What is Real-Time Bidding in Advertising 

The term RTB is used to refer to the technology of online advertising auctions (Real-Time Bidding). The whole procedure happens in the blink of an eye. It takes exactly as long as the user's web page is loaded. What is RTB advertising and by what algorithm it works? You can find all the answers in this article.

What RTB Advertising Is

In the world of web advertising, Programmatic and RTB technology has pushed far ahead. When they appeared, the development of advertising rapidly expanded. This period was marked by the appearance of new advertising platforms and networks with their tools on the market. In this case, advertisers and agencies were able to buy ad impressions for certain client segments.

Before that, they had to negotiate the publication of ads with multiple advertising systems. Each of them was designed with an individual interface, settings, and had its own rules and working conditions. Advertising prices were set by the owners of platforms and systems.

In this case, the advertisers had the opportunity to buy only space for advertising or a banner, rather than displaying ads to the target audience. It was difficult enough to understand what advertising sites and at what time potential customers are located.

Because of all these factors, buying advertising was quite difficult. A scheme was required that would facilitate the placement of ads — using a single entry point on different exchanges and venues. That's when Programmatic and RTB came into play. Today they are used by almost all large-scale advertising networks: Google, Yahoo, Facebook, etc.

RTB is based on a development by Admeld purchased by Google in 2011. After only a year, over 78% of venues and 17% of advertisers in Google's DoubleClick partner network have switched to this model. It must be said that Google, with its technologies Adsense, Adwords, Analytics, Admeld, Invite Media, Doubleclick, and others, is the largest player on the RTB market.

Simply put, the RTB is an exchange representing the meeting place of the three parties. The first is the advertiser, who sets the amount of money he is ready to pay for showing the ad to a specific user. The second one — platforms, which are sold as part of the auction in online mode. The third is a user or rather impersonal information about him. The object of the auction is just the right to show him an advertisement.

The auction on the exchange is held online. A series of events take place in a fraction of a second while a web page is loaded before the ad is displayed to a specific user. During this time, information about the user — the site he visited, information known to the site about him, maybe additional data from special information providers — are put up for auction. It's picked up by the advertiser who called the highest price. For example, after loading the page, an iPad owner will see an ad of smartphone cases.

The RTB system uses cookies, pixel tags, the ID of the mobile platform used, a browser, or social network accounts to identify users. Target users are those who fully meet the advertiser's requirements.

Anonymous information about users linked to a cookie includes quite a few user parameters (request history, socio-demographic targeting, retargeting information). This allows the user to see the relevant commercial ads.

The line between aggressive advertising and useful content is very easy to draw. Users react differently to an ad once it begins to affect their true needs. For example, often users say that they enjoy ads on specialized websites. Or at least they think they can be of use, so they click on them. This is quite common for those thematic sites, where users are gathered on a clear interest, well known to advertisers. And this is an excellent tool: involvement in such a system turns any site into a thematic one.

RTB Media Ads Comply With the Requirements of Advertisers

• First of all, there is no need to buy packages anymore — specific impressions are purchased. When reducing the quality of traffic to the site or changing its composition, the advertiser does not even pay attention to this, because, however, it acquires views only for those interested in its users. Different "third-party" traffic stops being loaded within the purchased package, as it usually happens. Almost all advertisers are buying their target customers, not a place on the website.
• Besides, there is a "second price" system that optimizes advertising expenses. The auction is held in a 1-cent step. And if you set a price of 11 cents and your competitor 9, you win the auction, but your bid is automatically discounted to a minimum of 10 cents compared to your competitor in our example.

As a result, it significantly increases efficiency. In a standard media advertisement, it is common to use CTR indicators at a percentage level. RTB increases CTR to dozens of percent. The clickability of 15% and above becomes reality.

RTB allows the advertiser to find exactly the client he needs. And users — to see ads relevant to their interests. Privacy of users, in this case, is not threatened, because, in fact, RTB advertising uses some virtual profiles, which are based on data about user's behavior on the website and available information about visiting other websites. This profile can be deleted by simply clearing the cookies in your browser.

RTB Advertising Market Participants

RTB advertising works via Open RTB protocol developed by Interactive Advertising Bureau (IAB). Each member of the RTB system plays a different role, making it possible to perform tasks and increase response speed.

SSP (Sell Side Platform) — is a service of automated traffic auctions, where website owners determine its cost. Sell-Side Platform represents the interests of the platforms, it is responsible for selling ads at the highest possible cost and selects the winner of the trades.

DSP (Demand Side Platform) — a service where agencies and advertisers purchase shows on various advertising exchanges. DSP represents the interests of the advertiser and is responsible for purchasing banner displays at minimum cost, as well as for collecting statistics on online displays.

