What is Real Time Bidding (RTB)?

As digital media plans increasingly use DSPs for increasing performance and driving reach, it is important for marketers to develop a working knowledge of Real Time Bidding (or RTB). RTB is the buying method, also called protocol, that powers bulk of the transactions in Programmatic Display Buying. This is now probably the most important and impactful standard defined by the industry body Interactive Advertising Bureau (or IAB) today.

As shown in the block diagram below, the RTB method is executed in part by the buyer i.e. via a DSP and the seller via the Ad Exchange/SSP.

RTB drives almost similar volume in the programmatic eco system as compared to Programmatic Direct. The biggest benefit of RTB for the digital marketer is that it enables buys (via a DSP) at the level of a single ad impression. This increases the performance of digital campaigns as only relevant ad impressions need to be bought. The video below shows the process of RTB in detail from how a user generates an ad impression that is sold via a ad exchange.

Anatomy of Real Time Bidding

To summarise the steps again –

1. When a page loads, a different request for every ad impression is sent to the publisher’s ad server or SSP (Supply Side Platform).
2. If the publisher’s ad server/SSP cannot find a match for the ad impression amongst publisher’s direct or contracted sources of indirect revenue (ad networks etc), a request for ad is sent to the ad exchange.
3. The ad exchange sends out requests for bids to all DSPs connected to it.
4. Each DSP sends back bid from a winning campaign (since multiple campaigns would be running inside a DSP).
5. These bids participate in a second price auction.
6. The DSP that wins the bid, sends the winning campaign’s ad creative to the ad exchange which is then rendered on the page.

This entire process concludes within 90 milli seconds, hence it is called Real Time Bidding.

Generating Performance via RTB

The DSP only controls which impression to bid on and how much to bid on it. The best performing DSPs do a better job of both these than competition. When sending out requests for bids to the DSPs, the ad exchanges send additional information i.e. location, size, page URL/category etc. This, along with any proprietary data that a DSP has, gives it the ability to select and value ad impressions in a manner that drives ROI.

Similarly, SSPs leverage the a fair amount of analytic information to maximise the eCPM (also called yield) of publisher’s inventory.