The media and marketing world is full of so much lingo that no one understands. All the abbreviations, technical terms, and buzzwords pile up as the days go by.
Real-time bidding (RTB) is no different. It’s one of the many terms anyone working in advertising or media buying needs to know. This industry is on the rise as digital advertising gains steam.
There’s a predicted growth of 20 percent in this industry by the end of 2020 alone. Other estimates show that real-time bidding networks could be generating more than $40 billion annually in 2021 compared to a mere $3.5 billion in 2017.
So what does real-time bidding mean in media buying? Who is it for? Why does it matter and who does it benefits? Everything you need to know about real-time bidding for media buying is answered below.
What is Media Buying?
Let’s start with the basics. Before you can understand what real-time bidding for media buying is, you need to understand what exactly media buying is.
Media buying is a set of multi-platform ad space purchases, finding the cheapest, most helpful placement for an advertisement. Media buying is a form of paid media and its goal is to find the right place, time, and context to advertisers to consumers.
What is Real-Time Bidding?
Real-time bidding is an auction setting where you buy and sell ad impressions. There is an emphasis on ‘real-time’ because advertisers that win the bid of the auction get their ad’s shown instantaneously. Think of it like the stock market but for ads.
Real-time bidding allows website owners to sell their ad impressions through advertising exchange platforms, and each impression sells as it becomes available.
The components of the real-time bidding process are:
The publisher is the website that the user visits, it could be a blog, website, or even a Facebook page.
The publisher makes ad space available for advertisers to bid for; they call the ad space, ad inventory.
The Supply-Side Platform (SSP)
This is a space designed to allow publishers to sell their ad space with ease. Publishers might not need to go through these platforms to sell, but it is recommended, and a guaranteed safety net.
Supply-side platforms also offer technology that allows suppliers to see the data analytics of how much they sell and how much they’re making.
An ad exchange is the platform that manages the buying and selling of ad spaces between the publisher (the seller) and the advertisers (the buyers)
The Demand Side Platform (DSP)
Similar to the supply side platform, but working on the opposite end. The demand-side platform keeps the ads that advertisers would like to post when they snag an ad space.
At the very end is the person or company buying the ad space.
How Does RTB (Real-Time Buying) Work?
So we know what real-time bidding is and that it’s a form of media buying, but how does it work? There are 5 steps to this process, these include:
- User accesses a website
- Publisher’s site sends to the SSP (supply-side platform)
- SSP analyzes the user’s information and sends this information to an ad exchange
- Ad exchange receives the information about the user, sends it to the DSP (demand-supply platform)
- The ad exchange starts an auction, the DSP bids and whichever advertiser bids the highest wins and they send the ad to the publisher who displays it to the user
- This entire process happens in mere 10ths of a second and repeats every time a new user enters a website that has ad space available.
Why Does it Matter?
With this process buyers, advertisers, and agencies need not work with publishers to negotiate prices. Publishers (host websites and sellers) have information on users visiting their site which allows them to know who to buy and sell to. Real time bidding is the selling force of media buying.
What are the Benefits?
For publishers and advertisers alike, real-time bidding comes with many benefits.
Publishers get pricing precision. Advertisers might be the ones bidding for ad space, but publishers can make the starting price adjustments off of information they receive from their platforms.
Publishers also get a lot of efficiency from real-time bidding, there’s no need to do any extra research within which companies you should sell or buy to, real-time bidding makes the process faster and go through without a hitch.
Since auctions are triggered by visitors on a website, ad-space unwanted before goes up in value. Publishers can also see audience insights, they know which ads are the best performing, and this can help build relationships with high-value customers who would like to use ad space on their websites.
Real-time bidding for media buying also helps advertisers, it enables the buyer to plan and update campaigns in real-time and based on the analytics they receive of the user. Since advertisers get information about the users right at the moment, they can target their ideal user and can trust that the targeted ad is being presented to a specific audience.
Buying in real-time is the most effective type of media buying. It’s cost-effective, there’s less waste, and the system doesn’t allow for overpaying of media.
Real-time Bidding vs Programmatic Buying
Programmatic buying is the buying of digital ad spaces using automated software. Sounds very similar to RTB, right? Think of real-time bidding for media buying as a subset of programmatic buying. real-time buying is not the only way to buy media programmatically. Other ways to buy programmatically include:
This is the buying of media directly or fixed price, without bidding from a seller, and the payment is automated. This is the more traditional style of programmatic buying.
The private marketplace is an invitation-only marketplace. It’s a closed auction where publishers set out a premium ad space for a select amount of advertisers.
Preferred deals allow advertisers to choose the ad space at a fixed price before the rest is left up to private market places and auctions.
Real-Time Bidding Vs Demand Side Platforms
It’s easy to get a lot of these terms mixed up, especially when they all play into each other. Demand-side platforms as touched on before are a component of real-time bidding for media buying, which is categorized under programmatic buying.
Demand-side platforms are programs that buy impressions based on user data while real-time bidding is the fundamental process of using this data to place the bid to the audience
Real-Time Bidding Vs Ad Exchange
Another confusing term housed under real-time bidding is ad exchange. This is also not the same thing, ad exchange functions as the platform where publishers and advertisers come together to list and sell open ad spaces and trade ad inventory.
Starting With Real-Time Bidding
Starting with real-time bidding isn’t as difficult as it sounds. When publishers have ad space for sale there’s an entire process that it needs to go through before it can be allowed to auction.
There is a minimum amount of page views a publisher can have before their site can meet the requirements to be available for auction.
This might not be critical since ads are targeted with the information of the user logging into the website but advertisers like to work with publishers who have a specific demographic for their content, this makes it easier in predicting who they’re targeting.
As long as you’re working with verified programmatic buying companies there should be no worries of any fraud.
When choosing real-time bidding for yourself and company these are specific outlines one should have in mind to get the best out of their online marketing strategy.
Real-Time Bidding for Media Buying
“Spending on real-time-bidded display advertising will speed up at a 59 percent compound annual growth rate through 2016, making in the fastest-growing segment of digital advertising over the next few years”
So is real-time bidding in media buying the best option for you? We hope this primer on RTB has armed you with the knowledge you’ll need when to explore this topic further and see if this is the best fit for your company and advertising strategy.
Real-time bidding for media buying has proven to be a game-changer in media and advertisement, it’s proven to bring a higher level of conversion and allow advertisers to run campaigns that are very effective. If you’d like to learn more about real-time bidding for media, visit our blog for more information.