Hit the Bull’s Eye with RTB

Real-Time Bidding (RTB) is emerging as one of the most exciting developments in online advertising. It has helped improve transparency and targeting efficiency in the display advertising ecosystem and completely changed the media buying and pricing dynamics that have prevailed for over the last two decades. RTB is empowering a healthy growth of the overall advertising industry.

In the year 2009 RTB was introduced to sell unsold impressions in real time to a large pool of advertisers and was considered a backup option for a long time. With the rise in the number of RTB exchanges and technological advancements, advertisers and publishers realized the monetization opportunities that RTB provides. RTB now fulfills more than 65% of online advertising demands.

To evaluate and understand the value RTB adds to online advertising- let’s compare how the system works under traditional online and RTB advertising approaches.

In a traditional approach, a publisher P enters into a direct deal with an advertiser A, to display ads on its portal. All the impressions shown, are charged the same price. The unsold impressions are either offered at a lower price band or remain unsold.

This approach lacks efficiency and dynamic pricing. There is no role of user-profiles in pricing. The traditional approach assumes that all impressions carry equal value, which doesn’t hold true anymore. Each impression is unique!

Let’s glance through a few facts that researchers have found during a study on internet access behavior.

1. Though more pages are getting browsed between 8 AM and 11 AM, ad click rates are very low during this time slot
2. Conversion and click rates are higher between 6 PM and 10 PM
3. Conversion rates during sleep hours are significantly lower than what we have during the daytime
4. Most of the websites have fewer visitors on the weekends
5. Ad campaigns with well-defined target segments receive higher click rates than non-targeted ones

Above facts echo my view- “Every Impression Is Unique!” Impressions shown at a specific point in time to a specific persona are more valuable to an ad campaign than the impressions at any other time of the day. Similarly, an ad shown to a closely matched target profile holds more value and should be priced at a higher rate.

RTB overcomes all the shortcomings of the traditional approach.

In RTB approach, dynamic content is chosen real-time at a dynamic price through the following steps:

1. A web page is getting browsed on the publisher’s site
2. While loading the page, the site sends the entire information it has about the page, the user and the user demographics to third party exchanges called RTB exchange or Ad-exchange
3. The exchange sends this information to their partner agencies (called Demand Side Platform – DSP) in the form of a bid request
4. Each DSP evaluates and weighs various parameters associated with the impression in question and chooses an ad that best suits the given parameters
5. Each DSP responds back with a bid price and an ad-markup URL for that unique impression on behalf of the advertiser
6. Ad exchange (RTB exchange) compares all the bids received from different partners and notifies the publisher site with the ad-URL of the highest bidder (the winner)
7. The publisher site displays the winning ad

This process happens within just 300 milliseconds and thus doesn’t hit the page performance or load time.

Both publishers and advertisers equally benefit by aligning themselves with the RTB ecosystem. Publishers can better monetize each impression they show to the end user. At the same time, advertisers make informed decisions on how much they want to pay to deliver their message to the right person at the right time.

Apart from Advertisers and publishers, there are many other players involved in the RTB ecosystem. Demand Side Platforms (DSP), Supply Side Platforms (SSP), ad exchanges are the few important ones.

Market players need to re-strategize their media buying/selling approaches to succeed in online advertising that requires considerable investments in technology and training. In my view, investment shouldn’t be a roadblock given the value addition and benefits a sophisticated RTB implementation brings back to the table.

It’s time to hit the bull’s eye with RTB.