Simply put: Real time bidding, or RTB, is the automated buying and selling of digital media. Mimicking a stock exchange, RTB uses computer algorithms to automatically buy and sell digital ads in real-time.
Although the digital marketing ecosystem is infamous for having hard-to-understand processes and acronyms, real-time bidding has forever changed the future of digital advertising. Bottom line is, it’s kind of a big deal and can still confuse even the savviest of marketers. Here’s a primer, in plain English!
Real time bidding 101
Real time bidding, or RTB, is the automated buying and selling of digital media.
Real-time bidding (RTB): Real-time bidding refers to the means by which ad inventory is bought and sold on a per-impression basis, via programmatic or instantaneous auctions, similar to financial markets. Instead of bulk buying and inventory-centric buying, RTB mimics stock exchanges and uses computer algorithms to automatically buy and sell ads in real-time. Empirical analysis suggests that RTB encourages the use of per impression context and targets the ads to specific cookies, primarily based upon demographic and behavioral data, and hence dramatically increases the effectiveness of display advertising.
Real time bidding advertising: traditional vs. programmatic
Traditional media buying is a manual process that involves buying directly from salespeople, requests for proposals, or RFPs, and the constant trading back-and-forth of change orders. Organized chaos is a good term to use when describing the process of traditional media buying.
Programmatic media buying, however, is quicker, data-driven, and saves a ton of energy and money. The bidding process is often done through an RTB auction, similar to the stock market. In Choozle, programmatic media buying is executed through automated processes where data, technology, and software consolidate data into a single dashboard that can be used in-house.
How RTB works:
- The user visits a webpage with an open ad placement. This is the beginning of the RTB auction lifecycle.
- An ad exchange or SSP announces the available bids to the bid manager. This is where your creative types, sizes, and other targeting strategies come into play.
- The bid manager evaluates the advertiser’s targeting and bids it matches. The auction then takes place for the open ad inventory, and in the instance that an advertiser is using Choozle to run programmatic ads, we will facilitate the bid in the RTB auction—if it’s a match based on targeting parameters—to the open ad placement. Advertisers always win inventory at the lowest possible CPM, but the base bid acts as a foot-in-the-door to these live auctions.
- Finally, the winning advertiser serves the ad (and wins the impression). All of this takes place while a user is waiting for a webpage to load, AKA, under 200 milliseconds!
Key takeaway: Programmatic advertising and RTB go hand-in-hand. With programmatic, there’s no back and forth on the phone or those dreadful, long email chains. Instead, you have access to near-instantaneous media buying, complete transparency, control over everything from creative, to cost, to targeting & beyond, and ease of optimization right at your fingertips. Interested? Send us a note.
Next up: Explore our other “What is?” posts to learn about more things that will impress your boss.