The Origins and Progression of Real-Time Bidding

If you’re not familiar with real-time bidding (RTB), which is a method of buying and selling digital advertising placements, here’s a quick rundown, including how it could help your business.

What Is RTB?

Much like in the financial markets, real-time bidding gives businesses the chance to purchase an inventory of online advertising impressions instantaneously via online auctions.

The per-impression ad auctions involve the following:

1. Demand-side platforms (DSP) allow advertisers set buying parameters (e.g., placement, demographics, device, category, etc.), and then bids are made automatically on their behalf within certain parameters that are set up.

2. Supply-side platforms (SSP) are used by online publishers to manage their ad inventory.

3. The Ad Exchange connects the publishers selling inventory with the advertisers looking to bid.

How Does RTB Work?

A user visits a website, and a bid request containing information about the user (including browser history, demographics, and location) is sent to an ad exchange. Advertising buyers are notified of the opportunity to get their impressions in front of the user, and the highest bidder wins.

All of this happens within 100 milliseconds.

What Are the Advantages of RTB?

Before RTB was developed in 2009, advertisers would buy a bulk of impressions for the same per-unit price, even though they were all worth different values.

With RTB, you choose the individual impressions to reach exactly who you want, when you want. Because your ads are better targeted, you’re saving impressions, time, and money. This more-efficient model provides an unbiased means of showing content, with prices being driven by supply and demand.

What Is the Future of RTB?

Right now, humans are still needed to manage RTB, but that could change in the future. Machine learning algorithms could likely automate the process entirely. Smart machines will be able to analyze ad performance and create a bid modifier to optimize performance.

The future of RTB is intriguing and has a bit of a learning curve, but if you’re willing to invest the time you’ll likley see effective advertising as a result.