What is Real-Time Bidding?

Real-Time Bidding

What is Real-Time Bidding?

Real-time bidding (RTB) is a system that allows advertisers and publishers to buy and sell PPC ad placements on a per-impression basis via automated, near-instantaneous programmatic auctions held by ad exchange platforms.

With RTB, B2B SaaS companies are empowered to fully optimize their advertising spend by selectively targeting the most relevant audiences in their Total Addressable Market (TAM) while effectively controlling the cost of every impression. As a result, RTB drives increased conversion rates while saving marketers hours of time and lowering Customer Acquisition Costs (CAC).

 

How Does Real-Time Bidding Work?

Ad placements that are determined by real-time bidding involve three parties:

  1. Ad Publishers – Publishers include websites, mobile apps, and other platforms that sell digital advertising space to advertisers via digital ad exchanges.
  2. Ad Exchanges – Ad exchanges like Google AdX (previously known as DoubleClick Ad Exchange) provide the platform and infrastructure that enables advertisers and publishers to buy and sell ad space/impressions through real-time bidding.
  3. Advertisers – Advertisers are the in-house marketing teams or paid media agencies that purchase ad space from publishers to reach their target audience.

 

Real-time Bidding Explained

When a user visits an ad publisher’s website, a bid request is immediately triggered. Bid requests include information about the ad space available on the page, as well as data captured from the user (demographics, browsing history, location, etc.). 

The bid request is sent by the publisher’s supply-side platform to an ad exchange, where the request will be automatically and immediately forwarded to multiple advertisers. 

Advertisers use specialized bidding applications or demand-side platforms to analyze bidding requests in real time, estimate the value of an impression based on the available ad inventory and user data, and deliver a rapid, automated response that includes a bid for the impression and the appropriate ad creative.

Once the bids have been finalized, the ad exchange will complete the auction and the highest bidder will see their ad placed on the publisher’s website. Publishers can usually set a floor price for their ad space to ensure adequate compensation for the impressions they deliver through RTB.

The entire process of RTB, from the initial bid request to the final ad placement, is completed in just fractions of a second.

 

What are DSPs and SSPs?

Demand-side platforms (DSPs) and supply-side platforms (SSPs) are software platforms that help advertisers and publishers manage ad inventory and purchasing across multiple ad exchanges and networks.

DSPs deliver centralized access to large volumes of advertising inventory by providing a single interface where advertisers can:

  • Manage multiple ad exchange accounts,
  • Engage in real-time bidding across multiple ad exchanges,
  • Track the outcome of every ad impression won via real-time bidding, 
  • Optimize ad campaign performance, including metrics like cost-per-click or cost-per-action, and
  • Leverage bid shading algorithms to avoid overpaying in first-price auctions.

SSPs provide a single interface where digital ad publishers can manage their advertising inventory, auction ad space to advertisers via real-time bidding, and collect revenue from multiple ad exchanges.

Real-Time Bidding vs. Programmatic Advertising – What’s the Difference?

Real-time bidding is a form of programmatic advertising, but not all programmatic advertising can be described as real-time bidding.

Programmatic advertising is when advertisers and publishers use software to automate the process of buying and selling ad space, so advertisers automating their bids in an RTB auction are absolutely doing programmatic advertising.

But software automation can also be used by advertisers to purchase ad space directly from publishers instead of going through an exchange. This type of transaction still involves programmatic advertising, but there’s no ad exchange involved, no auction for ad impressions, and no RTB.

What are the Benefits of Real-Time Bidding?

Reduced Costs and Smarter Spending

As an alternative to purchasing ad space in bulk, real-time bidding eliminates excess spend and reduces waste by allowing advertisers to bid for ad space on a per-impression basis. With access to impression-level data, advertisers can drive down costs by shifting spend away from under-performing segments or limiting the maximum number of times each user may be shown an ad.

 

Improved Audience Targeting

With real-time bidding, advertisers can modify their bid amount for an ad impression based on demographics, engagement history, and other data they receive about the user. This means that advertisers can selectively target specific ad creative to the most suitable and high-converting audiences.

 

Optimized Advertising Agility

Ad exchanges that offer real-time bidding give advertisers the ability to manage ad buying in one place instead of dealing with multiple publishers. Advertisers can also leverage demand-side platforms (DSPs) to manage ad spend and bidding strategies across multiple networks, achieving maximum flexibility with complete oversight of advertising spend in a single interface.

 

Optimize Your Ad Spend with Real-Time Bidding

Real-time bidding is the fastest and most efficient way to purchase pay-per-click advertising inventory for your SaaS company. RTB is offered through major digital ad exchanges, including Google AdX, AppNexus, and OpenX.

At Directive, we leverage real-time bidding as part of our Customer Generation methodology to ensure our pay-per-click advertisements reach the most relevant and profitable audiences for our B2B SaaS clients.

Want to learn more about real-time bidding from the leading SaaS paid media agency?

Book an intro call with our team, or Join Society and gain access to exclusive content and free marketing advice from our community of SaaS marketing professionals.

 

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