The Upside of RTB Programmatic advertising essentially refers to the automatic buying and selling of digital ad space using technology platforms. This method allows brands to reach targeted audiences more effectively and at a larger scale. It also enables publishers to monetize their content more efficiently and boost revenue.
This is a significant evolution from traditional Ad purchasing, which was typically done manually and involved one-to-one transactions — a process that was time-consuming and resource-intensive. In contrast, programmatic advertising uses technology to optimize campaigns and budgets in real time, delivering more personalized ad experiences across platforms.
Real-time bidding (RTB) was initially introduced in the early 2000s by Brian O’Kelley at Right Media. After understanding the challenges brands faced in securing large-scale deals with digital publishers, O’Kelley knew automation was the answer.
With the establishment of RTB, the landscape of programmatic advertising changed forever.
As the domain of programmatic advertising continues to expand — with expenditures reaching $96 billion in 2021 — RTB remains a key strategy for both brands and publishers. The programmatic advertising market size is expected to grow to $19.12 billion in 2027. Wow! Many recognize that for launching a variety of data-driven campaigns in secure, brand-compatible environments, RTB is a top choice.
In this guide, I will enhance your understanding of RTB programmatic buying by exploring:
- The Concept of Real-Time Bidding (RTB)
- The Mechanics of Real-Time Bidding
- Distinguishing RTB and Programmatic Direct
- The Advantages of RTB
- Defining Real-Time Bidding
So, what is RTB in the context of programmatic advertising?
Real-time bidding involves a virtual auction where advertisers bid for ad placements in real time. The bidding is typically done per thousand impressions (CPM). Advertisers with relevant offerings compete for inventory to reach the audience of publishers, and those with the highest CPMs secure the available slots.
How does RTB differ from programmatic advertising? RTB is simply one method to purchase programmatic ads. Programmatic ads can also be bought through:
- Programmatic direct deals, established directly between individual publishers and advertisers
- Programmatic guaranteed deals, which offer fixed impressions at a set price
- Private marketplaces (PMPs), which are RTB auctions by invitation only
Although RTB is not the only solution for programmatic advertising, it is one of the most favored due to its cost-effectiveness and scalability across various publisher properties.
Comparison of Programmatic Advertising Methods
|Virtual auctions where advertisers bid for ad placements in real time
|Cost-effective, scalable, precise targeting
|Less premium placements compared to Programmatic Direct
|Deals negotiated directly between an individual publisher and advertiser
|High-quality, premium ad placements
|Less scalable, potentially more expensive
|Offers guaranteed impressions at a fixed price
|Guaranteed impressions, predictable costs
|Less flexibility, potentially higher costs
|Private Marketplaces (PMPs)
|Invitation-only RTB auctions
|Exclusive access to premium inventory
|Limited scope, potentially higher costs
Understanding How Real-Time Bidding Works
RTB programmatic advertising operates using a key set of technology platforms, including:
- Demand-side platform (DSP): A type of software used by brands to buy programmatic ad units from publishers.
- Supply-side platform (SSP): A software used by publishers to sell programmatic ad units to advertisers.
- Ad exchange: A platform that connects the DSP and SSP, where the actual programmatic transaction takes place.
Here’s a step-by-step breakdown of how an advertiser might engage in the RTB media buying process:
- The advertiser uploads their campaign creatives and customer data to their DSP.
- The advertiser sets its CPMs based on its budget and campaign objectives.
- A reader lands on a publisher’s webpage that hosts an ad unit that needs to be populated.
- The ad exchange initiates a programmatic real-time bidding auction to fill the ad unit.
- The ad exchange aligns the data from the advertiser’s DSP with the data from the publisher’s SSP to identify the most suitable placement for the reader.
- The advertiser with the highest bid wins the ad unit. Their creative is sent to the publisher’s SSP and displayed to the reader — all in a split second.
Differentiating RTB and Programmatic Direct
When exploring real-time auctions, many advertisers might ponder, “How does RTB differ from programmatic direct?”
Programmatic direct, like RTB, is a type of programmatic ad buying. The main difference is that programmatic direct deals are negotiated directly between a publisher and an advertiser. While it’s not a form of traditional advertising, the ads are distributed programmatically through the aforementioned platforms, not manually.
In contrast, RTB operates on a much larger scale, with potentially thousands of advertisers competing for a single publisher ad unit at any given moment. For this reason, RTB tends to be more affordable and easier to implement, but programmatic direct can yield more high-quality, premium ad placements and collaborations.
The Benefits of RTB
RTB programmatic advertising offers several advantages for brands aiming to broaden their reach and optimize their budgets.
The primary benefits of RTB media buying include:
- Scalability: RTB allows advertisers to execute potentially thousands of campaigns in real time from a single platform: their DSP.
- Expanded reach: Advertisers can use RTB to automatically place ads across a variety of publisher properties without having to manually oversee the process.
- Cost-effectiveness: As advertisers can set their CPM bids, they ensure they never overpay for ad inventory.
- Precision targeting: Ad exchanges utilize customer data from publishers and advertisers to instantly identify the right audience for each campaign.
RTB and programmatic advertising will continue to provide new avenues for advertisers to boost awareness, consideration, and conversions. As reported by eMarketer, programmatic display ad spending grew 29% from 2020 to 2021, and it will soon represent over 90% of all digital display ad spending — an all-time high.