Traditional Advertising is Broken
For Advertisers, buying digital media in the traditional CPM model is outdated and inefficient. Impressions are bought in bulk and all at the same price, when each impression actually has a different value to your campaign.
For Publishers, the traditional methods of selling digital media leaves up to 70% of inventory being unsold, or sold at a fraction of its real value. And its even worse for small publishers, who have highly targeted niche audiences. As they often lack a sales team to sell their inventory as premium ad space at all.
RTB is the solution. But what is it?
Real Time Bidding or RTB for short, is a process that allows marketers to bid for media as it becomes available instead of pre-purchasing impressions in bulk. This process happens within milliseconds and is triggered as a user loads a website and a call for the ad is made to the ad-exchange. As this all happens so fast, Marketers set parameters ahead of time about the targeting and max bid that they want to pay for a particular impression (CPM) or click (CPC).
Ok, but it Sounds complicated… How does it work?
If we simplify the RTB process, it looks like;
- Publishers provide their remnant inventory to an Ad Exchange, which is actually the system responsible to holding the ‘auction’.
- During the auction, a DSP will place a bid for each impression on behalf of the Advertiser. The value of this bid is decided by the parameters that the Advertiser gives the DSP. This ensures that the Advertiser has full control over the purchase price of their impressions.
- Once the bidding is completed the highest bid is selected, ensuring that the price is dictated by market demand. The winning ad is then served on the publishers website
This whole RTB process is completed in the milliseconds that it takes for the webpage to load.
Sounds like a lot of people are involved. Who are they again?
Advertisers such Brands or Agencies are able to leverage DSP’s to purchase impressions that are
Demand Side Platforms or DSP’s enable the automation of purchasing online media space on behalf of advertisers. Advertisers are able to set parameters such as max bids or demographic information as guidelines in which bids can be placed.
Ad Exchange are similar to stock exchanges, in that they facilitate the purchase of inventory at fluctuating prices based on demand.
An Ad exchange connects advertisers and publishers through a real time auction that allows the purchase of digital media in the milliseconds before a page loads.
Publishers are now able to sell their unsold remnant inventory at the highest possible price. Some publishers may use Supply Side Platforms, or SSPs, to help better manage and sell their inventory.
Thats a lot of people involved, and they all benefit from RTB?
Agencies benefit by being able to achieve better result for their clients. This is thanks to having much more control over campaign performance and more efficient bid prices.
Advertisers maximise results by nearly eliminating wasted impressions and enhanced targeting capabilities. They are also able to achieve more effective reach and frequency for their budgets.
Publishers drive higher revenue on their inventory by offering that inventory to more targeted buyers who are able to maximize the value of each impression.