What is Real-Time Bidding (RTB) and how does it work?

What is real-time bidding and how does it work? These are not the only questions we’ll reveal in our article!

As you might perceive, it’s a programmatic advertising placement since many actions are done within a millisecond and it has been the primary vehicle for programmatic’s growth and since 2012 it has grown over 30%!

So, why is programmatic important?  You’ve probably already used programmatic methods to buy or sell traffic, directly or indirectly, and RTB is the primary programmatic method applied, so, if you haven’t yet, let’s discover more!

Programmatic advertising is not synonymous with RTB. Instead, programmatic is the process of using software and algorithms to trade data-rich media while RTB is one method of execution.

Once you’ll know exactly what RTB is and how it works, you’ll crave to start applying it with your ads, targeting more interested people and actually achieving more sales!

So, let’s get started and delve into the RTB world by overviewing:

• What is RTB?
• Which Platforms does RTB involve?
• How does RTB Work?
• How much does RTB cost?
• Why use RTB?
• RTB Conclusions

What Is Real-Time Bidding?

RTB (Real time bidding) is an automated digital auction process that allows advertisers to bid on an ad space from publishers on a cost per thousand impressions or CMP basis.

CPM is what you pay for one thousand people to see your ad like an auction, the highest bid from relevant ads will typically win the ad placement and the RTB process occurs in milliseconds before a website even loads and you won’t even notice it is happening!

So, real-time bidding simply refers to the buying and selling of online ad impressions through real-time auctions that happen during a specific time as a web page loads.

Those auctions are often facilitated by ad exchanges or supply-side platforms, so let’s check which platforms RTB involves!

Which Platforms Does Real-Time Bidding Involve?

RTB in advertising is a part of the programmatic advertising process. What does this mean?

Simply it involves three platforms for ad buying:

1. Supply-side platforms (SSPs)
2. Ad Exchanges
3. Demand-side platforms (DSPs)

These different platforms work together to get ads in front of the user, helping your products to be discovered and actually bought.

Before explaining how these different platforms work together for real bidding, let’s see what each platform does!

Demand-side platforms

A demand-side platform allows an advertiser to buy ad space and manage their ads.

In fact, it’s a place for advertisers who have a demand for ad space.

An example of a demand-side platform would be Google Ads.

Ad Exchange

Ad exchange is right in between the advertiser and the publisher. Think about the ad exchange like a market with vendors (publishers) and buyers (ads).

Google Ad Manager also includes an ad exchange formerly known as “DoubleClick Ad exchange” where they will help you reach your audience on every screen with innovative ad formats whether the user is watching and playing to engage them in discovering your ad.

Supply-side Platform

A supply-side platform is what publishers or website owners use to sell their ad space to advertisers.

In fact, publishers use the supply-side platform to supply the space for ads.

Google Ad Manager also includes a supply-side platform known as DoubleClick for publishers!

How Does Real-Time Bidding Work?

The RTB process starts with you!

You are part of the audience that an advertiser is attempting to reach.

The visitor doesn’t purposely play a part in the ad that he or she sees, but by allowing the collection of cookies, they make it possible for ad software to determine the value of their impression and not all impressions are equally valuable.

When you click a link to land on a site, that is where real-time bidding begins.

When you arrive at a site, before the page loads, the site’s publisher sends available ad space dimensions to the supply-side platform.

Then, the supply-side platform looks at your cookies! This is mainly all the data from your web activity, including interests, demographics and so much more!

This data helps determine what ad would be more relevant to you!

At this point, the demand-side platform assigns a value to each user and places a bid on the ad space based on that information an advertiser would be interested in!

These actions happen between the time you click on a search result and the time the page loads!

And this is where the supply-side platform comes in! As they receive the bids, they pick a winner based on the highest and most relevant bid!

Once an ad gets chosen, the website loads and you’ll see the winning ad on your screen!

If you think about it, it’s insane how complex steps can get done in such a short period of time, and we’re talking about milliseconds!

So, let’s put this into practice with a quick example:

Let’s say you are running a beauty cosmetic shop that sells singular parts of beauty products and you want to use real-time bidding to get your brand in front of people that are looking into similar products you are selling.

When someone in your target audience, who frequently researches products similar to yours, lands on a blog that happens to have a free ad space, you can start your RTB!

If your ad gets the winning bid, it will instantly appear as the blog loads, right in front of those users by discovering your brand and, since they are users who already have an interest in your product, they can become your future clients!

With real-time bidding you are able to target an ultra specific audience, which can help you deliver an excellent ROI for your business!

How Much Does Real-Time Bidding Cost?

The cost of RTB varies depending on other bids and on what you are targeting with your ad such as keywords, location, demographics, interests and what you are budgeting to invest in your ads.

You can pay anywhere from $2500 up to $15.000 for a campaign, but you’re not limited to that range! Keep in mind that RTB operates on a CPM basis, so your bid can even be something like $1 or $2.

As you can see, with RTB you can fully control your budget!

Why Use Real-Time Bidding?

RTB can save you valuable time when it comes to your ad campaigns and the process is automated!

This means that once you set your parameters, it will work for you!

RTB, as we previously mentioned, is also cost-efficient since you set your budget!

Programmatic RTB has changed the expectations of how media will be primarily traded in the future, not only applying it to digital media but non-digital as well, making every party learn a new language and way of thinking to ensure they are getting what they expect: after all, programmatic is already happening.

Google used programmatic advertising, for instance by reaching 30% more people 3x frequently with an approximately 30% lower effective CMP compared to the previous years!

To not mention that with RTB, you’re making sure your ad is relevant to users and not spending money on people who have zero interest in your products by actually achieving in acquiring more valuable customers.

Real-Time Bidding Conclusions

While compiling your benefits and RTB might seem like the simplest of all the exercises in the brand development process, they’re still the most critical.

Here, you are answering two vital questions posed by your customer:

• What’s in it for me?
• Why you?

Your positioning statement sharpens their proverbial desire, but your benefits and RTB give them the nourishment they need and crave.

To make sure your RTB is not wasted money, make sure your ads are engaging and drive users in desirable clicks!

Time for you to get started with RTB! Get those actions started by driving an ultra specific target audience, helping you deliver an excellent ROI for your business!