What Is Real-Time Bidding?

Posted by Tim Nichols on Mar 31, 2015 9:00:00 AM
Tim Nichols

Real-time Media BuyingIn case you hadn’t noticed, the real-time bidding revolution in online display advertising is well and truly here.

Over the past couple of years, digital marketing has been all about programmatic ad buying, and the industry continues to grow on all fronts; display, mobile, social and video. And within programmatic, real-time bidding (RTB) plays a very important roleIn fact, one could even say that RTB has completely changed the face of online advertising, but there’s still a lot of confusion around what it actually is. So here’s a primer, in plain English:

Real-time bidding is a dynamic way to purchase individual online impressions. It enables advertisers to buy media in real-time rather than from pre-procured inventory. Using RTB, advertisers can deliver better targeting, richer audience insights and fully integrated marketing campaigns. For additional information please check out ExactDrve's real-time media buying brochure.

OK. So how does Real-time bidding work?

As an ad impression loads in a user’s web browser, information about the page it is on and the user viewing it is passed to an ad exchange, which auctions it off to the advertiser willing to pay the highest price for it. The winning bidder’s ad is then loaded onto the webpage instantly. The whole process takes less than 50 milliseconds to complete. 

Advertisers typically use demand-side platforms such as ExactDrive to help them decide which ad impressions to purchase and how much to bid, based on a variety of factors such as the sites they appear on and the previous behavior of the users loading them. For example, online clothing store Zappos might recognize that a user has previously been on its website looking at a specific pair of shoes, and may therefore be prepared to pay more than Amazon or Best Buy to serve ads to him.

The price of impressions is determined in real-time, based on what buyers are willing to pay, hence the name “real-time bidding.”

The Role of a demand-side platform (DSP)

The Role of a demand-side platform (DSP)

Is real-time bidding the same as programmatic advertising?

No. RTB is a type of programmatic advertising, but not all programmatic advertising uses RTB. Some “programmatic” or technology-driven ad platforms let publishers sell their inventory in advance for a fixed price, as opposed to auctioning it off. This is referred to as programmatic direct or programmatic guaranteed.

Why is real-time bidding good for advertisers?

Thanks to real-time bidding, ad buyers no longer required to work directly (or manually) with publishers or ad networks to negotiate ad prices and to traffic ads. Using exchanges and ad tech, they can access a huge range of inventory across multiple sites and cherry-pick only the impressions they deem most valuable. This reduces the number of impressions wasted on the wrong users, but also minimizes the need for costly and unreliable human ad buyers.

 

Topics: Media Buying & Planning, Online Advertising, Real-Time Bidding, Real-Time Media Buying, Online Media Buying, Media Buying

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