Trading Desk (ATD or Agency Trading Desk) — DSP-manager or centralized advertising purchase service. For advertisers, the service is an entry point into the RTB. That is where it shapes the requirements for the target client and determines budget constraints. Trading Desk uses DMP for targeting and transfer of information between different DSPs. In this case, the DSP receives information about auction bids from the SSP. In addition, information about advertiser rates and conversion rates is exchanged between DSP and ATD.

Ad Network is an advertising network that serves as an agent between advertisers and publishers. It is designed to combine sites considering the needs of their owners and select the most appropriate ways to meet the demands of advertisers.

Ad Server — is a technological platform and software for website owners and advertisers. Ad Server allows you to manage to advertise and optimize ads. These are databases of banners and their properties for advertising networks (ad networks).

DMP (Data Management Platform) is a data management tool for the target audience that allows analyzing, segmenting potential clients, creating anonymous user profiles, and using the obtained data to display ads currently in demand.

Data Suppliers or Data Broker is a platform for collecting and selling anonymous user profiles, interests, and other behavioral factors to increase targeting accuracy in advertising. It uses cookies, pixel tags, mobile platform identifiers, social networks, and other sources.

Ad Exchange is an advertising exchange, a platform for holding traffic auctions and establishing links between platforms and advertisers.

Ad Verification & Brand Safety — a service that performs post-check ads, protects brands from improperly created and published banners, prevents their unwanted environment, and competes for clean traffic.

RTB Advantages for Advertisers

• They buy the show only for the target audience — potential customers who will be interested in the advertising message;
• They pay for the target client, not just for the spot, as it occurs in other forms of media advertising;
• When using dynamically created offers, they show a specific user an advertisement message that is as relevant to their interests as possible. This helps to make the audience more motivated;
• Manage campaigns on all websites centrally, making it easy;
• Can adjust targeted advertising as flexibly as possible, which has a positive impact on efficiency;
• With the help of statistics, they can manage stakes based on the value of the show to a certain user, rather than paying the same amount for an abstract hundred ad displays.

RTB Advantages for Advertising Platforms

• A better income as a result of the bidding scheme showing ads with a higher bid;
• When paying for clicks can earn more and minimize the negative of Internet users because advertising is relevant to their interests;
• No financial risks, since ordinary advertising is shown when the price is offered below the set limit.

Benefits for Users

Currently, RTB advertising is the most targeted — therefore, the most thought-out form of an online marketing campaign on the Internet. Thanks to developing algorithms and technologies, a wide choice of different design options, the algorithmic purchase becomes a prospect for all media advertising.

• To get the highest possible impact, you need to carefully segment the audience according to criteria that are convenient for you. With RTB, you can apply more selection parameters for targeting compared to classic targeted advertising.
• All statistics are open to you, so you can track all your costs and efficiency.
• You can disconnect from inefficient services or those that just don't work, and switch to other services.
• RTB increases conversion from other promotion channels, such as contextual advertising.
• You quickly get results with all the variety of targeting for customization.
• To solve different tasks, it is necessary to select different settings and elements of programmatic buying. If you aim to increase your brand awareness and reach a larger audience, you need to segment it by social and demographic parameters, describe your basic interests and adjust the visibility of the advertising space. If the task is to bring the target audience to the site, you need to combine the settings by behavioral parameters and apply the 'look-alike' algorithm. If it is necessary to increase the targeted actions, it is more efficient to use retargeting.
• Each type of task should have its performance indicators. Only in this case you can assess whether the advertising tool is effective in general. Suppose you want to increase conversion. It means that the evaluation will have to be based on the cost of the action and the price of the confirmed order.
• Thanks to improved targeting strategies it is possible to show ads to users who are at a certain distance from a given place.
• You can use the accumulated data from the advertiser's CRM system.
• Using the portraits of real customers, you can apply a look-alike algorithm to search for similar users.

Users, despite banner blindness, well perceive the native advertising, placed on a suitable web resource, and fit well into the overall content.

How RTB Advertising Differs from Advertising in the Programmatic Direct System

Let's focus on the advantages and disadvantages of the auction and direct bidding. We analyzed the advantages of the RTB model previously in this article. Now let's consider its disadvantages and compare it with another algorithm of advertising demonstration sales.

Disadvantages of RTB:

• The inventory is residual. They try to sell all the premium traffic directly and put up for auction the rest.
• Low-quality web resources. There are a lot of websites involved in RTB, including second-tier ones. It is impossible to understand in advance on what site your advertising will be demonstrated.
• Brand and image marketing campaigns cannot use RTB advertising.

