Working Model and Market condition of RTB – Real Time Bidding

These days, we want everything very very fast. Work should be easier and transparent. RTB is doing all these job for advertisers and marketers. In the first part, we looked at the outline of RTB. Now lets have a detailed factors of these new magic tool.

The biggest innovation in advertising world allows you to bid on per specific impression rather than paying on per 1000 impression when some of those impression may not be even relevant to you.

With superior targeting method and advanced bidding options, It not only opens the door for majority of the world’s leading exchanges but also for networks and premium sites.

How does RTB works?

Let’s say you were online  yesterday and decided to do  mobile phone shopping. You checked some sites, did look at few phones. You liked one, checked out a phone, add it to your cart and just as you’re about to checkout, the phone rings and you get distracted.  By the time you’re done talking to your friend, it’s late and you decide to buy the phone later.

Then, today you are doing some research on internet and you notice an ad from the mobile phone store you were on last night.  Not only is it an ad for the store, but the same phone you were looking at are in the ad!

How did the store know you were shopping for mobile phone last night? The answer is real time bidding.

Technically what happens is..

  • The real-time-bidding platform receives an HTTP request ( HTTP is a request means your computer sends a request for some file e.g. “Get me the file ‘home.html'” which even includes information such as whereabouts you are on Internet, which city you are in, your computer’s IP Address and what do you want ), and the web server sends back a response (“Here’s the file”, followed by the file itself).
  • It then reaches out to its bidders (ad networks) while providing all the necessary context (user segmentation, site information, other metadata), over HTTP.
  • The bidders (each) get this context, make a micro decision about the impression in concern in real-time, and respond back with a yes or no. If Yea, they also submit a price they are willing to pay for that impressions.
  • The RTB platform gets all the bids and chooses a winner based on its decision algorithm.
  • The user is then issued a HTTP redirect to the ad network who won the bid.
  • The ad network serves the ad.

That means that when you were researching, your browser requested an ad, the publisher put that ad up for auction on an exchange, marketers bid on that impression, and it was served to your browser in about 50 milliseconds. so fast it is !!

Market share of RTB

Back in 2011, eBay International director of internet marketing, Daphne Sacco predicted: “It is early days, but RTB is going to be as big an initiative in Europe as it is in the US, where we are seeing triple-digit increases in our ROI.”

According to a recent study by International Data Corporation (IDC) by 2015 RTB-based spending will stand for

  • 27 per cent in the United States (up from 10 per cent in 2011)
  • 25 per cent in the UK (up from 6 per cent)
  • 21 per cent in France (up from 4 per cent)
  • 20 per cent in Germany (up from 4 per cent)

Total spending on RTB in the US will reach $5.1 billion and $680m for the UK.

Even if we look at  the video ad market, according to study by Forrester Consulting commissioned by spotxchange, the largest global marketplace of video ad inventory in RTB which received an average of $7 CPM in 2011, will reach at an average of $9 by the end of 2012. RTB Online video advertising will account for 21.8 percent of all US online video spending by 2013.

No doubt, RTB is a game changer in the world of online Advertisement. The only concern is how much will it change.Let me know what do you think about present and future of RTB in comments.

In the next article we will cover the most important part of RTB i.e. Growth of AD Spend and Future of RTB.



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