Real-Time Bidding, or RTB, is a programmatic ad buying process where demand-side platforms (DSPs), which are on the advertiser side, and supply-side platforms (SSPs), which are on the publisher side, buy and sell ad inventory. In an RTB auction, DSPs bid in real-time on ad inventory supplied by SSPs. The entire process happens in only a fraction of a second.
How does real-time bidding work?
In an RTB auction, SSPs go through an ad exchange to make ad space available on publishers’ apps. DSPs see these available impressions and bid on them based on the targeting criteria laid out by the advertisers. The impression goes to the advertiser with the highest bid, and their ad is served in the app.
In RTB, publishers use a waterfall method to prioritize demand sources based on the cost per thousand impressions (CPMs) that they’ve gotten from each one historically. In other words, the waterfall allows certain demand sources to be prioritized and thus given the chance to bid on ad inventory before others. Because real-time bidding is a programmatic technique, the time between a user landing on a space where an ad can be served and the ad appearing spans just milliseconds.
What does real-time bidding mean for app developers and advertisers?
For developers, RTB simplifies and streamlines the buying process, because it allows them to manually prioritize ad networks in the waterfall in order to optimize their revenue. The ability to set price floors also allows developers to expand their buyer audience without compromising advertiser quality or sacrificing revenue.
Compared to a traditional ad network, RTB allows advertisers more control over the buying process. Because they can bid per impression, there is more transparency and precision in targeting. The ability to view campaigns in real-time also allows for easier and more responsive optimization.
What is the future of the programmatic waterfall?
The waterfall has worked well for years but the mobile industry is quickly moving to in-app bidding. In-app bidding builds upon RTB by allowing advertisers to have equal access to publisher inventory and is also known as a “unified auction.” In-app bidding increases revenue for publishers, allows advertisers a fair chance to bid on ad inventory, and allows consumers to see more relevant ads.
Learn more about Real-Time Bidding in our Ad Tech Deconstructed series.
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