Since 2002, when Real-time Bidding (RTB) came into existence, the online advertising industry has been revolutionized. Unlike traditional online display advertising, which proved too inefficient and costly (for all players in the field), Real time bidding shows the right ads to the right people at the right time. The real problem in regards to the traditional methods were that advertisers were using a CPM model to buy their impressions; which means you are buying a bulk of impressions for the same price per unit, even though each impression has a different value. For publishers, this was inefficient because they were unable to sell up to 70% of their inventory, and the inventory that they did sell was sold for way below the market value.
So Real time bidding appeared in the picture and things began to change for the better.
Real time bidding revolutionized the way online media is done because it allowed for advertisers to purchase their inventory based on individual impressions through an automated bidding system. This means that the publisher is getting the most bang for their buck and that the advertiser doesn’t need to worry about reaching unwanted audiences. Both parties win!
How does Real time bidding work?
There are 4 major players in Real time bidding:
Demand Side Platform (DSP) – The DSP enabled advertisers to gain access to multiple sources of inventory and makes the bid for them automatically, based on buying parameters the advertiser has preset.
Publisher- This one’s easy; the publisher supplies the inventory. In the earlier days, publishers would only supply remnant inventory to the DSP’s, but as demand began to grow from the advertisers, publishers are now supplying their most premium inventory as well!
Supply Side Platform (SSP) – The SSP is a tool which helps publishers manage their inventory.
Ad Exchange: This is the tool that actually connects the advertisers with the publishers and vice versa. It facilitates in the purchasing of inventory in real-time milliseconds before a page loads.
Without getting too technical, here is the most basic process of an Real time bidding.
- The publisher provides inventory to their Ad Exchange
- The advertiser sets their buying criteria on the DSP, which will eventually place the bid on each impression on behalf of the advertisers
- The value of the bid is based on the value of that individual impressions, which has been predetermined by the advertiser’s criteria with the DSP; this bidding process ensures that the publisher is getting the maximum price for their inventory, as dictated by market demand
- Once the bidding is completed, the impression goes to the highest bidder and their ads are served on the publisher’s site!
Advantages of Real Time Bidding
Real time bidding definitely wins over traditional online advertising. It makes efficient and economical what was not before and alleviates pains for both parties involved in the process.
Advertisers: Advertisers see immediate results as they are not frivolously spending their money on ads that are not targeted at the right audience. They have much better consumer targeting capabilities, have a great cost effective reach, and can nearly eliminate the number of wasted impressions and wasted dollars
Publishers: Now, instead of having an abundance of unsold inventory or inventory that is sold at a price below market value, publishers are able to gain a higher revenue through a process that is designed to maximize the value of each individual impression
Agencies: Like advertisers, agencies now have much more control over their campaign’s performance, have more efficient spending, and can deliver better results to their clients. And we all know that happy clients can only be good for your business
So you see, Real time bidding really IS revolutionizing the way online advertising is done. All players really get the best out of the situation, no matter what side they’re one.
AdClarity is a Marketing Intelligence tool which provides online marketers with actionable insights about their competitors’ advertising activities. Driven by big data and proprietary behavioral content discovery technology, AdClarity unveils brands’ campaigns, ad creatives, impressions, and spend data across multiple channels, including Display, Mobile Web, Mobile Apps and Video. Data is collected across 20 geographies and covers over 50M URLs daily while discovering over 40K new campaigns every day. The AdClarity product suite is used by over 7,000 media and advertising professionals globally in Fortune 500 Brands, Agencies, Ad Networks, and Publishers.