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Online display advertising is what is known as the Real-Time Bidding (RTB) mechanism to buy and sell ads. RTB essentially facilitates buying an individual ad impression in real time while it is still being generated from a user’s visit. RTB not only scales up the buying process by aggregating a large amount of available inventories across publishers but, most importantly, enables direct targeting of individual users. As such, RTB has fundamentally changed the landscape of digital marketing. Scientifically, the demand for automation, integration and optimisation in RTB also brings new research opportunities in infor-
mation retrieval, data mining, machine learning and other related fields.
What is real-time bidding?
Real-time bidding refers to the buying and selling of online ad impressions through real-time auctions that occur in the time it takes a webpage to load. Those auctions are often facilitated by ad exchanges or supply-side platforms.
Real-time bidding is distinguishable from static auctions by how it is a per-impression way of bidding whereas static auctions are groups of up to several thousand impressions. RTB is promoted as being more effective than static auctions for both advertisers and publishers in terms of advertising inventory sold, though the results of course vary by execution and local conditions.
How it works
A typical transaction begins with a user visiting a website. This triggers a bid request that can include various pieces of data such as the user’s demographic information, browsing history, location, and the page being loaded. The request goes from the publisher to an ad exchange, which submits it and the accompanying data to multiple advertisers who automatically submit bids in real time to place their ads. Advertisers bid on each ad impression as it is served. The impression goes to the highest bidder and their ad is served on the page. This process is repeated for every ad slot on the page.
Programmatic and RTB: do you know the difference?
A common point of confusion in the world of digital media buying is the difference between programmatic and real-time bidding or RTB. One of these things is like the other, but they’re not the same. Programmatic is the automated format of ad buying, while real-time bidding is one type of programmatic, referring to a lightning quick auction that takes audience data into account to assess the value of an impression to a certain advertiser.
Why does programmatic advertising matter?
Efficiency. Before programmatic ad buying, digital ads were bought and sold by human ad buyers and salespeople, who can be expensive and unreliable. Programmatic advertising technology promises to make the ad buying system more efficient, and therefore cheaper, by removing humans from the process wherever possible. Humans get sick, need to sleep and come to work hungover. Machines do not.
While RTB is estimated to account for over 90% of all programmatic buying and over a third of digital ad spend overall, there is also something called programmatic-direct or fixed-price programmatic, also known as automated guaranteed. In this model, ad inventory is sold directly to advertisers without any bidding, although there still may be some negotiation involved.
Ads sold through programmatic direct are often tied to premium publishers (think Forbes and The Wall Street Journal) who reserve a certain percentage of their inventory they prefer not to sell on the open market because they can demand a premium price from advertisers.
