A beautiful 4 BHK luxurious villa with a large swimming pool is up for sale. The owner has decided to start the auction process, allowing interested buyers to place bids starting from 10 million dollars. Among the many bids, Mr.Jacob offered 11 million dollars, the highest bid, and the villa was sold to him. This is an auction process we have seen before, but now, with everything moving online, bidding has also gone digital. In digital marketing, a similar process happens online but at an incredibly fast pace within milliseconds. This is known as RTB advertising.
It’s a process where ads are bought and sold in just a fraction of a second faster than a webpage load. That’s exactly what Real-time bidding (RTB) advertising does. It’s a small technology that lets advertisers bid for ad space instantly, ensuring their online ads reach the right people at the right time, unlike old-fashioned ad buying, which takes time and effort.
Now, some questions might blow up in your mind, like how does it really work, and why is it so important in today’s fast-moving digital world? Let’s find out.
What is RTB Advertising?
There is only one ad placement, but multiple advertisers are eager to buy that spot to publish their ads. So, how can one decide who wins the placement? You could propose a lottery system that depends on luck. That’s a possibility, but what about the publisher? Would they receive a fair price for that placement? The chances are 50-50. However, in programmatic advertising, this issue is resolved. Publishers receive the best possible price, and advertisers secure the most suitable placement for their ads through RTB advertising.
RTB (Real-time Bidding) advertising is an automated process in online advertising where digital ad spaces are bought and sold in real-time. When a user visits a website, advertisers bid for the ad spot through an auction. The highest bid wins, and the online ad is instantly displayed. This happens within milliseconds.
RTB helps advertisers target the right audience efficiently while publishers maximize their ad revenue. It is a cost-effective way to show relevant ads to users at the right time.
What is Ad Server and Real-Time Bidding in Advertising Explained
Advantages of Real-Time Bidding
RTB plays a crucial role in streamlining the ad process in digital advertising and offers many benefits. Some of the advantages of RTB are given below:
Enhanced Targeting
RTB (real-time bidding) allows advertisers to target specific audiences to promote their offerings in real time. By bidding on the basis of accurate targeting data like location, interests, and behavior, you can show your online ads to the most relevant users. This not only increases the engagement rate but also improves the chances of conversion and reduces wasted ad spend, which makes your PPC ad campaign more efficient and effective. It’s worth bidding for ad placements that lead to quicker returns on your investment rather than targeting an irrelevant audience.
Cost Efficiency
RTB allows advertisers to bid based on their budget, choosing the price they’re willing to pay for an ad impression. It’s all about the traffic that the website offers in the area where the ad inventory is available. The bidding price varies accordingly. This results in more control over ad spend and helps ensure that money is spent only on valuable ad placements. It never forces advertisers to bid beyond their actual capacity or budget. Advertisers know their limits, and if a bid exceeds their set limit, they can simply adjust it or opt out of the auction.
Faster Decision-Making
RTB advertising delivers ads almost instantly after a bid wins. The whole automated process, from bidding to showing the ad, happens in just a few milliseconds. This thunderbolt lightning speed helps advertisers seize real-time opportunities for the success of their ad campaigns. It saves advertisers both time and effort, giving them a competitive edge that they truly deserve. They don’t have to wait long to see whether their bid wins or not. The process is so fast that if they don’t win the first bid, they can quickly shift their focus to other ad inventory.
Access to Premium Inventory
RTB advertising opens up access to a wide range of premium ad spaces across multiple platforms for advertisers. They can bid for spots on top websites or apps that they might not have had access to otherwise, ensuring they reach a more relevant and potential audience for their offerings. However, the more premium the spaces, the higher the cost. Premium ad spaces provide quicker results compared to other types of ad placements, making it worth spending on them.
How Real-Time Bidding (RTB) Works in Digital Advertising
Above, you understand that RTB is a programmatic ad buying process that allows advertisers to bid for ad space in real-time during the milliseconds before a user sees the ad. But how does it really work? Below are the steps that can help you understand its process:
- You Set Your Campaign Parameters: You start by setting up your campaign on the demand-side platform (DSP). You decide on targeting criteria such as demographics, interests, or behavior. This ensures you’re bidding for the right audience.
- A User Makes a Visit on a Site: When a user taps on a link and lands on a webpage, RTB kicks off. The website sends the available ad space and its dimensions to the supply-side platform (SSP).
- User Data is Analyzed: The SSP examines the user’s cookies data on their browsing history, preferences, and behavior. This helps determine the type of ad that would be most relevant for them.
- You Place Your Bid: Based on the user’s data, the DSP you’re using assigns a value to the user. You place a bid on the available ad space based on how much you’re willing to pay for that specific impression.
- The Auction Takes Place: In the milliseconds before the page fully loads, all advertisers place their bids, and the highest and the most relevant bid wins. The process is quick and automated.
- The Winning Ad is Displayed: Once the auction concludes, the chosen ad (your ad if you win) is displayed to the user on the site, and you pay the amount you bid for that impression.
The above steps look like a lengthy process, but in reality, the entire process happens in the blink of an eye. This quick process ensures that users see the most relevant ads while you, the advertiser, only pay for valuable impressions. (Remember, this process takes place between the time when the user clicks on search results and the page loads)
Didn’t get it? No problem! The upcoming example will help you understand the process better. Suppose you run an online business that sells high-performance gaming accessories, and you want to use real-time bidding to reach gamers actively looking for new gear. You set your targeting options and budget to focus on gamers who frequently search for mechanical keyboards, gaming mice, and high-refresh-rate monitors.
Now, a potential customer who regularly reads reviews about gaming accessories visits a popular gaming news website that has available ad space. The supply-side platform (SSP) analyzes the interests of the customers and sends the ad request.
Your demand-side platform (DSP) evaluates the opportunity and places a bid. If your bid wins, your ad appears on the gaming website.
Is RTB Advertising Expensive?
No, not at all. In fact, it is very cost-effective because it delivers the results you desire from your ad. However, if you ask us about the cost, not only we but no one can tell you the exact amount spent on RTB advertising. This is because it depends on multiple factors, such as:
- Keywords,
- Location,
- Demographics,
- Interests,
- And most importantly, competition.
Its completely up to you how long you want to stretch your ad campaign within your budget, which can range from $100 to $10,000 or even $20,000, depending on the results you achieve. However, this is only possible if your ad gets the right placement to catch the attention of your target audience. You can also use RTB advertising in your retargeting strategies, as it allows you to attract customers who have previously shown interest in your business.
Conclusion
RTB advertising is a smart and fast way to buy and sell ads online. It helps advertisers target the right people at the right time while allowing publishers to get the best price for their available ad space. With RTB, you have better control over your budget, access to premium placements, and the ability to make quick decisions. Whether you’re a small business or a big brand, RTB can improve your ad performance and maximize your returns efficiently.
Frequently Asked Questions (FAQs)
What is RTB advertising?
Ans. RTB advertising is an automated process in which advertisers bid in real-time for the available ad space on websites. The advertisement of the highest bidder is shown immediately.
How does RTB advertising work?
Ans. When a user accesses a particular website, an auction takes place in milliseconds. Advertisers place bids based on user data, and the highest bid wins the ad placement.
Does RTB advertising guarantee ad placement on every website?
Ans. No, ad placement depends on bid value, audience relevance, and competition for the same ad space.
Is RTB advertising expensive?
Ans. RTB advertising is cost-effective because advertisers only pay for impressions that match their targeting criteria.
Is RTB the same as programmatic advertising?
Ans. RTB is a part of programmatic advertising. While programmatic advertising includes different methods, RTB specifically refers to real-time auctions for ad space.
