A Plain English Guide to Real Time Bidding

April 09, 2021

By [email protected] (Martina Bretous)

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Since its inception in 2009, real-time bidding (RTB) has become one of the most popular ways to purchase ad inventory online.

But even for experienced marketers, this type of programmatic advertising can be a very confusing concept. I, for one, get intimidated just by reading the word “programmatic.”

So let’s break down what RTB is, how it works, and the pros and cons of using it – all while keeping it jargon-free.

Before we dive into RTB, let’s cover a few basics.

An impression, which is when an ad is displayed on a user’s screen, is the currency used in RTB. Publishers – i.e., the owners of the webpages and mobile apps on which ads are displayed – typically charge for every 1,000 impressions the ad gets. Advertisers know this as the cost per mille (CPM) and place their bids based on the value of each impression.

How do you determine that value? By evaluating the user against your targeting parameters (more on that later).

Are there real-time bidding platforms?

There are no RTB platforms because real-time bidding is a method of purchasing impressions, not a channel. Still confused? Let’s picture a real auction.

Imagine you want to bid on a car. You hire someone to go to the auction for you – that’s your demand-side platform (DSP). The person putting the car up for auction is the publisher and the venue is the marketplace. Raising your hand to indicate a bid is your real-time bidding process.

To purchase ad inventory through RTB, you’ll have to use a DSP, which is a media buying platform on the advertiser side that facilitates the purchase of an ad campaign and monitors its performance. Learn more about that here.

How The Real-Time Bidding Algorithm Works

To understand how the algorithm works, you’ll need to first understand the platforms involved in the process.

On the advertiser side, marketers use DSPs to set up their ad campaign and track its performance. Publishers, on the other hand, use supply-side platforms (SSPs) to list their ad spaces (also known as ad inventory) and the price they charge. They then meet in the middle at the ad exchange, the marketplace where the real-time bidding actually takes place.

To determine what ad inventory to bid on, advertisers will set targeting parameters. For instance, a brand may only want to take users who are in a specific region or have visited their website recently.

So, advertisers, or specifically their DSPs, evaluate ad potential in real time and decide whether or not to place a bid and how much to bid.

So, now that we’ve covered the key elements needed for a real-time bid, let’s go through an example of how it works.

Let’s say Silk is a UK-based beauty brand that just launched a new brow line and is running a campaign. They set up their campaign on a DSP and are targeting users who regularly shop for makeup products, are located in the Manchester area, …read more

Source:: HubSpot Blog

      

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