Step foot into a college business school lecture, and you’ll undoubtedly hear the word “streamlined” at least once. Streamlining is central to business efficiency, yet it also plays an important role in advertising. In particular, programmatic advertising generates better results through streamlining. Streamlining is possible with the use of real-time bidding.
The Basics of Real-Time Bidding
Real-time bidding is a type of programmatic advertising. Often referred to by the acronym of RTB, such bidding empowers businesses to buy/sell digital advertising spaces in real time. Here’s how it works.
Use your mind’s eye to envision businesses bidding on digital ad space through computers. Programmatic advertising RTB is centered on an auction in which advertisers set bids in an attempt to win coveted ad slots. Now envision a potential customer visiting a website or a mobile app after such an auction occurs. The online visitors see the ad presented on the mobile app or publisher’s website, receiving exposure to the advertiser that placed the highest auction bid and ultimately proving that they are much more likely to convert.
RTB occurs through demand- and supply-side platforms along with ad exchanges. Demand side platforms, or DSPs, are platforms that face advertisers though some are equipped with capabilities that face publishers.
SSPs, or supply-side platforms, face publishers, sometimes including the capability of facing advertisers. Ad exchanges provide the ability for DSPs and SSPs to transact the ad inventory of publishers.
RTB on SSPs
Bidding on SSPs is streamlined with programmatic software that empowers publishers to sell ad impressions. SSPs bridge the gap between several ad exchanges, ad networks, and DSPs in unison. This technology empowers the suppliers, sometimes referred to as publishers, to streamline the sale of coveted impressions to an expansive pool of potential customers. SSPs empower suppliers to establish a bid range for profit maximization.
RTB on DSPs
Let’s temporarily shift our attention to demand-side platforms. DSPs are a type of programmatic software advertisers use for fully automated media purchases in a centralized manner. This approach provides access to media buys through several different sources.
As indicated in its name, a DSP is fueled by demand. Advertisers use such platforms to win inventory spots, making it easier for businesses to connect with target audiences. Streamlining occurs through automation that secures such inventory at the optimal time and also at a reasonable cost.
An Efficient Online Marketplace
Ad exchanges are web-based marketplaces where the magic of bidding for programmatic ads occurs, empowering businesses and advertisers, DSPs, SSPs, publishers, and agencies to bid on ad inventory from multiple publishers. Such bidding occurs with RTB.
Advertisers engage in the bidding process to determine the winner of ad space used in programmatic advertising. Moreover, ad exchanges empower advertisers to heighten the visibility of ad presentations.
RTB Will Become Increasingly Important
If you could travel through time a decade into the future, you would likely find RTB has captured even more market share. Industry insiders project RTB’s aggregate market value to exceed a whopping $50 billion before the end of the decade.
RTB facilitates the purchase and sale of programmatic ads with efficiency. In contrast, conventional advertising takes up more time in that it requires the development of RFPs, short for requests for proposals, along with quotes, negotiations, and more. There is simply no sense in bothering with these inefficiencies when RTB technology is easily accessible and readily available for businesses of all types.
RTB empowers businesses and advertising specialists to purchase and position advertisements with minimal time investment while also exerting maximum control over the bidding process. In terms of cost, RTB operates through CPM, short for cost per mille or cost per thousand impressions. CPM is the industry’s standard RTB model for pricing in which bidders pay the price in accordance with the aggregate number of impressions each placement attains in a set period of time.
In general, CPMs are quantified on either a quarterly or monthly basis. Moreover, RTB costs are flexible and dynamic when juxtaposed with conventional advertising, as advertisers can alter their budget halfway through a campaign for cost efficiency.
Make the Transition to RTB Today
Advancements in machine learning and artificial intelligence (AI) will enhance ad targeting all the more, heightening RTB conversion rates as well as advertisers’ return on investments. Recognize RTB is the wave of the future, make the transition to this relatively new approach to advertising, and your organization will benefit both in the short-term and also across posterity.