (Demand-Side Platform) is
What an SSP (Supply-Side Platform) is
What RTB platforms are good for


Discovered in 2009, RTB, short for Real-Time Bidding, has turned the performance marketing industry around. Not only has it helped reduce the costs of online campaigns, but also drastically changed the approach to audience targeting, leading to higher conversions and maximized revenues – or, to put it simply – big money.

You don’t buy a box of assorted chocolates if you only like one particular flavor, do you? Well, that’s basically what affiliate marketers used to do.

A big part of their budgets was spent on useless impressions because only a small percentage of the people they reached with campaigns was their target.

Before 2009, fixed rates and a first come first serve basis of selling ad space were the reality. What did it mean for advertisers?

Let’s take an example of a company producing basketballs. Let’s call them Lapsding. So, back in the day, Lapsding would advertise their balls on websites devoted to sports, because that would pretty much match their target.

It may sound like a decent idea, but in reality it leaves a lot to be desired. Fans of other sports aren’t very likely to be interested in Lapsding basketballs.   

So, in this case, only a fraction of Lapsding’s ad recipients would be their target. Moreover, they would have their campaign displayed both during the day and also at night when the conversion rate is presumably lower.

In a nutshell, the introduction of Real-Time Bidding allowed the advertisers to cherry-pick the impressions they truly cared about and spend money only on their target with programmatic buying. Publishers, on the other hand, were given a chance to maximize the value of their ad space and sell any leftover space.

The term RTB refers to buying and selling ad space each time a webpage loads. As unrealistic as it sounds, the whole process takes about a hundred milliseconds – four times shorter than a blink of an eye! Yes, it still takes longer than for the angry guy behind you to honk at you as soon as the light turns green, but it’s impressive nonetheless, especially given the events that occur during the process.

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Demand-Side Platform – The Advertisers’ Way of Placing Orders

The whole thing starts with an advertiser – an individual or a company that wants to place an ad online – setting up their campaign.

This is usually done through a Demand-Side Platform (DSP). A DSP lets advertisers set the targets of their campaigns and limit the money they are willing to spend.

To launch a campaign, advertisers need to upload visuals (if they opt for a banner ad), and/or set up a landing page in a DSP. There, they also target their audience. This is where things get interesting.

The key advantage of RTB over the more traditional ways of digital advertising is the precision. Advertisers can distinguish their audience by utilizing different socio-demographic data.

For instance, if you’re running a really weird campaign, you could target only the people in Penistone, UK, using their iOS 11 iPhones before the dawn.With RTB, the targeting options can really point you to your future customers. And yes, even if they are all in Penistone for some reason.

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There are various types of pricing models. From CPV (Cost Per View), through CPM (Cost Per Mille – that is 1000 impressions), to CPI (Cost Per Install) and others. To avoid surpassing their budget, advertisers can set a frequency cap which limits the number of impressions of a particular ad per user. So you won’t bother people with the same ad every hour.

The main role of a DSP, however, is the bidding. Think of it as a counter where you place your order. But before we get to that, let’s jump to the other side of the deal.

Supply-Side Platform – The Publishers’ Counterpart of DSP

While advertisers are using Demand-Side Platforms to place ads, publishers are utilizing Supply-Side Platforms (SSPs) to sell their inventory.

Thanks to SSPs, publishers can have full control of their ad space and maximize profits by offering all their inventory to multiple advertisers at the same time. Using SSPs, the publishers provide information about their website’s audience and set up the minimum impression price.

Whenever a user loads the page with ad space for sale, the SSP communicates with the DSP to share information about the upcoming impression. The SSP delivers all the socio-demographic data needed for the DSP to determine if the impression is useful.

Ad Exchange – A Digital Marketplace

The exchange doesn’t occur directly, though. It is handled on an RTB platform called Ad Exchange.

Ad Exchanges are digital marketplaces where advertisers and publishers meet, usually via DSPs and SSPs, and try to reach a deal. It’s where the actual bidding takes place.

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When an impression is about to be made, the SSP sends a bid request (containing all the details about the impression) to the Ad Exchange. In response to the bid request, the DSPs decide whether it’s worth for the advertiser to enter the bidding war. In other words, when the campaign criteria are met, the bidding begins.

All the advertisers whose targets align with the particular impression enter the auction and place their bid. Since the process needs to happen faster than a blink of an eye, the advertisers don’t get a chance to one-up each other during the auction. Their first bid is their final bid.

Once the bidding is finished, the ad is displayed, and everybody has earned their money.

Proper RTB Platforms Can Do Wonders

Even though it’s the DSP that’s responsible for buying and the SSP for selling, the Ad Exchange is the crucial part of the equation. It’s a platform that facilitates the whole transaction.

RTB platforms can differ in terms of the traffic quality, pricing, and the types of ads. Moreover, the lines between the DSPs, SSPs and Ad Exchanges have begun to blur, with the latter becoming a one-stop shop for everybody.

The best Ad Exchanges are self-serve platforms in which advertisers can set up their campaign by themselves. Self-serve is an important feature, as it shortens the process by eliminating the people who would have to manually manage campaigns as the middlemen.

This doesn’t just go in favor of the advertisers, as publishers can offer ad space at a rate that wouldn’t otherwise be profitable. The reduced minimal price means reduced campaign spending for the advertisers.

RTB platforms aren’t just for banner advertising. If you fancy full-screen desktop and mobile pop-ups, and parked domain redirects, to substantially increase the traffic on your landing pages, we have a solution for you.

More than anything, RTB platforms simply enable advertisers and publishers to maximize their revenues.

The latter benefit from added value to every ad, even those previously unwanted, as they can be turned into gold by advertisers.

Publishers have full control over the pricing and can adjust it accordingly to the intel that RTB platforms provide them. RTB makes it possible to recognize which audiences are most valuable for them so that they can build stronger relationships with those who are the primary advertising target. This can help improve publishers’ individual sales strategies and globally increase the value of their ad space.

For the advertisers, the opportunities seem endless. The robust targeting settings and the ability to bid only for relevant impressions have changed the performance and affiliate marketing industries once and for all. Ad efficiency skyrockets with RTB, not just because of wiser spending and purchasing at an adequate value, but also because of comprehensive retargeting possibilities.

So if you’re still stuck with the traditional methods of online advertising, it’s high time you saw for yourself what a proper RTB platform can do for your business.