Programmatic real-time bidding, or RTB advertising, has become an integral part of the online advertising and ad tech industry, impacting all stakeholders from the advertiser to the ad exchange to the publisher and all the middlemen in between such as agencies, trading desks, DSPs (demand side platforms), SSPs (supply side platforms), etc.
What is real-time bidding (RTB) in advertising?
With real-time bidding, advertisers can buy advertising inventory automatically and determine an ad impression target for every target audience in every programmatic advertising campaign.
Real-time bidding (RTB) is the key element of automated buying and selling of digital ads through ad networks, also known as programmatic advertising. In the programmatic advertising ecosystem, the bidding process begins with an ad call or bid request for a publisher’s inventory, often through a middleman like a supply-side platform. Advertisers bid on ad impressions based on their target audience, often through a demand-side platform.
The highest bid in the bidding process is the winning bid. The ad related to that bidder is instantly displayed on the publisher’s site. The whole process happens automatically, making real-time bidding an ideal solution for advertisers and publishers alike.
How does real-time bidding (RTB) work?
In RTB bidding, an ad call is sent out automatically when a user visits a website. Advertisers bid on the ad based on visitor data, and the ad of the winning bid is displayed.
Typically, real-time bidding (RTB) is initiated when a user visits a website. The visit prompts a request or “ad call,” that includes snippets of data about the visitor, such as location, demographic information, type of browser, and others.
This information is processed and submitted to multiple advertisers on multiple ad exchanges using advanced ad exchange technology. Based on the information, the ad with the highest bid that is “looking” for that type of impression (visitor) is served and the winning ad is displayed on the web page in the appropriate ad format. The same process is repeated through a loop system, selling ad space on a per impression basis until all ad space is filled. The transactional process is fast and is completed within a hundred milliseconds.
Most advertisers use demand side platforms (DSPs) to set up and track the campaign performance of their advertising campaigns. They often use advanced targeting parameters to optimize campaign performance per thousand impressions and make the most cost-effective use of their campaign budgets.
Publishers, on the other hand, usually use a supply-side platform (SSP) to promote their ad inventory for real-time bidding in programmatic advertising. The SSP and DSP “meet” in the ad exchanges, which are the platforms where real-time bidding actually takes place.
What are examples of RTB?
Let’s look at an example. Some advertisers may be interested in people in a certain geographic region. Using RTB, they can target ads to viewers currently in that location. They can also leverage data from the user’s history to effectively target potential buyers, for example, an advertiser selling baby products might want to target parents in an RTB campaign.
Real-time bidding within programmatic
Programmatic advertising is the infrastructure that enables real-time bidding.
Sometimes the industry just talks about programmatic ad buying. Sometimes, it talks about programmatic real-time bidding (RTB). Is there a difference? The answer is YES.
Real-time bidding is a programmatic tool with a limited scope and function. Programmatic is the large-scale automation system that handles all the necessary parts of the process on multiple ad networks and platforms.
Why is programmatic RTB so popular? What is the benefit of RTB?
RTB lets advertisers pick the impressions that best meet their campaign goals, and ensures that publishers fill their ad inventory.
There are many compelling benefits to utilizing real-time bidding in programmatic advertising, for buyers (demand side platform) and sellers (such as premium publishers) alike. Advertiser demand for this type of real-time bidding process is high because it allows them to cherry-pick the ad impressions that are most likely to meet their campaign goals and accomplish the most with their ad spend.
For sellers, programmatic RTB can deliver a 100% fill rate for their ad inventory. In addition, RTB allows publishers to automate and bring real-time intelligence to what is otherwise a very complicated process, one that is lacking in data and that requires a large amount of manual effort.
The risks of RTB
A large chunk of ad inventory available today through programmatic methods and instant auction is questionable. Publishers end up displaying ads on their sites that are of poor quality or don’t meet their brand guidelines.
Real-time bidding (RTB) is not without its risks. In addition, to low quality ads, there is a high likelihood the ad served is not compliant with the publisher’s company policies. Due to third-party placements, the publisher has little control over the entire process, and often struggles to make sure that the right ads are served on every web page.
GeoEdge’s publisher partners noted three key reasons they invested in ad security and quality protection.
1. Malware and malvertising
Malvertising is characterized by hackers looking for exploits where they can insert their malware through ads. Even the most robust programmatic systems can still have issues with malware. A publisher who sells ad inventory through certain ad servers or exchanges may think they are protected, as ad servers typically have anti-malware systems built in. However, there is a fatal flaw in the methodology of programmatic advertising. Since inventory is still sold via a third party it bypasses the ad server/exchange anti-malware system altogether, and is therefore a vulnerable part of the ad network.
2. Unsupported ad formats
In RTB it’s all too easy, through the input of incorrect data, for an unsupported file format to appear on a publisher’s site. When this happens, visitors are kept waiting as the page attempts to load the faulty ad, or an error message appears. In either case, it’s a less-than-ideal brand experience for users.
3. Content classification
Content verification and classification are extremely difficult to standardize. What’s “racy” to one publisher may be rather tame to another. For example, one publisher can set a policy to block female mud wrestling as brand-inappropriate, classifying it as “adult content”. However, if the advertisers classify women’s mud wrestling as “sports,” then the female mud wrestling ads could still be served on the publisher’s pages.
Header bidding vs. RTB
Header bidding builds on the real-time process, enabling multiple ad exchanges to bid for the same impression at the same time.
It replaced a process called “waterfalling” in which the automated auction was run through one demand source at a time (static auctions). With header bidding, multiple sources can bid in parallel and publishers sell the ad spaces to the highest bidder. They can also set price floors for their bid requests to maximize revenue.
Programmatic buying vs. RTB
Programmatic direct and real-time bidding both work in the programmatic advertising ecosystem and use technology to handle transactions. However, programattic direct uses direct sales while RBT uses an auction model.
In some cases, the advertising inventory in programmatic direct is guaranteed (reserved) in a direct deal and positions, quantities, dates, impressions, and prices are predetermined. In other cases, the inventory price is set, but the amount is not guaranteed. Yet, no matter which format is used, programmatic buying does not include an auction, which is the key component of RTB.
Real-time bidding platforms
RTB is an ecosystem that involves supply-side platforms for publishers, demand-side platforms for advertisers, and ad exchanges involved in selling and purchasing ads.
In some cases, RTB can even include a private marketplace.
When publishers choose a real-time bidding platform to meet their needs, they should consider things like ad format (whether they focus on video or display ads for example), support, and the technology that supports the platform.
What is in-app RTB?
In-app RTB is the same as other types of RTB, but allows advertisers to place ads in advertising space in apps, rather than in websites on the mobile web. For example, ads shown in a mobile game are considered in-app RTB.