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

by Stephen Graveman

8 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 faster than the human brain can comprehend. Much of this revolution was kickstarted by computers and programmatic buying; today it’s 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) is an automated auction process where ad impressions are bought and sold instantly as a webpage or app loads. Advertisers bid in real time based on user data, ensuring highly relevant and efficient ad placements.

Header Bidding vs. Real-Time Bidding

Header bidding is a type of RTB that lets publishers solicit bids from multiple advertisers before sending the request to an ad server, maximizing competition and revenue. Unlike traditional RTB, which runs a single auction per impression, header bidding creates a more competitive bidding environment.

Learn more about header bidding vs RTB.

Direct Buying vs. Real-Time Bidding

Direct buying secures ad placements through upfront negotiations, guaranteeing inventory and fixed pricing. Unlike RTB’s dynamic, auction-based model, direct buying offers more control and predictability over where and how ads appear.

Advantages of Real-Time Bidding

Real-time bidding (RTB) supercharges digital advertising by making campaigns faster, more efficient, and highly targeted. Here’s how it delivers results:

1. Faster Campaign Activation

RTB enables advertisers to launch, pause, or adjust campaigns in real time based on performance data. This agility helps brands capitalize on trends and continuously optimize their strategies.

2. Flexible Budget Allocation

Marketers can control ad spend with precision, adjusting budgets on the fly to focus on high-performing audiences and placements. This flexibility ensures every dollar is spent where it drives the best results.

3. Expanded Audience Reach

RTB connects advertisers to multiple ad exchanges and networks, significantly increasing exposure. This access helps brands engage with a wider, more relevant audience at scale.

4. Higher Return on Investment

By focusing on high-value impressions and optimizing bids in real time, RTB maximizes conversion rates. This efficiency leads to stronger campaign performance and a better return on ad spend.

5. Full Campaign Transparency

RTB platforms provide real-time insights into ad placements, costs, and critical digital marketing metrics. This level of visibility empowers marketers to make data-driven decisions with confidence.

Disadvantages of Real-Time Bidding

While RTB offers powerful advantages, it also presents some challenges that advertisers need to navigate carefully. Though, these vary by platform as we’ll discuss later in the article.

1. Brand Safety Risks

Without proper controls, ads can appear alongside low-quality or inappropriate content, putting brand reputation at risk. Advertisers must use premium inventory sources and implement strict brand safety measures to ensure quality placements.

2. Privacy & Compliance Hurdles

RTB relies on extensive user data, making compliance with privacy laws like GDPR and CCPA a complex, ongoing task. Brands must stay proactive in data protection strategies to avoid legal and reputational risks.

3. No Guaranteed Ad Placements

Since RTB operates on an auction model, winning bids aren’t guaranteed, leading to fluctuations in ad exposure. Advertisers should balance RTB with direct deals or private marketplaces to ensure consistent reach.

4. Data Accuracy Concerns

Inaccurate or outdated audience data can lead to ineffective targeting and wasted ad spend. Using first-party data and AI-driven audience insights helps improve precision and campaign effectiveness.

5. Latency & Performance Issues

Bidding delays can cause missed impressions, especially during high-traffic bidding windows. Partnering with high-speed, performance-focused platforms ensures ads are served efficiently and without disruption.

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 or ad network, 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.

Types of Real-Time Bidding

RTB comes in two main formats, each designed to meet different campaign objectives and advertiser needs.

Open RTB

Open RTB operates as a public auction where any advertiser can bid on available inventory. While it offers wide-reaching access, it also comes with higher competition and less control over ad placement quality.

Private RTB

Private RTB is an exclusive, invite-only auction that gives select advertisers access to premium, brand-safe inventory. This approach ensures greater control over where ads appear, leading to higher-quality placements and stronger campaign performance.

Real-Time Bidding Options

RTB comes in several formats, each impacting how ad inventory is bought and sold. Here’s what you need to know:

Header Bidding

To touch on this concept again, this advanced programmatic method lets multiple ad exchanges compete for inventory simultaneously, ensuring publishers get the highest possible bid before the ad server processes the request.

First-Price Auctions

In this model, the highest bidder wins and pays exactly what they bid. Advertisers must strategically manage bids to stay competitive without overpaying for impressions.

Second-Price Auctions

Here, the highest bidder still wins, but they only pay slightly more than the second-highest bid instead of their full offer.

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?

Want the efficiency of RTB without the risks of low-quality inventory? MNTN’s platform uses AI-driven automation to optimize bids in real time while ensuring your ads only appear on premium streaming networks. That means better audience targeting, smarter spending, and full visibility into campaign performance.

Here’s what you get with MNTN Performance TV:

Premium CTV Inventory – Avoid low-quality placements with guaranteed ad space on top streaming networks.
Automated Optimization – AI continuously adjusts bids in real time to maximize performance and efficiency.
MNTN Matched – Advanced targeting ensures your OTT marketing campaign reaches the right viewers at the right moment for higher engagement.
Verified Visits™ Attribution – Accurately tracks site visits and conversions tied to ad exposure, giving you clear performance insights.
Reporting Suite – Provides real-time campaign data so you can make informed optimizations and drive better results.

Take control of your RTB strategy with MNTN’s self-serve Connected TV advertising software—sign up today to get started.

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.