The real-time bidding (RTB) industry has become a significant element in the digital advertising ecosystem, with no signs of slowing down. The improvement in return on investment is encouraging advertisers, advertising agencies, media buying agencies, and publishers to take an interest in real-time bidding. In fact, there is robust growth forecasted in the spending of RTB.
What exactly is RTB?
Real-time bidding is how advertising inventory is bought and sold on a per-impression basis. RTB allows advertisers to manage and optimize ads from multiple advertising networks with ease. In this per-impression way of bidding, advertising buyers bid on an impression with their bid requirements, i.e. desired target audience, price, etc. If the bid is won, the buyers advertisement is instantly displayed on the publisher’s website. Real-time bidding is thus a key component of the programmatic ecosystem, and represents the “pipes” connecting the buy side and the sell side of the advertising market being laid down.
How is RTB growing?
In terms of growth, the RTB industry is quickly flourishing. Regarding advertising spending, in 2013, RTB accounted for $3.1 billion in 2013. In comparison, in 2018, RTB will account for over $18.2 billion or 33% of U.S. digital advertising sales. This accounts for a compound annual growth rate of 42%. Mobile and video advertisements are the main culprits with regard to what is driving this growth. Real-time bidding for these channels is projected to top $6.8 billion for mobile and $3.9 billion for video in 2018. This clearly illustrates the potential of the RTB industry to dominate advertising markets in the coming years.
The reason the RTB industry has grown and is projected to grow substantially is because it is a highly useful strategy. The introduction of real-time bidding technology has helped to address a number of challengers known to both publishers and demand-side platforms. For example, RTB addresses the inefficiency publishers are faced with by having to work with all these partners directly. Publishers can now access more than one hundred demand-side platforms through a single integration with an ad exchange or supply-side platform. In addition, real-time bidding is especially useful concerning retargeting in order to increase the number of completed conversions. Lastly, RTB matters because it is cost efficient. It allows advertising spend to go further with less budget spent on poorly targeted impressions. With access to automation, buyers and sellers are experiencing greater rewards with smaller investments.
In the next three years, the RTB industry is expected to considerably grow, largely because of its significant impact on the advertising industry that is brings to the table. Real-time bidding is becoming a key player in programmatic by targeting a larger audience, as well as the appropriate target audience for your brand.