Our world is evolving fast and technology is the driving force behind it. Only a decade ago, the internet was accessible from a one location - your computer. Now, the web is accessible on a number of devices namely mobile devices like smartphone and tablets.

Because of this, publishers have made a conscious effort to make their content more user-friendly for mobile devices, including the creation of responsive websites and apps.

As well as this, digital media has become a very popular media used by publishers, advertisers and also end users. As per the IAB report, digital advertising has generated $60 billion revenue in 2016 alone and in 2017 it is expected we’ll see a further growth of 31.1%.

One of the reasons for this rapid growth is due to the transparency, technology and vast accessibility to target individual audiences that digital media has the ability to do.

This is a large contrast to the traditional media buying system, which can now be considered inefficient. It requires the lengthy process of manually purchasing inventory from publishers, which is necessary to be completed through manual bidding by the advertisers.

One of the drawbacks of this, in particular, was that it wasn’t possible to make the purchasing process more equally reliable to both advertisers and publishers.

Previously, it was much easier for publishers to manipulate and exploit advertisers by creating false demand. Even agencies influenced advertisers to pay more.

Because of this, advertisers always ended up on the losing team.

Since digital advertising was introduced, there has been the opportunity for developers or marketers to take this process to a digital or programmatic level.

In particular, tools such as RTB , DSP’s and SSP’s have allowed both parties to meet in a programmatic marketplace where publishers are able to sell their inventory in real time. In this circumstance, the highest bidder wins inventory, meaning the advertiser is spending no more than is required, instead only paying as per the demand.

What makes this process so popular is the “second price auction”. This system has effectively secured and justified the pricing system.

Let me explain it a bit more.

“Second price auction” means the highest bidder wins but the price paid is the second-highest bid. For example, ‘A' has put a bid of $100 and ‘B' has put a bid of $150. In this circumstance ‘B' will win the auction but will only have to pay the price of ‘A' ($100).

With real time bidding RTB, advertisers place their demand or interest to purchase inventory with the help of their DSP, which is connected to the digital marketplace. This programmatic system ensures fair bidding and sets a fair price for inventory.

Because the system is fully programmatic, it comes with some extra facilities. The platform allows for advertisers to acquire vast knowledge on the end-user, which can be utilized to build a more detailed profile of their audience’s interests.

This information allows the adverts to set specific targets to the right demographics. This in turn helps to generate the best ROI and performance from a campaign.

With this, both publishers and advertisers become the winners.

This win-win situation created by the programmatic system is attracting more advertisers to participate in the marketplace and is the secret behind the growth and success of this industry.

If you want to learn more about programmatic advertising and how you can use it to create amazing advertising ROI, get in touch. We specialise only with mobile programmatic advertising, making us the experts in our field.

Author:
Joshua Prottoy Adhikari
Manager, Country & Programmatic Ad-Operations
TARGETOO

RTB has become something of a phenomenon in modern day online advertising yet, many people are still unsure what it really is. Throughout this article, we answer any questions you may have regarding this topic and help to you towards understanding RTB and how it’s used in online advertising.

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What Is RTB?

RTB or “Real-Time Bidding”, refers to the buying and selling of online ad impressions. What makes it unique to other methods is that you bid via real-time auctions. These auctions will take place in the time it takes for a webpage or app to load, which - when you think about it - is incredible. You’ll also find that real-time auctions have to be aided by someone. In most cases, supply side platforms or ad exchanges are responsible for the setting up of these auctions while a Demand Side Platform is able to ‘bid’ and win on the impressions.

What Is an Impression?

An impression is another way of saying a view of your ad. It is logged each time an advertisement is loaded up on a person’s device. Using impressions, you can work out the number of times your advert has been shown, as well as your CTR and conversion rate.

How Does RTB Work?

The process of RTB advertising lasts mere milliseconds. Everything that is discussed below happens in those precious moments when a user loads up a webpage with an ad impression on it.

At some point during the average internet user’s day, they’ll load a website or open an app that has at least one ad impression on it. While this ad impression is loading up, large amounts of information is being passed to an ad exchange, which then auctions off the impression to the highest bidder.

All of this happens behind the scenes and in real-time. The information passed on will include elements like the webpage the impression is on, as well as details of the user that is on the page.

The winning bidder (using a Demand Side Platform) will then have their advert loaded up onto the page instantly. From the user’s perspective, nothing has happened. They’ve clicked on a page and been greeted with a highly relevant advertisement.

Because of this, advertisers use a RTB platform to bid on ad impressions that will be most effective for them. A good example of this is an advertiser working for a company that sells cooking utensils. If they get information from an ad exchange that a user interested in food is looking at cooking recipes online, this will be deemed a suitable impression and a bid will be placed to get their advert placed in front of them.

How can a DSP help?

More often than not, advertisers use demand-side platforms (DSPs) to help figure out which ad impressions they should purchase and for how much. DSPs can find ad impressions based on various contributing factors. This includes information such as the site the impression is on, the previous internet history of the user loading the ads, etc. These factors have a bearing on how much someone should bid on the ad impression too.

For example, if a user has previously been on your site and made a purchase, then you should be more inclined to pay top dollar to serve an ad to them. As a previous/existing customer, your ad will more likely have an effect on them than someone that’s never been on your site before.

Impressions are priced depending on how much people are willing to pay for them. Someone may start by bidding $1, and then others join in until a price is reached where no one else bids higher. Consequently, there is never a set price for a particular ad - it all depends on the real-time bidding process.

What’s The Purpose Of RTB?

The main purpose of real-time bidding is that it allows advertisers to target ads towards users, rather than looking at specific websites. In the past, if you had a certain market to reach, you’d look for websites where your audience is most likely to be. With RTB, you can use DSPs to directly find your target market, and serve them an ad no matter where they are.

Is RTB Good For Advertisers?

In short, yes, RTB is very good for advertisers. As well as being able to target their ads to the people that matter, they also see another main benefit. Real-time bidding is simply the most efficient way of buying ads. You don’t need to wait for anyone, or negotiate prices with companies.

By using ad exchanges and DSP’s, you can bid on ads in milliseconds and ensure you find the right ones for you. There’s less chance of buying impressions that are wasted on users that aren’t your target market too. Plus, you don’t need human negotiators to find and buy ads either. This allows it to be better on your budget, too.

We hope this guide has provided you with a better understanding of RTB advertising. The actual process is complex and lasts under a second, but the concept is simple.