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Real Time Bidding – A Beginner’s Guide

Real time bidding
Valuing ad impressions based on real-time data and market demand drives up your ad revenue. But how to make it happen?

Adtech ecosystem is known for it’s hard to understand jargons and processes. Real-time bidding (also called as RTB) is no exception. It changed the way publishers and advertisers trade their ad impressions, once and for all. 

Imagine a situation where a user opens up a site to read content, a display ad of the relevant product/service shows up. Wondering, how the website knows that the user is interested in the specific product/service? 

Well, that’s the result of Real-time bidding (RTB).

Real-time bidding creates a rare win-win-win situation.

Advertisers have the ability to serve ads based on real-time user data. They can “target users based on their demographic, psychographic, or behavioral attributes”.

Users/readers are served with relevant ads rather than a vague one. This, in turn, improves the ad experience.

Publishers or website owners can earn better ad revenue with the help of RTB. Because in RTB, individual ad impressions are put up for sale on an online auction, where thousands of buyers* compete to win the impression. The bidding process drives up the CPM, thus, increasing your ad revenue.

*The number of buyers varies and it ultimately depends on your demand partners and a couple of others

Let’s not dwell over the surface. It’s time to dive deep and understand what is RTB and how it works to help you.

Table of Content:

What is Real-Time Bidding (RTB)?

To put it simply, RTB is a real-time auction, where ad requests from the publisher are sent to an open exchange (marketplace/platform which facilitates auction) to get bids from buyers.

Every time, users load a web page, ad requests are sent out to exchanges. The number of ad requests varies from one publisher to another.

The exchange of ad impressions is facilitated by ad exchanges. 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 the better fill rate and maximized ad revenue. Real-time bidding is similar to the stock market where the price of a stock is determined by the on spot demand.

When a publisher receives the bids from the buyers, it’ll be directed to an ad server (decision layer). The server picks the winner (highest bidder) and then, serves the ad from that buyer to the reader on the page.

Why we developed RTB?

In the late 2000s, both publishers and advertisers faced issues. While publishers could not reach the right advertisers, the latter find it difficult to connect with the right target audience. This is where the RTB marketplace was introduced as an innovative & convenient technological solution. RTB not only filled the unused ad space but also effectively managed the filled inventory. According to eMarketer, almost half of the programmatic display ads are transacting via RTB. 

Real-Time Bidding Vs Programmatic Advertising

Many in the digital advertising ecosystem use RTB and programmatic interchangeably. However, there is a difference. These cannot be used as substitutes for each other.

Programmatic refers to an automated way of procuring ads using technology.

Sidenote: Programmatic advertising is not fully automated and requires human intervention to define factors such as target area, audience and ad formats (display, video, etc). After these parameters are set, the process of ad purchase is structured and automated. 

On the other hand, RTB refers to the auction connecting publishers (sellers) and advertisers (buyers) using an open marketplace (ad exchange). It is one of the types of programmatic.

Programmatic - Types

source: Google.

In the picture above, open auction, private auctions can be referred to as RTB, the rest of the methods comes under ‘programmatic’.

Why, you ask? Simple. Both of them involve more than one buyer, which means there’ll be an auction-based on real-time data.

How Real-Time Bidding (RTB) Works?

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 platform called the Supply-side platform (SSP)

Advertisers or Demand Side – The demand side comprises of 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 medium that facilitates a transaction between advertisers and publishers in real-time. An important thing to be noted here is that the auctions are completed in a few milliseconds, at the time even before the page loads. 

Working of RTB:

Header bidding can change the supply path. Here’s how RTB works if you’ve implemented header bidding.

Users load a page which has ad spaces for advertisers to bid on. As soon as the page starts loading, an ad request is generated and sent to ad exchange(s) via SSP.  SSP typically sends the bid requests along with information such as page URL, location, age, gender, etc. so that advertisers know whether the user is relevant or not.

Ad Exchange(s) gets the bid requests and sends calls to connected DSPs (potential buyers). Then, the DSPs 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.

Sidenote: The lines b/w SSPs and ad exchanges are now really narrow. Almost all the exchanges and SSPs are offered together (for instance, Google Ad Manager offers Google Ad Exchange; you can’t access Google AdX without Ad Manager).

Benefits of RTB for Publishers:

  1. Streamlined process – Real-time bidding has changed the way ad impressions were sorted and placed. It automated the whole trade for publishers. The platforms check the relevance of the ad and match it with the defined parameters within the blink of an eye; thereby structuring the process.
  2. 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 are thoroughly matched with the required criteria, it is less likely to make wrong decisions. This makes the entire advertising process much efficient, flexible, and faster.
  3. Optimization – You can use track the earning real-time and optimize accordingly to increase your ad revenue. Unlike ad networks, RTB puts you in control. You know what’s happening (if you’re going with header bidding) completely. 

How Can Publishers Get Started with RTB?

Starting with programmatic display or RTB process may sound complex but in actual, it is quite a direct process. As explained earlier, the RTB process involves SSP (supply-side platforms), ad exchange, DSP (demand-side platform), publishers, & advertisers. The SSPs assist publishers in accessing the ad exchange and place their inventory to be sold, on an ad exchange. So, your job is to get an SSP to help you sell the impressions. 

However, there are certain basic requirements to meet, in order to make ad space available via ad exchanges. Once the enlisted requirements are achieved, a publisher can immediately register with an SSP.

Page Views: Publishers with an acceptable number of page views are allowed to register for programmatic. Page view requirement varies depending upon the SSPs.

Target Audience: Though it isn’t necessary to have an audience, many SSPs prefer to take publishers who have build a specific audience base. It may be location-based, niche-based, etc. But, it pays to have a huge chunk of certain audience segments. 

Avoid Fraudulent Content: Though this is understood, it is always best to have safe content that does not harm partner identity.

Traffic Referrals: As a publisher, you might be getting traffic from several sources including search engines, Google, Social Media, etc. But 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.

It is advised to look for SSPs that provide:

  1. proper support and service.  
  2. Analytics and optimization dashboard to track and control ad inventories. 

The Way Forward:

It’s safe to assume more than 50% of the top publishers are utilizing real-time bidding (RTB) to better their revenues. If you’re using an ad network and have crossed the minimum requirements, we suggest you implement RTB. You can do so with the help of header bidding. There’s also Exchange bidding offered by Google.

Automatad Team

At Automatad, we help publishers to monetize better without hampering the user experience. Our products are live across hundreds of publishers, earning them incremental ad revenue with every passing second. You can request a free audit to get an estimated revenue uplift today.

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