What is Real-Time Bidding in Advertising?

Plenty of people create news and rumors on real-time bidding in advertising. Nevertheless, for the bulk of web users, the term and its importance still are a total mystery. In this article, we are going to represent the real-time bidding (RTB) explained in human words so that you may take advantage of it for your media campaign done programmatically.

What is Real-Time Bidding and How Does it Work?

Well, in fact, real-time bidding or RTB is a process of instantaneous buying or selling of the ad inventory through the auction that determines who finally becomes the owner of a particular impression. If even more straightforward, RTB comes as a way of getting ads through making specific bids on the auction so that the bidder can “win” the most beneficial space for displaying media.

The principle of real-time bidding in advertising lies in the concept of combining automation and maximum effectiveness. For example, the end-user enters the preferable web browsing tool and opens the web page; the one takes a look at the ad banner that at the same time is a product from the auction, where advertisers make bids to show the ad to this user; only one media buyer wins the game by making the highest bid from the available.

The entire process mentioned below is rapid and fully automated. Moreover, it looks like a coherent, full-featured system that connects data providers, advertisers, publishers, etc., by making them all take advantage of the right demand-side platform (DSP). The one allows to enter the RTB environment quickly and straightforward and simplifies the process of media buying, making the workflow flexible and the outcome as desirable and wise as possible.

Primary Components of Real-Time Bidding in Advertising

According to eMarketer, the new OpenRTB 3.0 version is a game-changer for the Ad tech community. And there is nothing strange here as every new spec brings more new, high-end opportunities to programmatic bidding. That is why it is essential to know core elements of real-time bidding to operate up-to-date advertising done programmatically.

The process of real-time bidding is a smart ecosystem as a whole and it comprises the relationship between the 5 primary participants:

  1. a publisher;
  2. SSP or a supply-side platform;
  3. ad exchange;
  4. DSP or a demand-side platform;
  5. an advertiser.

Component #1 – Publisher

When it comes to ads, the publisher plays the role of a website that web surfers visit. Whether it is a news portal, online city guide, fashion blog, or any other site, it fits the publisher’s role in display advertising. If there is a necessity to increase the revenue with the help of display ads, a publisher creates ad space on the website for future content placement. This space or slot is also called an inventory.

Component #2 – Supply-Side Platform

The SSP or supply-side platform aims to create a safe environment for selling the inventory mentioned above so that publishers can achieve their goals in promoting websites on multiple ad exchanges. The technology used for SSP provides publishers with an automated way to scan the target audience and receive the maximum profit from their ad slots.

Component #3 – Ad Exchange

Ad exchanges work similarly to stock exchange platforms as they simplify the complete buying & selling process both for publishers and advertisers. These are dynamic platforms that help to get impressions in the most convenient way.

Component #4 – Demand-Side Platform

The DSP or demand-side platforms are tailored for advertisers; they come as safe storage for the creatives (display ads) that advertisers wish to show on websites. The DSPs for advertisers are just like supply-side platforms used by publishers

Component #5 – Advertiser

The final participant of the real-time bidding ecosystem is the media buyer or advertiser. Advertisers can be agencies or companies, or marketers who represent several different companies.

Final Words

Real-time bidding in advertising influences the way media buyers and publishers get and sell out the display ads. It is a new era of advertising that develops rapidly, brings valuable results, and is about to dramatically change the entire perception of online ads.