The Truth About Real-Time Bidding
by Matt Chamberlin
As the online advertising space continues to flourish, one of the most talked-about technologies to emerge in recent years is real-time bidding (RTB). This sophisticated system allows marketers to purchase advertising space on an impression-by-impression basis across a wide range of online properties.
While RTB has definitely changed the face of digital advertising, there’s still quite a bit of misconceptions and misinformation surrounding what it is (and is not) all about. Below are some important facts to keep in mind about this popular yet often misunderstood technology.
RTB improves your ability to reach a targeted audience.
More than just buying ad space on a website, RTB actually allows you to purchase audiences. In traditional display advertising, marketers typically buy display ads on a CPM (cost per thousand impressions) basis.
For example, a company selling baseball equipment might buy an ad placement on a popular baseball website, paying a fixed amount–we’ll say $8.00–per 1,000 impressions. If they pay for their ad to be shown 100,000 times, they’ll pay a total of $800.00 for that placement.
The advertiser can reasonably expect their product to reach a targeted audience, because most of the people who would visit this sports site are probably baseball fans. The only problem is, not all impressions are created equally; there’s no real way to tell what each visitor is coming to the site for, which means that the advertiser just basically has to hope that a certain percentage of people who see the ad will be interested in buying baseball equipment.
Now imagine this scenario: What if that advertiser could pay for their ad to be shown only to people who have previously searched for baseball equipment online, or who have visited baseball equipment websites in the past? The advertiser would probably get a lot more bang for their buck, because they would only be showing their ad to people who have previously shown an interest in the type of equipment they have to offer.
This is exactly what real-time bidding does; with RTB, you can narrow your targeting down to one specific type of user who meets specific criteria (e.g., someone who has looked for baseball equipment online in the past), who also happens to be viewing a specific web page at a specific time.
RTB enables you to reach consumers who have been “pre-qualified” by way of cookie data that can include their location, browsing history, etc., at the moment the web page is loaded into their browser.
Within milliseconds, this information is sent to a real-time ad exchange, which then matches this criteria with the appropriate advertiser, instantaneously selecting the highest bidder’s ad to appear on the web page that the user is viewing. Ultimately, this provides a much more targeted audience for digital advertisers.
RTB is a far more efficient way to buy ads.
RTB enables marketers to make smart advertising purchases without having to work directly with website publishers or spend time negotiating ad prices. Using RTB, advertisers can access a wide range of content platforms and basically cherry-pick the impressions that make the most sense for their campaigns. This ultimately minimizes wasted impressions, enabling them to get far more bang for their advertising buck.
RTB lowers the barriers to entry for online advertisers.
In the world of traditional paid online advertising, it’s hard to get your foot in the door without committing at least $5,000-$20,000 up front to buy ad space on prominent websites. Some larger publishers require a six-figure starting budget, which automatically shuts out smaller players. With RTB, advertisers can get started on a much smaller budget, lowering the barriers to entry due to the ability to purchase ad space on an impression-by-impression basis.
Real-time bidding is a technology that is still very much in its infancy, and new developments for how to maximize this powerful platform continue to surface every day. Keep the above points in mind to help you determine how RTB might fit into your current marketing plan.