How real-time bidding is changing the way ad inventory is bought and sold
"Real-time bidding" (RTB) describes the automated way in which advertising inventory (mobile or desktop) is bought and sold via technology platforms such as ad exchanges or supply-side platforms (SSP). It's a relatively new technology and as a result we find that many people in the wider industry aren't sure how it works, or what the benefits are.
One way of thinking about it is to look at how the financial markets operate. Ad exchanges or SSPs (such as MoPub and others) can be compared to the likes of the NASDAQ or NYSE. Stocks are akin to ad impressions, sellers of the stocks are publishers and the demand-side platforms (DSPs) such as E*Trade are most closely related to the buyers.
So why does RTB matter?
The introduction of RTB technology into the mobile ecosystem has helped address a number of challenges that both publishers and DSPs are faced with. Ad exchanges leverage RTB to address issues with scale, inefficiency and control that plague both parties, so it is worth taking a moment to understand what it means and how it can apply to your digital marketing efforts.
By aggregating and automating access to demand, RTB can address the inefficiency publishers are faced with by having to work with all of these partners directly. So a publisher can now access more than 100 DSPs through a single integration with an ad exchange or SSP.
Additionally, tools within ad exchanges allow a publisher to implement a set of business rules that automate who can access and purchase the inventory and at what price, providing added control for publishers.
How it works
For how this works in practice, let's consider a hot gaming application developer that supports in-app advertisments. Let's assume that the publisher has quickly risen to the top of the app store rankings, and is now seeing explosive growth in its user base.
Inbound inquiries come from marketers, advertising networks and agencies, all interested in buying ads in their latest application. The challenge is that they aren't staffed up to support each one of these requests individually, but at the same time, don't want to turn away a clear revenue opportunity.
This is a great example of a publisher who might look to an ad exchange that supports real-time bidding as a way to scale monetisation, connecting them through a single point of integration to hundreds of advertisers.
Advertisers can benefit from RTB too. With publishers consolidating their inventory into fewer sources, DSPs no longer have to tackle the fragmentation of supply, a historical point of friction and inefficiency. DSPs leverage automation, technology built within the DSP allows the marketer to dictate in real time what they are willing to pay for a particular ad impression. Gone are the days of "spray and pray". With precision, marketers can ensure that they are serving the right impression to the right audience at the right time.
Let's continue with the gaming app example above, but approach the scenario from an ad buyer's perspective. A large telecoms marketer has been keeping a close eye on the explosive growth of this publisher's latest application and identifies that the audience is a spot-on match for an upcoming advertising campaign.
The marketer pulls together the parameters and goals for their upcoming campaign and reaches out to their DSP partner who is connected to the ad exchange this publisher leverages. After the campaign details are communicated and entered into the DSP's tool, within minutes the telecoms marketer's ads are now appearing in the hot gaming publisher's latest application.
So if you're a publisher or an advertiser, it's worth taking a little time to understand how RTB might apply to your business. For many parts of the online advertising industry, there's a more efficient market to be discovered and a great opportunity to capitalise on economies of scale.
Janae McDonough is director of exchange at Twitter. You can follow her @janaer64.
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