Real-time bidding, also known as RTB, is the buying and selling of online ad impressions through real-time auctions. These real-time auctions occur in the time it takes for a web page to load. These online auctions are often facilitated by ad exchanges or supply-side platforms (SSP).
A digestible parallel of RTB is to think of it like the New York Stock Exchange. See the below example from Business.com:
- A company goes public (Publisher), and can now sell their one share (100,000 impressions) on NASDAQ (Ad Exchange). Their IPO share price (Floor CPM) is $10 per share.
- NASDAQ (Ad Exchange) now lists available shares (impressions) for auction to potential shareholders (Marketers).
- Buyer bids $10.50, is the only bidder, and wins the shares.
The Importance of RTB
Historically, advertisers would facilitate a deal directly with a website to place any online advertisements. For example, if advertisers wanted to reach new mothers, they would purchase ads on sites related to new mothers. This purchasing model is timely and inefficient. With the use of real-time bidding (RTB), advertisers can decide in real-time the value of an ad impression and decide whether or not to bid for that impression based on its value to their campaign. They can use data to target new mothers on any website that they are visiting. RTB enables digital marketers and advertisers to bid in real-time on available ad inventory, maximize results within shorter timelines, and improve budget flexibility.