Pros vs Cons of Programmatic Direct

Programmatic is a technology that automates the process of buying and selling advertising equipment, based on the understanding of user wishes. In other words, it is a program that decides in the shortest possible time (milliseconds) whether or not to show advertising to a certain user.

Programmatic includes any automated purchase of advertising tools through an auction or directly, based on agreements with advertising platforms.

There is also a frequent definition of Programmatic Direct — the same Programmatic, but with the direct purchase of advertising displays on the sites, without bidding at a general auction. Programmatic Direct is the process of purchasing marketing tools using Programmatic. Programmatic Direct is the process of purchasing marketing tools using Programmatic.

Pros of Programmatic Direct:

• Premium traffic

The direct purchase ensures the sale of the best advertising spots and the ability to buy traffic ahead of other advertisers.

• High-quality platforms

There are large marketing platforms that do not sell their advertising tools at auction. You can place an advertisement on such sites only through direct purchases.

• Secure traffic

With Programmatic Guaranteed websites, the advertisers are guaranteed a certain amount of displays and advertising costs, which ensures more accurate planning of advertising budgets.

Cons of Programmatic Direct:

• High entrance fee

Only large advertisers can afford to buy directly. The size of the entrance threshold is usually at least 10 thousand dollars.

• High price

Advertising via Programmatic Direct costs several times more than the traffic from trades.

• Non-target audience

The advertiser acquires a certain advertising space or banner on a thematic resource, rather than displaying ads to the target audience.

It is up to you to decide which model of programmable purchases to choose. It must be said that the RTB model is known to almost all advertisers who have at least once launched contextual advertising in Google AdWords.

Types of RTB Advertisement

Forget the traditional banners. Be creative to make your brand noticeable and catchy to your audience.

• Smart-Banners. Advertising with movable content created according to the demands of website visitors. In a movable carousel of such a banner, each ad will be noticed by the user.
• A video in a banner or a stream.
• Designed surveys with options (quality content can attract visitors who do not object to the simple choice of lines).

Scheme of Displaying RTB Advertising

RTB advertising improves communication between you and your customers. Visitors see really useful advertisements that are relevant to their needs. Advertisers are delighted with new, previously unattainable performance indicators. Personal information of users is securely protected: all RTB services perform targeting based on anonymous profiles provided by DMP.

Large competitive platforms, which offer advertisers to place their offers, give their traffic to the auction. Media advertising RTB operates by the rules of bidding: when loading a web page, the system reads the user's profile and as a result, shows ads that are as relevant to his interests as possible.

The whole process is automated: the system sends a detailed description of the web page, the user on the site, and the type of ad to all connected buyers of the advertising site. Buyers correlate the received information with their settings, and if the client and the format suit them, offer already adjusted cost. The service collects bids, conducts the bidding, and gives the advertising space to the one who offered the highest price. At first glance, all this seems long and difficult, but in reality, it takes 100-120 milliseconds.

The advertiser enters his requirements for the target audience (social and demographic parameters, behavioral indicators) into the Trading Desk in advance, sets limits on the budget, price of an indicator, or click. While the Trading Desk campaign is going on, the corresponding RTB-block is activated — DMP, SSP, Ad Networks, Ad Exchanges, a lot of bets are made before each advertising demonstration.

All that an online marketer should do is exhibit and combine the settings of targeted advertising, identify sites for placement, set the cost, and monitor the results.

Algorithm of the scheme in detail

• The user enters the name of the site connected to the RTB advertising network in the browser string.
• Before downloading a page, the website sends the network to which it is connected a request for a banner display, as well as information about the user (not name and phone number, but information available for targeting).
• The RTB advertising network transmits user information to the SSP.
• The SSP classifies the request using the maximum number of criteria: the site visited by the user, its information, time of visit, retargeting information.
• SSP puts out trades — information about the site and user systems of advertisers. If desired, the SSP gets more information about the user from the DMP.
• Trading Desk, using a DSP, transmits information about the SSP bid.
• SSP processes data from all advertisers who made a bid. Chooses the highest one.
• It decreases it to the second value and shows it at a price that is 1 cent higher than the second-highest rate.
• Receives an ad about the winner and transmits it to the browser of the user in response to a request for advertising.
• A page with the received ad is loaded.

Conclusion

RTB advertising is a benefit to all participants. The website gets the maximum income as it automatically accepts the most advantageous offers. The advertiser finds exactly the client he needs. And the user sees the advertisement that meets his demands. Various design options will allow you to showcase your products or services in a new way, without bothering users, but arousing their interest and being within their sight.