Real-time bidding is a relatively new method for trading inventory, introduced back in 2009. Thanks to its convenience and innovative technological approach, RTB became an important part of digital advertising strategies both on supply and demand side. Those new to programmatic media buying might find it hard to navigate the concept of RTB. However, realizing its potential can contribute a lot to getting the best from advertising, both for advertisers and publishers.
What is Real-Time Bidding?
For starters, let’s clarify the definitions. Real-time bidding is the process of trading ad inventory — and in this way, it is closely connected to the notion of programmatic media buying. However, the terms are not identical in meaning. “Programmatic” describes the method of processing ad inventory and connecting publishers to advertisers, which happens automatically, thanks to special algorithms. Programmatic services collect and aggregate data on ad impressions, including location, demographics and interests of the audience, to present it in a convenient way. Eventually, advertisers have a direct access to publishers and are able to forgo the costs and risks of involving more intermediaries into the media-buying process.
Programmatic media buying does not necessarily happen in real time. Programmatic direct, for example, implies a guaranteed sale of inventory in advance. Real-time bidding, on the other hand, always happens in real time.
Real-time Bidding Step by Step
RTB marketplace is organized similarly to an ad exchange: the ad inventory is traded between advertisers and publishers. Ad impressions are auctioned by publishers, providing information on each of the users and the context the ad will be served in. Advertisers bid on the impressions, which they determine as relevant to their targeting requirements.
In short, the process unfolds as follows:
- User visits a page, and a browser sends a request to the server for loading an ad.
- Ad server or network puts an ad on the ad exchange.
- The ad exchange opens available ad impressions for all bidders.
- Advertisers evaluate the impression according to their targeting requirements and place the bids.
- The ad exchange receives the bids and serves the winner ad to the user.
Note that the whole process occurs in real time and takes just seconds to complete.
The reasons to start using RTB
RTB has many advantages — first and foremost, it is increasingly cost and time-efficient. Thanks to the automated algorithms, advertisers can easily connect to thousands of inventory publishers and pick the most relevant offers. Real-time bidding allows avoiding the costs and hassle of direct communication with publishers, establishing a business relationship and managing contract obligations.
The range of inventory available via RTB programmatic services is diverse and includes sites for various demographics and interest groups.
Additionally, advertisers have more control over the ads, the targeting and the context in which they are served. RTB also ensures real-time optimization and opportunity to apply more advanced strategies, such as frequency capping and ad sequencing. Finally, advertisers can experiment with ad formats more freely, evaluating and optimizing the ads without a large minimum spend per campaign and placement. To illustrate this point, some of the newer ad formats perform better with programmatic. For example, programmatic video buying accounted for 41% of all digital video dollars spent in 2016, representing 58% growth over the last two years, according to a study by IAB.
For publishers, RTB provides some important advantages as well. They get better fill rate and more ad diversity. As the result, publishers can avoid user frustration, which occurs when the same ads are repeatedly served to the users. To avoid the effects of market oversaturation with inventory, which can result in significant price decrease, publishers can also set the minimum price for their inventory.
Beware of fraud
Even the most advanced automated solution has some drawbacks. In case of RTB, it is the proneness to fraud. The problem of fraudulent traffic is relevant for all types of digital advertising, however, RTB requires slightly more consideration.
When an advertiser wins a bid and ad impression is served, the transaction is effectively ended. Then, it is really hard to dispute the traffic quality. To add to that, advertisers pay by CPM model for the number of impressions an ad receives, not the actions that users take. It also makes fraud detection more difficult.
Fraud tactics used in RTB include ad placement manipulations, malware and adware, popunders, bots traffic, hijacking ads and clicks. To combat fraud, it is advisable to use third-party services to track the quality of traffic and ensure the transparency of ad delivery.
Fraud affects publishers and advertisers in different ways. That is why the strategies they choose for fighting fraud also differ. While publishers are wary of inappropriate or low-quality ads that harm their credibility, they use the solutions, which block unsuitable ads.
Advertisers, on the other hand, use the solutions that check the quality of traffic, to avoid getting fake impressions or having their ads served to the wrong audience.
RTB and programmatic media buying technology improves every year, allowing to target larger audience and increase ROI. According to the real-time bidding industry report, RTB has become the fastest-growing segment of digital advertising. The Global Real-Time Bidding (RTB) market is forecast to grow at 41.18% in compound annual growth rate during 2014-2019. It is expected to hit $42 Billion by 2018. Overall, the exponential growth of RTB conforms with its potential and the opportunities it gives to advertisers and publishers alike.
If you haven’t yet benefited from programmatic services, perhaps it is the right time to begin. Clickky has entered the age of programmatic already last year, connecting direct publishers (app developers and website owners) to its Supply Side Platform (SSP).
Want to connect to Clickky’s RTB marketplace? Get in touch.