What is Real Time Bidding?

To gain a better understanding of what an RTB auction is, it is necessary to have some knowledge of certain programmatic terms.

RTB (Real-Time Bidding) – a way of transacting media that allows an individual ad impression to be put up for bid in real-time. This is done through a programmatic on-the-spot auction, which is similar to how financial markets operate. 

Ad Exchanges – a sales channel between publishers and ad networks that can also provide aggregated inventory to advertisers. They provide a technology platform that facilitates automated auction-based pricing and buying in real-time.

SSP (Supply-Side Platform) – a technology platform that provides outsourced media selling and ad network management services for publishers.

DSP (Demand-Side Platform) – a technology platform that provides centralized and aggregated media buying from multiple sources including ad exchanges, ad networks and sell side platforms, often leveraging real time bidding capabilities of these sources.

DMP (Data Management Platform) – a system that allows the collection of audience intelligence by advertisers and ad agencies, thereby allowing better ad targeting in subsequent campaigns on a combination of in-depth additional audience data. 

Trading Desk – RTB trading desks (TDs) are automated systems in RTB ecosystem, mainly on the demand side.

What is Real Time Bidding?

To put it simply, RTB is an advertising exchange where three parties meet: an advertiser (a brand), who decides how much he is willing to pay for displaying advertising to a specific user, a site that sells the ad space and a user, or rather his impersonal data, which are the subject of bargaining.

Programmatic advertising is the process of automating the buying and selling of ad inventory in real-time through an automated bidding system. Programmatic advertising enables brands or agencies to purchase ad impressions on publisher sites or apps within milliseconds through a sophisticated ecosystem.

Such data includes social demographic characteristics, geolocation, search history, device and browser information, and much more. All this makes ads relevant and accurate.

How does RTB work?

Real-Time Bidding allows for better and quicker targeting, enabling ads to be bought and sold on a per-case basis, meaning only visitors who are in your target audiences will be subjected to the ad.

What’s happening when the user loads the page

	The user visits the site
	The site sends a request to display ads on SSP or Ad Exchange/Ad Network
	Based on cookies, the "user portrait" is being compiled according to the maximum number of parameters: the site he visited; user data (if they are available); time; retargeting data, etc.
	SSP analyzes the information about the user (location, web history, and, if available, age, gender and any other user information) and then sends this information to the ad exchange There is a piece of information from Google Search that he chooses a car up to $15 000
	SSP can purchase additional user data from Data Management Platform There is some information from DMP that this is a man of 30-38 years old
	For example, they are interested in residents of Orlando and Tampa The ad exchange starts an auction, and the DSPs then bid on the impression based on what that particular impression is worth to them – determined by predefined parameters set by the advertisers
	One company is ready to show an advertisement to a 30-38 years old man from Orlando for 4 cents, another – for 7 cents
	SSP selects the highest bid among the responses received and discounts it to the minimum necessary to win the auction (the “second price” model)
	So, the second company wins and sends a banner display of its model for 5 cents
	The site receives advertising materials from the winner and transmits it to the user's browser in response to an advertisement request
	The user sees an advertisement for the second company in the price category that interests him

A chain of actions preceding the display of advertising to a specific user occurs within a fraction of a second while the site page is being loaded. The technology works with the emergence of a new kind of OpenRTB protocol.

Why is RTB worth using?

For advertisers

• Buying target audience, not site space;
• Centralized management of advertising campaigns across all sites;

For users

• Only relevant ads. Advertising can be useful and even necessary, but for that it must be interesting for a user;
• Privacy: RTB operates only with virtual profiles based on the data of user behavior on the site and the available “tail” from the data of visits to other resources. You can destroy such a profile by clearing cookies in your browser;

For sites

• Selling each impression on your site with the highest efficiency, depending on the visitor and the available advertisements;
• Selling excess of advertising capacity (inventory);

Programmatic VS RTB

RTB is a form of programmatic advertising, but not all programmatic uses Real-Time Bidding. Programmatic is simply a way to automate ad buying, and RTB is one way this can be done. Nowadays, 90% of programmatic buying goes through Real-Time Bidding.

To sum up, Real Time Bidding is a technology for conducting an auction for the sale of advertising places on the Internet in real time. The process takes less than a second, while the user is loading the page of the site. RTB, as a part of programmatic, provides extensive opportunities for displaying and controlling advertising channels. This protocol is beneficial to all participants in the advertising market.