Anyone in the AdTech industry will have heard about words such as ‘Programmatic’ and ‘RTB’ and how they are used by trading desks in programmatic buying.
Just to refresh your memory, 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.
Here’s something to give you an idea of how RTB works.
During the loading of the webpage, the user’s information is passed on to the Ad Exchange which puts the advertising space in an auction, operating on the Second Price rule. This means that the highest bidder wins but the price paid is the second-highest bid.
But what is so good about RTB? Why is everyone in the digital advertising industry talking about it?
In the past, advertising inventory was bought and sold in bulk. (Ad inventory refers to the quantity of ad placements available for selling to advertisers during a given period.) With print media, there are limits as to how much advertising space there is. This is not the case with digital marketing, as it is on the internet, and adverts can be placed in several places. The opportunities are endless. Hence, there was still some available inventory leftover.
In order to monetise the leftover content, publishers pushed this through ad exchanges on an auction basis. Publishers were also able to reap the benefit of the vast amount of data available to them, which made even more precise targeting possible.
Even though it was publishers who started using RTB to monetise their content, advertisers soon discovered the many capabilities of RTB as well. So much so that, for some companies, it has become the tool of choice for ad buying. The fact that entire companies that specialise in RTB have sprung up in recent years demonstrates just how well it is working.
When you compare RTB to traditional advertising (for example print and broadcasting), you are sending your message out to the masses. However, you have no idea who is seeing your ad, if they have seen it at all. You don’t even know who your customers are. With programmatic, you are able to target the people you want. You are also more certain that it has been seen by the right people. With RTB, you are able to show them relevant advertising in real time.
According to Leon Siotis, Director of Media at BrightRoll
“The ability to show the right ad, to the right person at the right time appeals to every advertiser no matter what their intent, and this is something that can only be done if you are making that buying decision in real time.”
So, who does RTB benefit?
RTB can benefit both the buy-side (advertisers) and the sell-side (publishers).
RTB gives advertisers greater control over the performance of their campaigns. It enables them to achieve more targeted results for themselves. This is because RTB ensures that advertisers are immediately reaching their desired audience on more than one website and device. This also increases the scale of their advertising.
Additionally, as they are serving the right impression to the right audience at the right time, their spending will be more efficient. They no longer have to worry about wasted impressions. (An impression refers to a single instance of an online ad being displayed.) Finally, the auction process dispenses with the need to work directly with publishers or ad networks to negotiate ad prices, offering greater transparency.
RTB can help publishers generate more revenue from their ad inventory. If you refer back to the above diagram, you will remember that the ad exchange auctions the space to the highest bidder. Therefore, the higher the bid, the higher the revenue generated from the sale.
The auction pricing system has resulted in concerns that RTB benefits advertisers at the expense of publishers. After all, since publishers are no longer naming the price, some worry that RTB would result in advertisers paying them less for their inventory.
However, there are ways for publishers to retain control over prices. Publishers can set a price floor (the minimum price at which their inventory is sold). The reserve price must be met in order for a transaction to take place. This enables publishers to open their ads up to an auction while ensuring that they maximise inventory revenue.
Here’s the main takeaway: RTB is no longer a thing of the future; it is our present. The benefit it offers in terms of efficiency, precision targeting, transparency and scale means it is here to stay. The reason everyone in the digital advertising industry is talking about it is because everyone wants a bite of the RTB pie. And yet, it remains something that not everyone has the expertise to do.
Here at the Media Trader, we are a trading desk specialising in the use of RTB to optimise the execution of your ad campaign. Our aim is to help you to reach the right person at the right time on the right device.
P.S.: 25 days to go until the Web summit, Dublin. See you there!