synchronous vs asynchronous javascript
How Synchronous and Asynchronous JavaScript Compare
April 16, 2021
Server
What Is an Ad Server and How It Supports the Programmatic Ecosystem
April 19, 2021

Everything You Need to Know About Real-Time Bidding

Everything You Need to Know About Real-Time Bidding

The digitalization of marketing has completely changed the industry. It has introduced new practices and methods that allow publishers and advertisers to earn ad revenue and reach a bigger audience. A particularly useful system is real-time bidding (RTB). It has made the ad buying and selling process easier.

In the early days of the internet, there was no way to automate marketing and advertising activities. The buyers and sellers had to meet and negotiate prices for ad spaces. This process proved to be too time-consuming for all sides involved. As technology advanced, online advertising was able to find a solution — programmatic advertising. According to recent estimates, programmatically sold advertising was worth almost $130 billion in 2020. Some predict this figure will reach $155 billion in 2021.

At the heart of this technology is real-time bidding. The RTB market is expanding at a rapid rate. In fact, the market in the U.S. has grown at a CAGR of 25% during the period 2016-2020. This means that RTB generates billions of dollars. Indeed, one research estimated that algorithms which enable more efficient bids in RTB networks will produce more than $40 billion in annual advertising revenue by 2021.

As more companies are adopting this programmatic advertising technique, it’s crucial that you understand RTB whether you’re a publisher, an advertiser, or simply a marketer.

So, what is real-time bidding?

What Is Real-Time Bidding?

Real-time bidding is a form of programmatic buying. This process enables advertisers and publishers to buy and sell ad impressions through real-time auctions.

In the time it takes a webpage to load, algorithms bid for ad space on a publisher site. The process goes unnoticed by internet users as it lasts for just a few milliseconds. By the time they open a webpage, the auction has finished and the highest bidder gets to serve their ad to the user. The auctions in the real-time setting are often facilitated by ad exchanges and supply-side platforms.

As opposed to the traditional way of placing ads manually, RTB places ads programmatically. This makes the process more efficient, plus it generates a higher return on investment (ROI). Namely, publishers have a chance to increase inventory pricing as multiple advertisers are competing for the ad space at the same time.

Although RTB isn’t the only available programmatic advertising technique, it’s certainly the most popular right now.

To better understand this technique, let’s see how real-time bidding works.

How Does Real-Time Bidding Work?

As we’ve learned by now, real-time bidding is a programmatic advertising technique that allows multiple advertisers to bid for an ad inventory simultaneously. Publishers make their ad space available through supply-side platforms which then connect the inventory to several ad exchanges and demand-side platforms. This can maximize their ad revenue because more potential buyers will have access to their inventory.

Furthermore, the technology behind real-time bidding is so advanced that desktop or mobile users aren’t even aware that this process is taking place. Nevertheless, the process is complex and it follows the below steps:

  1. The bidding is initiated when a user visits a website. This triggers a bid request containing information about the page, the user’s demographic information, location, browser history, and other.
  2. The request goes from the publisher’s website to an ad exchange.
  3. An ad exchange submits the request and the necessary data to advertisers. Numerous advertisers automatically submit bids in real-time, looking to deliver their ad to the target audience. Advertisers usually leverage demand-side platforms to decide which impressions to purchase.
  4. The ad exchange auctions the ad inventory off to the advertiser willing to make the highest bid.
  5. The winning bidder’s ad appears on the web page immediately.

That’s how an ad is served with real-time bidding! Basically, all publishers and advertisers need to do is rely on supply-side platforms and demand-side platforms.

Note: Participating in real-time auctions means that the price of impressions is based on what buyers are willing to pay. Usually they are willing to pay more if it means their ad campaigns will end up on the websites of premium publishers (e.g. The New York Times or The Wall Street Journal).

What Are the Benefits of Real-Time Bidding?

Programmatic buying and real-time bidding have been getting a lot of attention in the past few years. The reason for this is that they automate the entire ad buying and selling process. There is no need for publishers and advertisers to negotiate prices directly or insert ads manually.

Furthermore, real-time bidding initiates a process where advertising inventory is bought and sold on a per-impression basis via programmatic auctions. This process doesn’t require any middlemen. Basically, this is what advertisers and publishers love about RTB.

But there are other reasons why real-time bidding is so popular:

  • Improved performance — RTB enables buyers to use one dashboard interface to control their advertising campaigns. This is more efficient because they don’t need to communicate with a number of vendors or publishers.
  • Better targeting — This programmatic technique offers advertisers the ability to segment and deliver ads to the audience that is most likely interested in their product or service. Real-time bidding displays ads to those who have shown some interest in the company thanks to retargeting.
  • Reduced cost — With RTB, advertisers can spend smarter. As each impression is targeted, they aren’t buying ad space in bulk which means they aren’t spending marketing budgets on unnecessary market segments.
  • Increases the value of remnant ad space — Real-time auctions help publishers sell previously unwanted (remnant) inventory. This increases their value, generating additional revenue for publishers.

Best Real-Time Bidding Platforms

Now that we have real-time bidding explained, we can move to real-time bidding advertising platforms. Although there aren’t RTB platforms per se, there are ad exchanges, demand-side platforms, and supply-side platforms that support this programmatic advertising technique.

We’ll list four platforms that connect publishers and advertisers, enabling the real-time ad bidding process to take place. We suggest you choose the one that aligns with your company’s needs.

Google Marketing Platform

It’s not surprising that Google Marketing Platform is first on our list. After all, it is one of the largest advertising and analytics platforms around the world. But we’ll focus on one aspect of this solution — the Double-Click Ad Exchange.

The Double-Click Ad Exchange is a real-time marketplace to buy and sell display advertising space. It ensures publishers get the most value for every impression and deliver better experiences. Also, it enables ad space to be allocated much more efficiently across the internet.

Rubicon Project

Rubicon Project is committed to developing programmatic advertising solutions for publishers. They are the perfect choice for publishers because they have over a billion customers. One of the reasons for their success is the fact that Rubicon Project is an automated ad platform that offers a variety of features to publishers looking to maximize revenue with multiple ad formats.

PubMatic

PubMatic is popular among publishers working in the digital advertising industry. This supply-side platform gives publishers extensive control over their advertising efforts while enabling them to leverage advanced deal models, including real-time bidding, to maximize their ad revenue.

AppNexus

AppNexus has been around since 2007. For over ten years, the company has been developing solutions for programmatic online advertising. When it comes to selling ad inventory, they offer a wide range of solutions like a supply-side platform, an ad server, analytics, and others. This makes them a perfect RTB platform for publishers.

Final Thoughts

Real-time bidding has made lives easier for advertisers and publishers looking to buy and sell ad space. Unlike in the past, the entire process is automated, meaning there is no need for the buyers and sellers to meet and negotiate directly. They only need to find a suitable solution that supports a real-time marketplace, and they can start maximizing their ad revenue!

Support