An Introduction to Real Time Bidding and Programmatic Advertising

To most people in the online advertising space, hearing these two terms has become an almost everyday occurrence. However, for those who do not possess an in-depth knowledge and experience in the buying and selling of digital media, they’re mostly meaningless.

So what is Real Time Bidding (RTB)? RTB essentially refers to the buying and selling of online ad impressions through real time auctions that occur in the time that it takes a webpage to load. These auctions are often facilitated by ad exchanges or Supply-Side Platforms (SSPs). In essence, different advertisers can bid on a single piece of ad inventory on a website with the resulting ad displayed belonging to the advertiser with the highest bid.

How RTB works

So how does this work, you ask? A website with an available ad slot to sell (ad inventory) lists it on an ad exchange. The exchange sorts and classifies the inventory according to the audience it is being served to. When the webpage is loaded and the ad server requests for an ad, the exchange looks into its system to see which advertisers have placed bids on that particular inventory. Assuming two or three competing brands all bid on the same inventory, the ad exchange selects the brand with the highest bid (could be CPM or CPC) and displays that ad on the website in the available slot.

With the purchase of online ad inventory being streamlined in this manner, it is easy to see the benefits of this flow. A few of the most obvious ones are:

  • Efficiency — Using exchanges and other ad tech, buyers have access to a huge range of ad inventory and they can pick the impressions they deem the most valuable to them.
  • Higher Rates for Publishers — The programmatic auction effectively matches buyers and sellers of ad impressions or audiences and this boosts prices for publishers.
  • Better Audience Data — Due to the classification of the ad inventory into audiences and user profiles, both the buyers and sellers know specifically the interests of their visitors and this makes targeting a lot easier.

There are a number of platforms and services that offer these RTB services as the adoption of this type of programmatic ad buying is gaining popularity especially among leading brands worldwide. Some of these are DoubleClick Bid Manager, AppNexus and MediaMath.

Some RTB platforms

Have you had any experience using RTB or any one of these platforms? Leave your answers in the comments.