Real-Time Bidding (RTB): What Is It & How Does It Work?

by Stephen Graveman

7 Min Read

It’s hard to believe that at one point—and not too long ago, either—ad inventory could only be bought or sold when two people picked up a phone to complete the transaction.

Today, ad impressions are sold and purchased at an astonishing rate and at faster speeds than the human brain can comprehend. Much of this revolution was kickstarted by computers and programmatic buying; today it’s being driven further by a popular advertising technique known as real-time bidding (RTB).

But what is RTB and how does it work? How is it different from programmatic buying? And is it right for your brand? Below we walk through the details.

What Is Real-Time Bidding?

Real-time bidding (RTB), a subcategory of programmatic media buying, is a digital advertising process where ad impressions are bought and sold on a per-impression basis, through instant, automated auctions as a user loads a webpage or application. This enables advertisers to bid in real-time for the opportunity to show an ad to a specific user, based on their demographic or behavioral profile, maximizing the relevance and efficiency of ad placements.

Header Bidding vs. Real-Time Bidding

Header bidding is a pre-auction process that allows publishers to simultaneously solicit bids from multiple advertisers or demand sources before calling the ad server, ensuring that they get the highest possible bid for their ad space. Unlike real-time bidding, which involves selling ad impressions through a single auction, header bidding opens the floor to multiple demand sources at once, potentially increasing revenue for publishers by creating more competition for their ad inventory.

Learn more about header bidding vs RTB.

Direct Buying vs. Real-Time Bidding

Direct buying involves advertisers purchasing ad space directly from publishers, and negotiating terms such as price, placement, and duration upfront, thereby guaranteeing inventory and exclusivity based on the agreement. In contrast to real-time bidding, direct buying bypasses the auction-based, dynamic pricing model, offering more control and predictability over where and how ads are displayed.

How Does Real-Time Bidding Work?

Again, real-time bidding revolutionizes the way digital ad spaces are bought and sold, leveraging technology for instantaneous auctions. Here’s a breakdown of the process:

Publisher Uses SSP: A publisher integrates their website or digital platform with a supply-side platform (SSP) to manage and offer their ad inventory to potential buyers in real-time.
Ad Inventory on the Market: Through the SSP, the publisher’s ad spaces are made available on the ad exchange, where they can be bought by advertisers. The SSP provides detailed information about the inventory, including the site’s content type, audience demographics, and ad placement options.
User Visits a Site: When a user visits the publisher’s site, the SSP generates a bid request that includes information about the ad space and anonymized data about the user, such as location, device type, and browsing history.
DSPs Receive Bid Request: The bid request is sent to multiple demand-side platforms (DSPs), where it’s evaluated against the advertisers’ targeting criteria. DSPs represent the interests of advertisers in the RTB process.
Advertisers Bid via DSP: Interested advertisers, through their DSPs, place real-time bids on the ad impression based on how valuable they believe it is to their advertising goals.
RTB Auction Runs: The SSP conducts an RTB auction among the bids received. This auction takes place in milliseconds, determining which advertiser’s bid is the highest.
Ad Served to Winning Bidder: The highest bid wins the ad impression, and the SSP prompts the publisher’s site to serve the advertiser’s ad to the user’s browser or app.
Performance Tracking and Optimization: After the ad is served, both SSPs and DSPs track various metrics like impressions, clicks, and conversions to analyze performance and optimize future bids.
Payment Processed: The advertiser pays the agreed bid price through the DSP. The SSP then collects the payment, deducts its fee, and remits the remainder to the publisher.

This RTB process ensures that ad inventory is sold at the best possible price fairly and transparently, benefiting both publishers and advertisers by efficiently matching supply with demand.

Real-Time Bidding Benefits

Why exactly is real-time bidding so important? In summary, here are some of its awesome benefits:

For Advertisers

Benefits of RTB for advertisers include:

Per-impression buying: By bidding on individual impressions instead of a predetermined fixed price, RTB offers a cost-effective method of ad purchasing that prevents overspending.
Improved performance: RTB allows advertisers to use one dashboard interface for their campaign, rather than communicating with multiple publishers at once.
Faster speed: Thanks to the bidding and advertising process taking less than a second to complete, advertisers get instant feedback on what’s working (or isn’t) and can optimize as needed.

For Publishers

Benefits of RTB for publishers include:

Cost-effective for advertisers: When advertisers save money, publishers benefit too. Brands that feel they’re choosing the more cost-effective solution will be more likely to put their trust in publishers using RTB, resulting in less unused ad inventory and increased ad revenue.
Increasing ad space value: As real-time auctions are triggered, previously unwanted inventory increases in value for publishers, helping them to clear inventory faster.
Ad control: Publishers can fully control who can or cannot advertise on their platform, including having the ability to blacklist certain advertisers.

Real-Time Bidding Platform Examples

Because it’s a method and not a tool, RTB can be achieved on platforms including leading ad exchanges, DSPs, and SSPs. Because of this, finding an ideal platform depends on whether you’re acting as an advertiser or publisher. Examples of platforms include:

Advertisers:

The Trade Desk
MediaMath
Adform

Publishers:

OpenX
Pubmatic
Magnite

How Does Performance TV Fit In?

So we see all the benefits of RTB above. But how does MNTN Performance TV fit into this? Performance TV gives brands complete control of their CTV advertising with powerful features that offer all of the key benefits of RTB, but supercharged. Features of Performance TV include:

Premium Inventory: Performance TV partners with top-tier trusted networks like CNN, NBC, ESPN, and more to offer premium CTV inventory on some of the biggest streaming channels on CTV. The result is OTT ads exclusively served alongside trusted programming and popular shows, giving brands the clout they deserve.

Standing apart from other CTV platforms, Performance TV doesn’t co-mingle inventory with traditional video inventory to garner more impressions for advertisers or drive down costs. If you pay for TV inventory, you get TV inventory.

Customizable real-time reporting: Every campaign is different, which is why one-size-fits-all reporting doesn’t offer the insights needed to hit your key marketing metrics. Performance TV offers a powerful reporting suite that offers accurate metrics including ROAS (Return on Ad Spend), a fully customizable dashboard, and full Google Analytics integration to monitor your CTV campaigns alongside other digital marketing channels.

Performance TV’s real-time reporting leverages the power of Connected TV to show you instantly what’s working (and what isn’t)—allowing you to tweak and optimize your creative for maximum efficiency.

Unparalleled tracking and targeting: Unlike other CTV ad platforms that use ineffective third-party vendors or charge extra for targeting abilities, MNTN uses first and third-party data to prioritize audience and performance with targeting efforts. No hidden or extra fees necessary.

Further, Performance TV allows you to track the entire customer journey with Verified Visits™ technology. This model allows advertisers to see how a customer behaves after watching the ad—from visiting and engaging the website to making a purchase—regardless of what device they use to take their next steps.

Related: Streaming TV Advertising: The Definitive Guide for Marketers

Real-Time Bidding: Final Thoughts

The act of buying and selling ad inventory has made great strides over the last few years and will only make greater leaps as the CTV popularity boom continues. By embracing a powerful and comprehensive television advertising platform like MNTN Performance TV, your brand can experience all of the key benefits of real-time bidding—and be prepared to enjoy the powerful features of whatever comes next.