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At the heart of today’s search engine marketing is the real-time bidding (RTB) engine.
Why does it matter?
Real-Time bidding engine conducts buying and selling of impressions of your pay-per-click ads in seconds. To get higher clickthrough rates in your campaigns, you’ve got to optimize your ads to enjoy a higher placement over your competitors.
There’s a positive correlation between higher placement, clickthrough rates, and conversion. And this makes the real-time bidding process critical in your campaigns.
For ad buyers like you, real-time bidding means streamlined, efficient, and targeted buying. Besides, it allows them to fine-tune targeting and focus on the most relevant inventory, resulting in higher investment returns (ROI).
Ultimately, users see more relevant ads.
Conversely, RTB increases revenue and fill rates for publishers by opening inventory to a wider variety of buyers in a competitive auction. So, publishers gain visibility of who is buying which inventory and can leverage this knowledge to charge more for their premium placements.
In this blog, you’ll learn:
Let’s start with what is real-time Bidding and why is it important?
Real-Time bidding (RTB) is the buying and selling of online ad impressions through real-time auctions using:
The Supply-side platforms (SSP) are the publishers offering the ad space. On the other hand, Demand-side platforms (DSP) are the advertisers looking to purchase ad space.
When a user visits a website and an ad impression loads, that impression is passed to an ad exchange. And it’s auctioned off to the highest bidder. And the highest bidder’s ad loads on the web page in milliseconds.
Real-Time bidding (RTB) allows advertisers like you to set target filters and parameters to invest in the impressions that matter most to them. For instance, you can easily analyze the most valuable impressions of your campaigns.
In a traditional media buying process, you have to manually buy ads.
Let’s say that you find a magazine that serves your buyer persona. You ask for the media kit, choose the ad dimensions that fit your budget, and then buy the ad for a certain amount of time. Once time runs out, the ad is taken down.
Real-time bidding takes out all of that work.
You can get space on that magazine and hundreds of others by letting a Demand-Side Platform (DSP) automatically choose the best publishers and ad spaces, then bid on them for you.
You set several certain targeting parameters, such as maximum bid price and target audience. And these parameters then determine where your ads are placed.
The publisher accepts your ad only if you place the highest bid. But remember: real-time bidding automatically does all the bidding. You don’t have to take any additional steps.
Still confused? No worries. Take a look at the example below
Let’s say XYZ (hypothetical) apparel brand is a US-based beauty brand that just launched a clothing line and is running a campaign.
The company in question set up its campaign on a Demand-Side Platform (DSP). Besides, its target users are:
The brand also wants its ads to only be shown on sites related to beauty and lifestyle.
A user visits a publisher’s site. The publisher’s Supply-Side Platform (SSP) sends a bid request to the ad exchange, where XYZ apparel brand’s DSP will be evaluating the value of the impression.
The DSP will then determine if the user meets the parameters outlined in the campaign. If so, the DSP will submit a bid.
If XYZ apparel brand has the winning bid, the user will see the ad once the page loads. And this process happens thousands of times on different web pages during the length of XYZ apparel brand’s ad campaign.
XYZ apparel brand’s paid ads manager will also be monitoring the ad’s performance on the DSP to see if it’s reaching the desired audience.
Now that we’ve addressed what RTB is: In the coming section, we’ll answer the following: who invented real-time bidding?
Brian O’Kelley, now CEO at AppNexus, was the first person to create the first ad exchange, bringing with it the advent of real-time bidding.
O’Kelley says the idea for an ad exchange came about as he recognized the inefficiency associated with digital advertising at the time, with large-scale deals between publishers and buyers resulting in many lost impressions.
The AppNexus CEO sought to create tech, which would match publishers with the best buyers on an impression-by-impression basis. However, O’Kelley was not alone in pioneering real-time bidding (RTB). Dr. Boris Mouzykantskii, founder, CEO, and chief scientist of IPONWEB led a Moscow-based team that reviewed and improved O’Kelley’s code.
Keep reading because we’ll address the following question: who’s involved in real-time bidding?
The supply side is made up of publishers.
Publishers determine which Google Ads formats and sizes to allow within the app and then make these ad spaces available to bidders looking to have their ads placed.
The demand side is made up of advertisers, such as agencies, demand-side platforms (DSPs), and ad networks.
Essentially, they’re the ones looking to target a specific audience with advertising. Advertisers like you can determine the most valuable users through programmatic advertising and exchange and then adjust bidding accordingly.
In between the advertiser and the publisher is the ad exchange.
Think of the ad exchange like a market made up of vendors and buyers. Here, you have a ton of ads waiting to be bought and sold to the most relevant and highest bids.
So how does real-time bidding work? Keep reading to discover the answer.
Traditionally, real-time bidding (RTB) is an automated process where advertising inventory can be sold or bought on an impression basis.
Every transaction in the ad exchange takes about 100 milliseconds (a 10th of a second). Publishers sell ad space on their websites, and advertisers buy it to display their ads to a target audience.
RTB decides which ad to display on a particular site.
Typically, there are three main players involved:
Publishers provide inventory to an ad exchange. Therefore, an ad exchange (the marketplace itself) holds the inventory. Conversely, the demand-side platform is where the buyers bid for the inventory depending on their impressions. Everything is rather forthright here: it’s the highest bidder’s ad that will be displayed.
Members of the programmatic ecosystem can make bids on ad placements in real-time.
An advertiser who wins the auction gets his digital ad displayed on a publisher’s property. That’s why it is crucial to know what to bid for and how much it is best to bid. Real-time bidding is beneficial for publishers and advertisers alike.
Although real-time bidding does play a compelling role within the programmatic niche, programmatic technology extends far beyond just RTB.
