Real-time bidding is the process of buying and selling online ads through real-time auctions. Programmatic buying matches advertisers with available publisher ad units using supply-side platforms (SSPs) or ad exchanges. Once a match is found that meets advertiser targets and publisher minimum prices, the ad impression is awarded to the highest bidder.
How Does Real-Time Bidding Work?
When someone browses a web page or mobile app, it triggers an ad call which initiates the media buying process and bid request. In milliseconds, the ads are offered to multiple advertisers in the bidding process.
Advertisers generally use demand-side platforms (DSPs) to facilitate their bid requests, setting parameters for their target audience, such as demographics or geolocation, along with maximum pricing. Supply-side platforms are used by publishers that make their advertising available and set minimum floor prices.
The ad exchange facilitates the deal, acting as an intermediary between the DSP and SSP, and using algorithms to manage the process. The whole process happens in near real-time auctions thus the name real-time bidding (RTB).
RTB is different than header bidding, which lets publishers offer ad units to multiple demand partners to create more competition and higher ad revenue. Learn more about the differences between real-time bidding and header bidding.
Why is Real-Time Bidding Popular?
Publishers and advertisers alike enjoy benefits from RTB. The programmatic ecosystem works efficiently to buy and sell online advertising. Once ad inventory is added to SSPs by publishers and advertisers build their ad campaigns in DSPs, Ad Tech handles the rest, making targeted buying possible at scale without further human intervention.
Publishers: Visibility, Inventory, & Revenue
Publishers benefit from:
- More stable fill rates
- Wider inventory of buyers and auctions
- Visibility into who is buying ad space
- Potential for increased revenue
Rather than having to negotiate individually with advertisers, publishers can put their ad units up for bid and let the Ad Tech make buys happen. Publishers can also do programmatic selling in private marketplaces, inviting select advertisers to bid on available ad space.
Advertisers: ROI, Relevance, & Streamlined Process
Advertisers benefit from:
- Streamlined and targeted buying
- More relevant ad selection by industry
- Higher ROI on their ad spend
- Advertise on multiple publisher’s sites in one buy
Since SSPs aggregate ad units and ad formats from different publishers, it allows ad buying to happen across multiple websites or mobile apps. Ad spend is split across publishers, serving relevant ads to visitors, to meet advertiser goals.
Advertisers can also track campaign performance for their digital advertising.
Real-Time Bidding Platforms
There are several different RTB platforms and each takes a slightly different approach to handle programmatic buying using proprietary algorithms.
Here are some of the more popular programmatic advertising and real-time bidding platforms in use today. Each of these works as an ad network, aggregating ad inventory from publishers and selling it to advertisers. This is different than an ad exchange, a digital marketplace where advertisers and publishers sell ad inventory directly. Learn more about ad networks vs. ad exchanges.
Newor Media serves more than 1.5 billion monthly ad impressions, covering 250 million unique monthly users.
Newor Media embraces header bidding, allowing publishers to make advertising inventory available to a wide range of advertisers at the same time in real-time auctions, allowing for more competition in a bid request and optimizing revenue by attracting a higher winning bid.
Many publishers use Newor Media as an alternative to Google AdSense because it delivers consistently per-unit rates. Ads are sold on a cost per thousand (CPM) model, which allows publishers to get paid based on ad unit impression rather than just pay per click (PPC).
Digital Turbine (formerly Ad Colony)
Digital Turbine recently acquired Ad Colony, one of the largest app developers and ad unit suppliers for mobile gaming. Digital Turbine provides mobile publishers with real-time bidding focuses on mobile publishers, specializing in playable game ad formats, incentive ads, offer walls, and HD video advertising for mobile.
The company has a monthly reach of 1.5 billion and works with about 45,000 publishers, connecting them to a pool of about 500 advertisers.
Digital Turbine also handles the creation of media campaigns and ads if needed for programmatic advertising or a private marketplace.
Magnite bills itself as the world’s largest independent supply-side ad platform offering real-time auctions and private marketplace (PMP) ad space.
