By definition, RTB is a method by which advertising inventory is purchased and sold on a per impression basis, through programmatic instant auction, similar to financial markets.
When the bid is won in an auction, the buyer’s ad is immediately put on the publisher’s site. RTB helps to manage and optimise ads from multiple sources ( ad networks ). It provides access to different networks permitting them to create and launch ad campaigns. It prioritizes networks and allocates a portion of unsold inventory, called backfill.
This stands in sharp contrast to static auctions. In dynnmic RTB, the bidding is per impression. In static auction, it is for a group of several thousand impressions RTB is thus more efficient and effective both for the publisher and advertisers.
Imagine a user visiting a site. Here a bid request is initiated. It covers the demographics of the user, his browsing history, his location and the page being loaded. The request travels from the publisher to an ad exchange, The request and the accompanying data gets submitted to multiple advertisers. They submit their bids in real-time to place their ads. Advertisers bid for each and every ad impression on offer. The impression goes to the highest bidder. The highest bidder’s ad appears on the page the user has visited. The process is repeated for every ad slot available on the page. The whole transaction takes place in milliseconds from the moment the request is received by the exchange.
The bidding process is automatic. The advertisers set budgets for a campaign and the maximum bids. The criteria for bidding for consumers are complex, and consider a lot of data.
Probabilistic models guide us about the probability of a click or conversion, considering the user history. This probability can be used to decide the size of the bid for the respective slot.
DSPs give buyers direct RTB access to multiple sources of inventory. DSPs have the technology to determine the value of an individual impression in real-time — less then 100-milliseconds, considering user history. Large publishers use SSPs to manage advertising yield.
An individual browser history is more difficult to cull on mobile devices. Mobile real time bidding has no universal standards.
The first such RTB platform was launched by DoubleClick Ad Exchange from Google. Microsoft and Yahoo then launched Microsoft Advertising Exchange and Yahoo Ad Exchange respectively.