Real-time bidding has changed the face of online advertising, but there’s still confusion around what it actually is. Here’s a primer, in plain English:
Everyone’s talking about real-time bidding. What is it?
Real-time bidding refers to the buying and selling of online ad impressions through real-time auctions that occur in the time it takes a webpage to load. Those auctions are often facilitated by ad exchanges or supply-side platforms.Often, RTB is compared to the stock mark where the entire inventory of ad space available to buy is similar to the stocks available. Instead of having to go through a trader to purchase ad space, as it was traditionally done, advertisers are now able to purchase ad space within 200 milliseconds, automatically.
OK. So how does it work?
Once an advertiser places their bid parameters (min and max bid, who they want to target, how they want their ad placed), they’re all packaged up and sent through a DSP or demand-side-platform to different publishers. At this point, the publishers will take a look at the advertiser’s bid parameters and decide whether or not they have a display match. If a match is present, the auction for placement of the ad begins. The prices of the advertisement could change depending on multiple factors: one factor, is if there are multiple parties bidding on the same placement and another factor, is the price of the advertiser’s base bid and max bid. Once a bid is finalized, the publisher then has the option to accept the advertisement. If the ad is accepted, it is then placed, and the impression is won for that advertiser.