Real Time Bidding – A Beginner’s Guide

I feel that we can’t appreciate a solution enough if we aren’t aware of the problem. Although things have changed a lot in digital advertising, all thanks to RTB (Real Time Bidding), things were different before. 

RTB turned the tide forever. This innovative technology has been shaking up the digital landscape for over a decade, and it’s time for you to join the party. With RTB, you can earn better ad revenue thanks to an online auction system where individual ad impressions are sold, and buyers compete vigorously to win the impression. 

This bidding process drives up the CPM and ensures you get the best value for your investment. And the best part? RTB provides your audience a more personalized ad experience using real-time user data that helps advertisers serve relevant ads.

But let’s face it; the AdTech industry can be full of confusing jargon, leaving you feeling like you’re on the wrong track. That’s where we come in. So, if you’re ready to take your digital advertising game to the next level, hold onto your hats and get ready to learn everything you need to know about this game-changing technology.

What is Real-Time Bidding (RTB)?

Real-time bidding (RTB) is a programmatic advertising technique that enables the buying and selling online ad inventory through real-time auctions. Here, ad requests from the publisher are sent to an open exchange (marketplace/platform that facilitates auctions) to get bids from buyers.

Here’s an example of how it works:

Let’s say you have a website about cooking. You have ad space on your homepage and want to sell it to advertisers. You work with a supply-side platform (SSP) that connects you to ad exchanges where RTB auctions occur.

When a user visits your website, the ad server sends a request to the ad exchange, asking if any advertisers are interested in bidding on the ad space. The ad exchange then conducts a real-time auction, with advertisers submitting bids for the right to show their ad to the user. All the received bids are redirected to the ad server. The ad server then decides on the winning bid, and the ad is displayed to the user.

Real-time bidding is a winning scenario for both publishers as well as advertisers. The advertisers benefit by targeting the appropriate users, and the publishers benefit with a better fill rate and maximized ad revenue. Real-time bidding is like the stock market, where the on-spot demand determines the price of a stock.

Real-Time Bidding Vs. Programmatic Advertising

Real-time bidding (RTB) and programmatic advertising are two terms that have been buzzing around the digital advertising world for quite some time now. While both are often used interchangeably, they’re not the same. Think of it like this: RTB is like a fancy sports car, and programmatic advertising is the entire garage that houses it, along with other vehicles.

RTB is just one type of programmatic advertising where you put your ad inventory up for real-time auction and let advertisers bid against each other to show their ads to your audience. On the other hand, programmatic advertising is an umbrella term that encompasses a wider range of automated buying and selling techniques, including RTB, private marketplaces (PMP), and programmatic direct.

As a publisher, understanding the differences between RTB and programmatic advertising is crucial to developing a successful strategy. Whether you want to sell your ad space through real-time auctions or private marketplaces, knowing your options will help you maximize your revenue potential.

Private marketplaces include invite-only auctions (only pre-selected advertisers can bid for the publishers’ inventories). Like RTB, the auctions happen in real-time only, but between selected advertisers and publishers. 

Then, we have programmatic direct, including programmatic guaranteed and preferred deals. Here, no auction happens, and advertisers work directly with the publisher to negotiate the terms of the deal, including the price, targeting, and format of the ad. The ads are then served using programmatic technologies. 

With a programmatic guaranteed deal, the publisher guarantees a fixed volume of inventory, and the advertiser agrees to a specific price and terms. However, suppose a guaranteed deal is not feasible for both parties. In that case, they can opt for a preferred deal, which still offers some level of exclusivity but without the same level of commitment as a guaranteed deal.

Real-Time Bidding Ecosystem

Before getting to know how real-time bidding works, it is essential to understand the entities involved in RTB. The RTB ecosystem involves:

Publishers or supply Side – To explain simply, a publisher has a specific kind of target audience to which advertisers want to display their ads. Publishers connect to an open exchange with the help of a supply-side platform (SSP). 

Advertisers or demand Side – The demand side comprises advertisers, ad networks, or demand-side platforms (DSP). The advertisers use DSP to target and buy the ad impressions made available through open exchanges. 

Ad Exchange – It is a real-time medium that facilitates a transaction between advertisers and publishers. An important thing to be noted here is that the auctions are completed in a few milliseconds, even before the page loads.

How Real-Time Bidding (RTB) Works?

Among all RTBs, header bidding is the most popular and effective one used by most publishers. Here’s how RTB works if you’ve implemented header bidding. 

• Users load a page that has ad spaces for advertisers to bid on. 
• When the page starts loading, an ad request is generated by the header bidding wrapper and sent to ad exchange(s), ad networks, ad exchanges, and ad networks.  
• The bid requests includes information such as page URL, location, age, gender, etc., so advertisers know whether the user is relevant.
• Then, the demand partners bid on the available impression (CPM) to win it.
• The winning bid gets the chance to serve the ad to the user. 

The ad creative is fetched from the advertiser’s ad server. Usually, the publisher’s ad server decides the winner and fetches the ad creative.

If there’s no header bidding implemented, there’ll be no SSP, and ad requests are sent to different ad exchanges/ad networks in the traditional waterfall model. But publishers switched to header bidding as the waterfall model isn’t effective.