Magnite handles more than three billion transactions daily across its platform. Magnite was formed in a merger between Rubican Project and Telaria in 2020, bringing together programmatic and Connected TV (CTV) ad formats.
Outbrain displays a feed of relevant content and relevant ads on publisher websites. Ad units generally appear below publisher content, recommending content and native advertising. Outbrain counts monthly traffic of more than 412 million and is used by many publishers as an additional content source that provides passive revenue.
Outbrain uses a proprietary recommendation engine, powered by AI and machine learning, to serve different content based on user behavior and contextual relevance. Publishers can also utilize Outbrain’s ad server to capture ad spend and budgets by delivering native advertising to direct clients.
Pros & Cons of Real-Time Bidding
There are major benefits of RTB, but also some things to keep in mind when using it.
Pro: Better User Targeting
RTB can use first-party and third-party data, including accessing user profiles based on engagement. This helps advertisers understand behavior and interests, helping ensure that the most relevant ads are purchased and served.
Due to the algorithm, advertisers can keep their advertising spending low. This is because RTB provides high-value and relevant impressions as a cost-effective way to buy advertising at scale. It also limits the need for manual intervention, which can free up internal resources.
Con: Ad Fraud Potential
With any form of digital advertising, there is the potential for ad fraud. While ad networks, ad exchanges, SSPs, and DSPs have security in place, fraud does happen which can hurt ad performance and publisher revenue. Most typically, this occurs from fraudulent publishers selling ad space on malicious sites (domain spoofing), click fraud from bots, or ad hijacking where hackers take control of an ad unit and substitute their own ads.
By using Ads.txt, an initiative by the IAB Tech Lab, publishers can be recognized as authorized digital sellers. When ad units are offered for sale, they are checked against the ads.txt file on publisher sites so buyers know it is legitimate. This is especially important in the programmatic ecosystem where ad units may be bought and resold.
Publishers use a common format to identify authorized sellers and resellers by placing an Ads.txt text file on their domain server or using a plugin on WordPress.
Con: Brand Safety and Protection
Due to the nature of RTB, there is the inherent possibility that advertisers’ ads may end up on irrelevant websites depending on how thorough they have been in setting parameters. Publishers also run the risk of filling advertising space with ads that aren’t relevant to users. While this can still generate an impression and ad spend, it’s possible to leave a negative impression on their users if there are irrelevant ads shown on their web pages.
Real-Time Bidding vs Programmatic Advertising
While many people use programmatic advertising and real-time bidding interchangeably, there are differences. RTB is a form of programmatic bidding, but not all programmatic is handled by RTB platforms.
There are four common types of programmatic advertising, including:
- Real-Time Bidding (RTB): The most common form of programmatic, using real-time auctions, for buying and selling ad inventory on an ad impression basis.
- Private Marketplace (PMP): Auctions publisher inventory in private auctions from invited advertisers.
- Preferred Deals: Publishers set aside ad units for specific advertisers, often offering first looks at high-performing inventory at fixed prices.
- Programmatic Guaranteed (PG): Advertisers and publishers work one-on-one to create deals.
If you want to learn more about how to use programmatic advertising to generate revenue for your website or app, check out Programmatic Advertising: A Complete Beginner’s Guide to Monetizing Your Website.
Key Takeaways on Real-Time Bidding
Real-time bidding matches publisher ad units with advertisers using Ad Tech algorithms. Advertisers create ad targets and bid prices on DSPs. Publishers make ad inventory available in SSPs. Ad exchanges work as intermediaries to find matches and facilitate the bidding process. The highest bid wins and gets its ads shown.
Publishers can use RTB as a primary method of selling advertising or augment their sales efforts. Publishers can also segment ad units, reserving some for direct sales or premium pricing through private marketplaces, while releasing the rest into the programmatic market to increase fill rates.
Real-time bidding is popular with both advertisers and publishers. More than 86% of digital display ads are bought programmatically, the majority of which use real-time bidding.Newor Media is an industry-leading platform for publishers to tie into the real-time bidding ecosystem and optimize both ad units and revenue. Contact our team of experts to learn more about website monetization, or try our website earnings calculator to see how much your website could be earning.