How Real Time Bidding works

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In the digital world, Real Time Bidding is a strategy on the rise. Find out what it is, how it works and the differences with Programmatic Advertising.

The Real Time Bidding has changed the face of online advertising. Everyone talks about it but above all everyone considers it a reference point for advertisers, a frontier of online advertising given by a new sales method.

To talk about RTB you must first define the concept of impression .

This represents the number of times that a content, video, web page, banner or any other web content has had the opportunity to be viewed by users. The term Real Time Bidding refers to the purchase and sale of online ad impressions through real-time auctions, which occur in the time necessary to load a Web page.

The RTB is therefore a great opportunity for ecommerce sites and to increase the strength of their brand awareness by planning a series of targeted campaigns. And it is the best tool to involve a specific target already tending to conversion, thus obtaining greater optimization of costs and ROI .

But how does Real Time Bidding work?

How Real Time Bidding works

In detail, after defining Real Time Bidding , it is useful and above all necessary to understand how this mechanism works, how it is applied and what it can entail.

In practice, everything starts when the ad impression is loaded on a user’s Web browser: the information about the page where the user is located and that the displays are transmitted to a mostly ad exchange software, which the auctions and sells them to the advertiser willing to pay the highest price .

The winning bidder’s announcement is then uploaded to the web page almost instantly; the whole process takes only a few milliseconds to complete. And those who surf do not notice anything.

Advertisers typically use demand-side platforms to help them decide which ad impressions to buy, and when to bid based on a variety of factors, such as the sites they appear on and the previous behavior of the users who upload them. A shoe site, for example, may recognize that a user has previously been to his site by looking at a certain pair of products for sale and, therefore, may be ready to pay more than Amazon or Best Buy to offer him advertising.

The price of the impressions is determined in real time based on what the buyers are willing to pay, hence the name “Real Time Bidding”. This is a decidedly important development for advertisers, who previously used websites as a proxy for their ads. If they wanted to reach sports fans, for example, they would have bought ads on a sports site. The advent of RTB has allowed them to target their ads to specific users.

There are therefore three phases that make up Real Time Bidding:

Buyers want advertising space . Marketing experts enter a virtual line through demand-side platforms (DSPs), which automate the purchase of advertising space on behalf of the parties interested in conquering the next availability. DSPs know the purchase parameters that they are authorized to look for when auctions start and also monitor the performance of the campaign, in order to optimize the most valuable impressions for them.

The auction starts . Publishers supply ad exchanges with their impressions and open doors so that bids can begin. The supply side platforms (SSP) therefore work to automate the sale of the advertising space, simultaneously increasing at the highest possible price. This part of the process is often described as a stock exchange. All DSPs are taking the opportunity to get the most efficient, important and attractive advertising space, while SSPs are looking for the highest price. Offers continue to rise automatically until DSPs with the largest budget reach the best offer .

The announcement is published . At the end of the auction, the winning ad is published where it is expected (therefore on the app, network, feed or site). It all happens in milliseconds, like in the blink of an eye.

When purchasing ads is handled manually, it is easy to waste impressions because the audience is often unknown when the inventory becomes available. The RTB, on the other hand, allows for greater automation: robots spend time familiarizing themselves with consumer behavior and immediately know which impressions they can make the most.

  • Real Time Bidding therefore allows advertisers to:
  • Get the benefits of efficient shopping
  • Optimize impressions
  • Have restricted targeting available
  • Take advantage of new insights and trends based on buyer behavior

The birth of Real Time Bidding

The RTB was born in 2007 when three web giants such as Google, Yahoo and Microsoft purchase the main ad exchanges , platforms for the real-time buying and selling of inventories from multiple advertising networks. Respectively, the three multinationals bought DoubleClick, RightMedia and AdECN. Thus was born the need to create an efficient system that could improve the workflow management of the countless advertising agencies.

Real Time Bidding has significantly improved the sector, allowing to increase sales and improve the CPM rate. In fact, thanks to real-time bidding, ad buyers no longer have to work directly with publishers or ad networks to negotiate prices and transfer ads. By using exchanges and other advertising technologies, they can access a wide range of advertising spaces on countless sites, and choose only the impressions they deem most valuable to them. This reduces the number of impressions wasted on the wrong users .

The difference between RTB and programmatic advertising

Real Time Bidding is a type of programmatic advertising , but not all programmatic advertisements use RTB.

Some “programmatic” advertising platforms (or based on this technology) allow publishers to sell their inventory in advance at a fixed price , instead of selling it at auction. There is therefore a different approach and methodology, which mark the difference between Real Time Bidding and programmatic advertising .

There are three main reasons for using the RTB:

Cost optimization . RTB allows you to generate an interesting return on investment on targeted campaigns. The ad appears in qualified profiles which can likely lead to a conversion. It also allows advertisers to manage their budget more strategically. An advertiser can set the maximum bid he is willing to pay for an impression before participating in the auction. It is also possible to collect significant insights in order to optimize bids and evaluate the performance of a positioning in real time.

Tracking opportunities . Real-time bidding allows buyers to identify relevant placements or websites that they would not have thought of. It allows them to whitelist the placements identified within a specific campaign, in order to generate the best performance . In addition, they can effectively target their audience with specific strategies or messages .

Effective retargeting . Real Time Bidding also has great potential in terms of retargeting. It allows you to reach users who have not converted through RTB on different sites and to bring them back to a specific website. Real-time bidding strategies on retargeting will be based on the probability of conversion of the potential customer.

In practice, the RTB refers only to a part of programmatic advertising . It is a real-time advertising purchase system based on an auction system. In the last year, it has represented about half of the investments for a digital campaign, therefore – to be effective – RTB must be associated with offer identification strategies.

The aspects to consider

Many platforms are available, and you may need to access several of them to perform an adequate RTB inventory. You shouldn’t limit yourself to big names, rather focus on certain parameters :

  • Prices
  • Features / Functionality
  • Technology
  • Support

We must also take care of the right skills: regardless of whether you use an agency, a specialist or do everything internally, there is no doubt that the skills needed for trading RTB media differ drastically from the buying skills of traditional media : data mining, test framework, analysis, auction dynamics, management of characterized campaigns require high skills.

Finally, it must be considered that Real Time Bidding requires special skills and technological platforms to publish the ads and – therefore – can require a considerable outlay . Therefore realistic expectations must be maintained, but above all, considerable patience.