This website uses cookies to ensure you get the best possible experience. See our Cookies Policy.

PMG Digital Made for Humans

A Simple Look At Real Time Bidding

3 MINUTE READ | August 10, 2017

A Simple Look At Real Time Bidding

In the programmatic world, there is one term that trumps all: Real-Time Bidding. Real Time Bidding (RTB) is the backbone of all things programmatic, yet most digital marketers don’t fully understand what it is.

As a web page is loaded, thousands of factors are running in the background to determine how much a publisher will pay for you to see their specific ad. Maybe you hit their target demographic to a T, then they would be willing to pay 10x for you to see their content. Alternatively, you could be the exact audience they want to exclude, and bid down 10x. Enter: Real Time Bidding (RTB).

There are three key pillars of Real Time Bidding: the demand side platform (DSP), an ad exchange, and publisher. Publishers supply real estate on their site to the ad exchange which then holds an auction between DSP’s. DSP’s then bid for advertiser’s content based on different targeting factors that have been indicated from advertisers (e.g. Income, browsing behavior, past purchases etc.). When an advertiser’s targeting and the publisher’s inventory line up, the auction is in full swing. Within a millisecond, thousands of bids are made for the real estate. One bid trumps the rest wins the auction, and that advertiser’s ad is served on the publisher’s inventory.

(Image source)The winning advertiser’s ad is then loaded onto the web page almost immediately; the whole process takes just milliseconds to complete. Advertisers typically use DSPs to help them decide which ad impressions to purchase and how much to bid on them based on a variety of factors, such as the sites they appear on and the previous behavior of the users loading them.

Historically, advertisers decided which websites to buy inventory on based on predetermined factors from the content on site e.g. sports brands buying inventory on ESPN. Given the vast amount of information that you accumulate as you browse the internet, advertisers are privy to a much more broad understanding of things that are important to you online.

Stay in touch

Bringing news to you

Subscribe to our newsletter

Because of Real Time Bidding, advertisers no longer need to work directly with publishers (private marketplace deals) or ad networks to negotiate pricing of all trafficked ads. Utilizing the ad tech that powers DSPs, advertisers can access inventory across a wide range of sites, bidding on only the impressions they see to be most valued to them. This cuts down the number of impressions wasted on the wrong users but also minimizes the need for costly and unreliable human ad buyers.

Posted by John Stewart

Related Content

thumbnail image

Get Informed

PMG Pioneers Programmatic Linear TV Buying

2 MINUTES READ | November 4, 2021

thumbnail image

Get Informed

Shared Lessons for Linear TV and AVOD

1 MINUTE READ | July 15, 2020

Get Informed

SPO Can Lead to Unintended Consequences

2 MINUTES READ | July 3, 2020

Get Informed

In-Game Advertising Grows Up

1 MINUTE READ | June 23, 2020

thumbnail image

Get Informed

The Programmatic Promise

2 MINUTES READ | May 22, 2020

Get Informed

Amazon Ad Business Booming, Despite Declining Prices

1 MINUTE READ | May 21, 2020

Get Informed

The Potential Return to Context Targeting

2 MINUTES READ | April 24, 2020