So, what’s the difference between real-time bidding and programmatic video advertising?
First of all, RTB is a form of programmatic buying.
Although real-time bidding is the most beneficial technology for all ad tech players now, it’s not the only programmatic method you can use to buy digital ads.
Programmatic or technology-driven ad solutions allow publishers to sell their inventory in advance for a fixed price without taking part in an auction.
Unlike programmatic buying, real-time bidding is based on a supply-and-demand algorithm, and a result is therefore not guaranteed. And this means once you have a demand, you’ll get a good price, but if not, you’ll experience a decline in ad earnings.
Let’s get this straight.
Real-time Bidding is a form of programmatic buying. The programmatic ecosystem encompasses the means of real-time bidding. Also, it includes:
Programmatic includes all marketing campaigns involved in an offer supported by supply-side and demand-side platforms.
And it simplifies the process of transactions by connecting the SSP and DSP entities.
So, why is real-time bidding important?
Firstly, there’s no need for ad buyers to work directly with publishers or ad networks to agree upon ad prices and deliver ads with RTB advertising.
Besides, there’s no need to waste money and time searching for the proper inventory to display their ads for advertisers.
RTB helps brands like yours reach their target audiences
Secondly, real-time bidding (RTB) is measurable and action-encouraging. And it makes your campaigns measurable directly after their launch. Indeed, both publishers and advertisers can check the campaign’s results instantly.
For advertisers, RTB comes with the possibility to act and change campaigns in no time. On the other hand, publishers can change the floor price and ad unit placements anytime.
The cost of RTB varies, depending on other bids and what you’re targeting with your ad. Specifically, it’s influenced by the factors highlighted below:
So, it’s all about what you want to invest in your ads.
You can pay anywhere from $2,500 to upwards of $15,000 for a campaign. But you’re not limited by the aforementioned range.
Let’s check out real-time bidding examples.
At any given moment, advertisers like you can bid on a single impression of a publisher’s inventory, then the winning ad (is shown to the user.
Through RTB, you can apply fine-tuned targeting and focus on the inventory most relevant to them.
Real-Time bidding (RTB) also allows advertisers to optimize PPC campaigns for profitable performance.
For example, imagine playing a mobile game and deciding to watch an ad between game levels. At that moment, the mobile SSP runs an auction for all advertisers interested in showing an ad to you.
The advertisers make their bid, and, in a split-second, the highest bidder is chosen. And their advertisement is then served to you.
Publishers and advertisers can both set parameters for RTB, such as minimum prices and maximum bids, and prioritize specific deals and inventory.
In the coming section, we’ll address the following question: how does real-time bidding work?
When an ad impression loads in a web browser, the user on the page is passed to an ad exchange. And then, the user impression is auctioned off to an advertiser willing to pay for the highest bid.
The winner of the highest bid and few other factors then loads onto the web page in milliseconds.
Advertisers typically use demand-side platforms to help them decide which ad impressions to purchase and how much to bid on them based on a variety of factors.
So, what are RTB benefits for publishers like you?
Publishers have control over setting the minimum bidding price or the floor price for their inventory.
RTB demand helps the publishers to optimize their floor prices according to the demand. And this information can be analyzed using various granular reporting options in the Supply Side Platform (SSP) connected to Ad Exchanges.
The publishers can set the higher bidding price and increase the CPM value using the historical bid pattern.
Managing remnant inventory is one of the significant challenges most publishers struggle with.
However, in some cases, publishers may serve unprofitable ads. By enabling the ad exchange to manage the remnant inventory, publishers can easily get a fair price by availing their inventory in all the ad exchange auctions.
Publishers have control over all the ad inventories served via real-time bidding (RTB).
The publisher can change the floor price based on the demand and the ad unit placement and targeting option at the ad unit level. And this can help them to test their ad units to maximize the revenue.
Through real-time bidding, the publishers can serve the relevant ads to their users and collect data for optimizing the customer experience.
Besides, the system can help publishers to boost clickthrough rates (CTR) by serving the relevant ads.
RTB enables the publishers and advertisers to access the performance data in real-time for optimization purposes.
The data is crucial, especially in improving and personalizing the ad delivery. More so, publishers can increase the floor price for top-performing ad units to maximize revenue and lower costs.
RTB only represents a part of programmatic media buying.
In other words, real-time bidding is a form of programmatic buying. In less than 120ms, the RTB platform allows publishers to monetize the advertising space available on their website by selling to buyers through an auction system.
Yes, Google does real-time bidding to serve its users with the most relevant content.
The search engine giant sends the bidder account request to participate in the auction.
As we said, at the heart of today’s search engine marketing is the real-time bidding (RTB) engine.
Why does it matter?
The real-time bidding engine conducts buying and selling of impressions of your pay-per-click ads in seconds. To get higher clickthrough rates in your campaigns, you’ve got to optimize your ads to enjoy a higher placement over your competitors.
There’s a positive correlation between higher placement, clickthrough rates, and conversion. And this makes the real-time bidding process critical in your campaigns.
For ad buyers like you, real-time bidding means streamlined, efficient, and targeted buying. Besides, it allows you to fine-tune targeting and focus on the most relevant inventory resulting in higher returns on investment (ROI).
Ultimately, users see more relevant ads.
Conversely, RTB increases revenue and fill rates for publishers by opening inventory to a wider variety of buyers in a competitive auction. So, publishers gain visibility of who is buying which inventory and can leverage this knowledge to charge more for their premium placements.
Check out the benefits of real-time bidding (RTB) to publishers
We hope we’ve debunked real-time bidding (RTB) and programmatic advertising, which most of us misconstrue to have the same meaning.
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