Fun Fact: The lines b/w SSPs and ad exchanges are now really narrow. Almost all the exchanges and SSPs are offered together.

Benefits of Real-Time Bidding for Publishers

1. Streamlined process: Real-time bidding has changed how ad impressions are sorted and placed. It has automated the whole trade for publishers. The platforms check the relevant ad and match it with the defined parameters within the blink of an eye, thereby structuring the process.
2. Highly efficient: RTB is highly efficient because it eliminates the time consumed in the manual process of requesting proposals and quotes, doing negotiations, and creating the negotiation order to finalize the deal. You can fill your inventory in a few milliseconds and have more control over the bidding process. 
3. High inventory value: Targeting the potential users is possible with RTB. You collect first-party data, which is the real asset to be used in RTB. Advertisers seek publishers with more information, and you can connect with more demands that need your first-party data in RTB and get a high price for your inventory. 
4. Better ad revenue and flexibility: Based on real-time market demands, publishers can set minimum prices for impressions (floor prices). Since the ad impressions in RTB thoroughly match the required criteria, it is less likely to make wrong decisions. This makes the advertising process much more efficient, flexible, and faster.
5. Optimization: You can track the earnings in real time and optimize accordingly to increase your ad revenue. Unlike ad networks, RTB puts you in control. You completely know what’s happening (if you go with header bidding).

Real-time Bidding Platforms for Publishers

The real-time bidding platform lets you take advantage of the real-time bidding process. If you have inventory to sell, you can connect with any reliable supply-side platform that connects you with multiple advertisers and demand. 

Here are the few top real-time bidding platforms for publishers:

• OpenX
• PubMatic
• Verizon Media
• Google Ad Manager
• Magnite
• Index Exchange
• Xandr

Find more details about the best SSPs for publishers here.

Revenue Model of Real-Time Bidding: CPM

CPM (Cost-per-mille) is the basic pricing model of real-time bidding where advertisers bid on your inventory based on impressions.

Cost-per-mille is cost per thousand impressions. If an advertiser wins your ad space for $1 CPM, you get $1 for 1000 impressions and will be paid monthly or quarterly. 

Also, when you use real-time bidding through SSPs, you can set the minimum prices, i.e., minimum CPM for your inventory using floor price. Advertisers reserving the seat in your inventory must meet this requirement to bid. If not, their bidding will be ignored. 

How to Get Started With RTB?

Ready to jump on the RTB bandwagon? Don’t worry; it’s not as daunting as it may seem. The first step is finding a supply-side platform (SSP) to help you sell your ad inventory on an ad exchange. The SSP will assist you in placing your inventory to be sold, so it’s important to ensure you meet the basic requirements first. 

But before knocking on an SSP’s door, ensure you meet a few basic requirements. 

• Check whether you have a decent number of page views and a specific target audience. It will increase your chances of being accepted by an SSP.
• And let’s not forget about the importance of avoiding fraudulent or harmful content. That’s a big no-no in the world of RTB. 
• Also, remember that CPMs are higher for search engine traffic and direct referrals. SSPs may even reject you for having more than 70 or 80 percent social traffic.

If you meet a basic requirement, then find the SSP that provides the following:

• Check whether the SSP provides proper support and service. 
• Adtech is evolving fast, so you must find one who uses current technologies such as header bidding, Ad refresh, attention metric, etc. 
• Connect with SSPS, which offers high Ad quality and performance by connecting you to more demands and supporting different ad formats. 
• Look for analytics and optimization dashboards in SSP. This can help you track and control your ad inventories more efficiently. This will give you greater control over your ad inventory and allow you to make data-driven decisions to increase your revenue.

The Way Forward

Real-time bidding has revolutionized online advertising, allowing publishers to monetize their inventory more effectively. By understanding the basics of RTB and its ecosystem, publishers can take advantage of the benefits of programmatic advertising, including improved revenue, greater transparency, and enhanced targeting capabilities. 

However, it is important to remember that RTB is a constantly evolving landscape, and staying up-to-date with industry trends and best practices is crucial for success. As the digital advertising industry grows, publishers who embrace RTB and adapt to changing market conditions will be well-positioned to thrive in future years.

FAQs

Q1. What is Real-Time Bidding?

Real-time bidding (RTB) is an automated auction process for buying and selling online ad inventory in real time. It allows publishers to sell their ad impressions to the highest-bidding advertisers in a fraction of a second.

Q2. How does real-time bidding work?

In RTB, a user clicks on a website, and the page sends an ad request to the ad exchange. Advertisers then submit bids to the ad exchange in real time, and the highest bidder gets to display their ad to the user.

Q3. How is programmatic different from real-time bidding?

Programmatic advertising uses technology to automate online advertising buying and selling, including RTB. Programmatic advertising can also include other types of automated transactions, such as private marketplaces and programmatic direct.

Q4. What is the benefit of real-time bidding?

RTB allows publishers to sell their ad inventory to the highest bidder in real time, resulting in improved revenue and greater transparency in the advertising process. It also provides advertisers with more targeted ad placements, increasing the effectiveness of their campaigns.