What Is Real-Time Bidding? RTB in Advertising Explained

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 exactly? 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 a digital advertising process where ad inventory is bought and sold on a per-impression basis, via an instantaneous programmatic auction, allowing advertisers to manage and optimize ads from multiple ad networks by bidding on the impression they want in real-time.

How Does Real-Time Bidding Work?

Real-time bidding operates within an intricate ecosystem of digital advertising that functions through a series of automated steps.

Firstly, when a user visits a webpage that has ad space configured for RTB, information about the website and the user (like their browsing history or location) is packaged by the supply-side platform (SSP) and sent to an ad exchange.

This ad exchange then runs an auction among various demand-side platforms (DSPs), which represent advertisers that bid on the impression based on the user’s profile.

The DSP that offers the highest bid wins the auction, and the advertiser’s ad is immediately served on the webpage. All of this happens in milliseconds, even before the webpage fully loads on the user’s screen.

I know we just dropped a few terms in there without definitions, so let’s discuss those now.

What is an Ad Exchange?

An ad exchange is essentially a market that links advertisers and publishers.

Inside the ad exchange, ads are waiting to be bought and sold to the most relevant and highest bids. Publishers can use this platform to sell ad impressions, and advertisers can use it to purchase them. Ad exchanges make it easy for advertisers to find inventory, while it benefits publishers by allowing them to monetize every impression rather than waiting to be contacted directly.

What is a DSP?

DSPs are platforms that help advertisers buy ad space and manage their ads.

Advertisers set the desired amount they want to spend, create campaign flight dates and target audience segments—then the DSP (Demand Side Platform) takes it from there, searching to find available impressions to meet the desired criteria. By automatically finding ad inventory that matches campaign criteria instead of working with a third-party agency, DSPs save advertisers time, energy, and money.

What is an SSP?

While DSPs are built for advertisers, SSPs operate on the other end of the inventory buying process and help publishers.

With an SSP (Supply Side Platform), publishers can list ad inventory on a marketplace that advertisers can peruse and bid on. This allows publishers to sell inventory quickly and easily, instead of contacting individual advertisers to share what ad inventory is available.

RTB vs Programmatic Buying

RTB and programmatic buying are closely related but differ in a few key ways.

Programmatic buying, as the name suggests, allows advertisers to use software that automatically purchases digital ad space.

This process has streamlined the buying and selling of ad inventory, resulting in more efficient and easier transactions for all parties. While there are many methods for programmatic media buying, three of the most popular methods are buying directly, using a private marketplace (PMP), or engaging in real-time bidding.

Real-time bidding (RTB), a form of programmatic buying, allows advertisers to make ad inventory purchases on an impression-by-impression basis.

Acting as an auction, RTB allows advertisers to bid against each other on an impression—with the highest bidder having their ad seen by the viewer. Every time an ad break begins for a viewer, countless bids are placed and compared. The process moves at astonishing speed, with the winning bid being selected and served to the viewer almost instantaneously. From the consumer’s vantage point, they’re unaware of any process or bidding war—they just see a relevant ad instantly play.

The RTB process can be carried out over programmatic platforms including ad exchanges, supply-side platforms (SSPs), and demand-side platforms (DSPs).

Why Is Real-Time Bidding Important?

Why exactly is real-time bidding so important? Here are some of its awesome benefits:

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.

Benefits 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.

What Are Examples of Real-Time Bidding Platforms?

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 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 ad 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 marketing KPIs. 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 (including Oracle Data Cloud) 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 Cross-Device Verified Visits. 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

RTB in Advertising: 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.