Real Time Bidding: what it is and how it works.
The programmatic advertising world can be a bit confusing in the beginning, even more when talking about Real Time Bidding (because of all the elements that are involved in the whole process).
RTB is a type of programmatic advertising - the one where ad space is bought automatically through softwares.
In the beginning, Real Time Bidding appeared as a solution from online media to fill the ad space that wasn't bought by the advertisers (known as unsold inventory). Since then, real-time bidding has grown steadily, and more and more agencies and brands are making use of it due to its high efficiency and low cost.
This type of system allows brands to show their ads to their target audience using specific segmentation criteria -avoiding paying for visualizations from users that are not interested in their product or service!- To achieve this, the software uses data from each user collected through cookies.
So, what's Real Time Bidding?
RTB is one of the main types of programmatic purchase, where ad space for video or display ads is bought through a bidding system that takes place in real time.
Websites offer spaces for brands to place their ads, creating another source of income. Before, businesses needed to directly buy that ad space and pay a fixed amount. As the number of Internet users started to grow rapidly, many websites started having empty ad spaces (the more website visits, the more ads were needed, since the purchase was on a CPM basis).
That's how programmatic advertising and RTB emerged.
Programmatic purchase involves any process where ad space is bought in an automated way. RTB is one of those ways.
These ads are not static; advertisers upload the banners into a server and are viewed thanks to an HTML code - that the webmaster inserts in the page. This means that when it comes to RTB each user sees a different ad depending on his/her profile.
The bidding process between brands to get the ad space on a website depends on the profile of the user who's visiting has and it's a process that takes place in 100 miliseconds.
How does this work?
During this process there are two ends:
1. The Publisher: the website where the add is shown.
2. The Advertiser: the brand that wants its banners to be seen.
The Publisher offers its available ad space through an SSP (Supply Side Platform). The Advertiser, through a DSP (Demand Side Platform), creates the demand. The DSP is the platform where the Advertiser selects the campaign's details (type of bid, objective, segmentation, etc.).
Supply (SSP) and demand (DSP) meet at the Ad Exchangea place where Advertiser and Publisher get in touch and where the bids take place.
To summarize, this is the role each part plays:
And how's the data collected?
As we've seen, ads appear to those users who meet the criteria that was chosen previously by the Advertiser (for example, people who live in a certain city). It's the DSP platform where we'll choose the segmentation criteria (we explain more about it in this post ). But, how do we get that information for the platform to know about the user?
Here's where databases come into play. Some of the online media that offer their ad space to the different publishers usually have their own, integrated with a CRM. This is known as 1st Party Data. In cases where businesses don't have their own database, they can buy it to another company - which is known as 3rd Party Data.
3rd Party Data companies collect data from users through Data Suppliers, companies whose function is to process data collected through cookies. These Data Suppliers identify audiences to sell those segments to other companies so that they can offer more relevant ads.
Apart from this, there are also DMPs (Data Management Platform), platforms that collect and manage data to create audience segments.
If you have any question about Real Time Bidding and how it can help your brand, don't hesitate to get in touch with the RTBMind team.