What is Real-time Bidding and Why is it Useful?

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We see ads on websites all the time.

The average person will view somewhere in the region of 1700 adverts online every single month! However, did you know that only half of these will be paid any attention and even less will actually be clicked on?

This is why ad placement and getting your ad displayed prominently and at the start of a users’ visit to a website is so important. You are far more likely to click on an ad that is related to what you are searching for when you see it on the first page of a website rather than the 3rd, 4th or even 5th page.

So, with this in mind, we need to look at real time bidding.

Real time bidding advertising can be confusing but we are going to break it down to show you what it is, how it works and why it is effective for marketing purposes.

Real-time Bidding advertising

What is RTB?

Real-time bidding advertising is common but it isn’t always the easiest to explain!

If we think about media buying and ad placement – there are two sides to this. On the one side you have publishers who sell their digital space to display these ads (think websites) and on the other we have advertisers who are competing with each other to have their ads shown.

Programmatic advertising and media buying has been around for a while although real-time bidding differs slightly, essentially RTB allows buyers to bid for advertisement space and impression instantly so that their advertisements can be displayed across a large number of sites right away.

Now we (roughly!) know the RTB meaning, how does real-time bidding work?

How does RTB actually work?

When someone comes to a website they are likely to see an ad. This counts as one impression. When they go to another page and see an ad in the same location then this is two impressions.

There are numerous mechanics that go into the process of real-time bidding however at a basic level the highest bidder gets their ad shown at the first impression (where it is more likely to be clicked and interacted with) and the second highest bid gets the second impression. This goes on and on.

Let’s take an example of a blog that posts sneaker reviews.

When someone visits that site the bidding starts right away for what ad to be shown on the first page that the visitor goes to, then the second page, third page, etc.

The first ad that comes up is a massive sneak retailer. They can afford to make big bids on real time bidding. They offer $1.7 per CPM (1000 impressions) and set a frequency cap at 3.

The second bidder is a smaller retailer that offers $1.4 per CPM with a frequency cap of 4 and finally, an affiliate marketer offers $1.2 per CPM with a frequency cap of 5.

What does this all mean?

Well, they are bidding per 1000 impressions and there is a limit to how many times each visitor will see each ad – this is the frequency cap. The biggest retailer in the example above has bought the first 3 impressions that a visitor will see. If the person that visits the sneaker review site visits 10 pages, they will see the biggest retailer’s ad on 3 pages, the smaller retailer on 4 and then the affiliate marketer ad on the other pages.

The problem for smaller bidders is that many people won’t visit 10 different pages on a website so many are unlikely to see the affiliate marketer’s ad.

This is the basics of real-time bidding.

Real-time Bidding Platforms

There are RTB bidding platforms where advertisers and publishers can come together within the same database.

Rather than having to do this the old fashioned way and manually reach out to websites, advertisers can bid on multiple sites using a range of parameters to find their target audience.

That being said, ad exchanges are not the same thing and they are slightly different. Generally, they include Supply-side platforms and Demand-side platforms which have been emerging that are providing competition to these RTB bidding platforms. They allow a greater range of bids and they are created specifically with RTB in mind.

How you can benefit from RTB

Real-time bidding provides advantages for both buyers and advertisers.

It is a highly efficient way in which to get ads placed on websites and for buyers, it is a simple method of generating income. In fact, affiliate marketers especially find RTB useful as it boosts their performance. There is less wasteful media buying and while there is more to think about with RTB it offers a chance to build better campaigns.

Publishers will find better prices to display ads on their sites and they give better insights into who their audience actually is.

Real-time bidding advertisements

Many people ask “what is RTB?” and it can be a confusing subject to explain.

RTB marketing is a big business and it has emerged as the best way in which to get ads on a website both from the advertiser’s perspective as well as the publisher. It also opens the door for smaller marketers to get a foothold and even though this usually means that a visitor has to click on and view a large number of pages before that ad is shown (think about the affiliate marketer in the example we gave above), it means that the smaller marketers aren’t fully excluded from the process.

Real-time bidding is growing all the time as more and more people see the benefits not just of RTB but of programmatic advertising in general. If you are able to use it properly then it can be highly effective in growing your business online.

It’s potential is massive and in the ever-changing world of digital marketing, real-time bidding is a process that isn’t going away anytime soon.

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