How does real-time bidding work?

RTB is a very popular approach to ad space trading. Based on programmatic, it is automated and safe for both publishers and advertisers. Today the RTB system became a wonderful alternative to the traditional ad inventory buying. The way it works is simple even if it seems complicated.

What’s RTB?

RTB stands for real-time bidding. It is one of the directions of the programmatic approach along with programmatic direct. RTB is based on computerized algorithms, which make the process of ad inventory trading automated. As a result, human involvement becomes minimal.

Real-time bidding presupposes the deals, which are made in real time. For the cooperation of marketers, special platforms are created. The deals are made through online auctions. Thanks to such a system, the transactions and purchases are fulfilled within seconds.

For the application of the RTB system, two parties should be involved:

• supply-side platform (by means of it, publishers can make their space available to multiple publishers)
• demand-side platform (with the help of it, advertisers can find suitable offers with advert inventory and make bids).

The platforms described are also required to make settings. Thus, advertisers can select the definite targeting options while the system will automatically select only those offers, which match the requirements. They also set the highest bid, which will be made by the system. Publishers can also select the advert categories and formats they are ready to place on their sites or applications. Besides, the information from their websites or apps is collected in order to compare it with the requirements of advertisers. It concerns the number of visitors and their features (location, age, gender, interests, education, etc.) Such an approach allows avoiding inappropriate content, money losses (due to the ineffective ad placement), and other problems typical for modern marketers.

One more platform required for the RTB system is an advert exchange. Here online auctions are organized. All the platforms are connected with each other, thus, the automation of the trading process becomes possible.

How does it work?

Let’s look at the principles of the RTB system functioning:

1. A publisher makes the inventory available through an SSP. Certain settings are made (concerning ad types, prices, etc.) and an offer is created on an advert exchange.
2. Using a DSP, an advertiser creates parameters of an ad campaign. The platform keeps monitoring an advert exchange selecting suitable offers and notifying an advertiser.
3. An advertiser considers the offers selected according to the requirements and makes bids participating in an online auction together with other advertisers.
4. The automated system selects the highest bid.
5. The winning bidder’s advert is then loaded into the application or webpage instantly.

The transactions and other processes connected with ad space trading are automated and take a few seconds.

Distinctive features of the RTB system

Compared to programmatic direct and traditional ad space buying, RTB offers full automation. There is no need to meet, negotiate on prices, targeting, and other options. It is vital not to confuse RTB and programmatic because RTB is just one of the directions of the approach.

Real-time bidding is a complex system. An ad exchange is an integral part of it, which connects advertisers and publishers making their cooperation easy as never before. The RTB system provides plenty of advantages to the marketers:

• accurate pricing
• low risks of fraud
• time and money savings
• advanced control of the deals via special platforms
• better targeting
• low risks of money losses (due to the buying of ineffective ad space).

Moreover, publishers can sell their remnant inventory getting an additional profit.

Types of platforms

There are various kinds of platforms, which are created for the cooperation of marketers. There exist open and private ad exchanges. The first type is available for any advertisers while the second one can be used only by the premium ones. Private exchanges are usually created by publishers to sell their high-quality ad space to reliable advertisers. Besides, you can find specific mobile RTB platforms and the united ones.

RTB becomes more and more popular. The interest in such an approach keeps increasing because of the growing number of digital devices all over the world. The system is beneficial for both sides of cooperation and even for marketers working with these parties.