What is Real-Time Bidding (RTB)?

Real-time bidding (RTB) is a process through which publishers sell their ad inventory to advertisers. It involves the use of automated platforms that leverage machine learning to carry out auctions for ad space in real time. It is an essential part of the programmatic advertising ecosystem one of the most efficient media buying methods available.

 How does RTB work?

Using supply-side platforms (SSPs) and demand-side platforms (DSPs), respectively, publishers and advertisers are connected to ad exchanges and then matched together according to the predetermined targeting criteria. Once matched, the advertiser can engage in real-time bidding for the publishers’ ad inventory.

Whenever a user visits a publisher’s webpage, the programmatic progress begins, with a variety of matched advertisers submitting automated bids for the ad space they desire. The bids are determined by each advertiser’s DSP data and configurations, and the ad space is typically sold to the highest bidder.

As a core media buying method in digital advertising, RTB ensures that advertisers can target audiences with precision while publishers achieve competitive pricing for their inventory. When a successful bid has been chosen by the publisher’s SSP, the relevant ad will be displayed on the webpage for the visitor to see. This process takes in milliseconds, repeating anew each time a new visitor lands on the page.

What are the advantages of RTB?

There are a range of benefits to using real-time bidding. Some key advantages of RTB include:

• Precision targeting: With real-time bidding, advertisers use key data points, such as user demographics or hardware information, to target specific audiences. This ensures ads are always served to relevant audiences with a high potential for engagement and conversions.
• Access to supply sources: By buying DSPs and real-time bidding to buy ads, advertisers can access a wider range of supply sources across various channels.
• Cost optimization: With RTB, bids are based on impressions, with advertisers only paying for each time their ad is actually served. This reduces revenue wastage from low-impression ads and increases overall ROI.
• Performance tracking: DSPs and SSPs give advertisers and publishers the ability to track the performance of ads and ad inventory. This enables each party to analyze and adjust their targeting criteria and pricing to better align with their goals.

What is the difference between real-time bidding and programmatic advertising?

Real-time bidding and programmatic advertising are closely related by distinct concepts.

Real-time bidding refers to the process of submitting automated bids in real-time auctions. More specifically, it refers to automated bids that are submitted for individual impressions on individual pieces of ad inventory.

Programmatic advertising, on the other hand, is wider in scope. It refers more generally to the automated sale of digital ads through software platforms, encompassing all sales models, from RTB to direct sales, preferred deals, and private marketplaces (PMPs).

As such, we can say that real-time bidding is a subset of the wider concept that is programmatic advertising.

Conclusion

Real-time bidding (RTB) is a cornerstone of programmatic advertising, offering precise targeting and cost-efficient ad transactions. By enabling seamless, data-driven auctions, RTB helps advertisers reach relevant audiences while maximizing revenue for publishers.