Outline of RTB – Real Time Bidding

RTB is a data-driven buying model through which ad agencies place auction-based bids for individual ad impressions. This process takes place in milliseconds, allowing agencies to adjust their strategies almost immediately based on the performance of individual sites and ad impressions.

RTB, as defined by Park Associates, describes the automated process of buying and selling online display advertising in real time, and it incorporates enhanced solutions in targeting algorithms and data analytics in order to deliver better targeting, greater control and more granular campaigns.

Life cycle of RTB

When ad exchanges opened, they brought more liquidity to the marketplace for online inventory. 2007 was a pivotal year for ad exchanges. Three major exchanges were acquired that year:

Each company quickly made vast pools of inventory available, which greatly improved the experience for many parties to transact in online display.

News Corp.’s Fox Audience Network purchased Rubicon Project in 2010, and Google followed suit in 2011 with the acquisition of Admeld.

June – 2012, Facebook announced the expansion of its growing display ad business into the RTB marketplace, with several DSPs already testing the Facebook Exchange, or FBX. RTB-enabled ad exchanges aggregate ad impressions across many online channels and connect ad sellers to buyers.

Within the FBX system, brand advertisers can target Facebook users based on their Web-browsing history, with ads displayed on a Facebook page based on third-party Web browsing habits. It matches users more closely with not just relevant content but with products where they have displayed purchase intention.

“The more that Facebook can open up to different types of advertisers with different types of goals and make it easier for them to deliver targeted advertising, the better for Facebook,” EMarketer analyst Debra Williamson said.

Ads sold this way are still a relatively small percentage of the overall U.S. online advertising market, but demand is increasing, and may grow even more now that Facebook is taking part, Williamson said.

RTB is just like Stock Exchange where within few seconds sellers and buyers meet online, buyers check inventory, bid for the inventory, maximum bid get selected and selected advertisement will be on webpage at next moment.  Three main sides of RTB are:

DSP-  Demand Side Platforms

A demand-side platform (DSP) is a system that allows digital advertisers to manage multiple ad exchange and data exchange accounts through one interface. It includes buyers such as

  • Google Invite
  • Revcloud
  • 24/7 Real Media

SSP – Supply Side Platform

A Supply Side Platform, or SSP, is an advertising technology platform which represents the suppliers of online ads, and guarantees inventory availability. Similar to a DSP, an SSP allows many of the larger web publishers of the world use an SSP to automate and optimize the selling of their online media space. Some of them are:

  • Rubicon Project
  • LiveRail
  • Admeld
  • Pubmatic

Online real time AD Exchange

Ad exchanges are technology platforms that facilitate the bidded buying and selling of online media advertising inventory from multiple ad networks. The approach is technology-driven as opposed to the historical approach of negotiating price on media inventory.  Examples:

  • Google AdEx
  • AppNexus exchange
  • RT Bidding exchange

Advantages of RTB

  • For Sellers
    • Incremental revenues for display ads sold outside of direct relationships with buyers.
    • Higher value of inventory.
    • Increase CPMs and revenue through more competition
    • Access to agency trading desks, DSPs, and other new channels of demand for your inventory
    • Greater yield optimization.
  • For Buyers
    • Impression-by-impression decision making and bidding in real-time.
    • Full path transparency on every impression before placing a media buy.
    • Visibility into content category of page and whether placement is user- or auto-initiated before bidding.
    • Audience targeting and optimization.
    • Improved performance and decreased waste ultimately results in more ROI for advertisers.

The advantages of the RTB process to ad buyers and sellers are simply too great to ignore. I believe, Ad spend will shift away from traditional online display advertising to the RTB ad market. Let me know your opinions in comments.

In next article, we will look at the Work cycle of RTB, Market share of RTB, Growth of AD Spend and Future of RTB.

 

 

 

 

 

Sources:

1.http://static.googleusercontent.com/external_content/untrusted_dlcp/www.google.com/en/us/doubleclick/pdfs/Google-White-Paper-The-Arrival-of-Real-Time-Bidding-July-2011.pdf

2.http://www.spotxchange.com/spotxchange_real_time_bidding.html

3.http://adage.com/article/digital/facebook-launch-real-time-bidding-marketplace-ads/235367/

4.http://en.wikipedia.org/wiki/Real-time_bidding

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11 thoughts on “Outline of RTB – Real Time Bidding

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