What is Real-Time Bidding (RTB)

Real-time bidding (RTB) is a relatively new advertising technology that allows online advertising to be purchased and served on the fly. Instead of reserving prepaid advertising space, advertisers bid on each ad impression as it is served. The impression goes to the highest bidder and their ad is served on the page. The closest analogy would be to the stock market: as stocks (online advertising spaces) come up for sale, brokers (advertisers) bid for the stock. Whoever bids the highest price gets that stock (the ad is served). Then the process immediately starts all over again.

How do advertisers decide when to bid on an ad? Real-time bidding (RTB) platforms buy data about users from across the web. The data is usually in the form of behavioral data gathered from tracking cookies. This information is then fed into the real-time bidding platform, giving advertisers insight into who is about to be served the ad.

Here’s a simplistic example of how real-time bidding (RTB) would work in  the real world: A user spends a lot of time on financial websites, checking stocks and looking up Morningstar ratings. They arrive on a webpage that uses Real-Time Bidding to serve ads. 

On the back end, a major financial services provider has specified that they are interested in users that like stocks. A luxury carmaker has also indicated interest in this audience. The RTB system matches these advertisers with the user profile and they bid on the ad.  Whoever has the highest bid wins, and their ad gets served.

Of course, all this happens in the blink of an eye. Advertisers don’t literally sit and bid on individual ads. Like Google AdWords, they set maximum bids and budgets. The user criteria can also be very complex, taking into account everything from very detailed behavioral profiles to conversion data.

The amount of ads sold through RTB is still relatively low percentage of the overall $26 billion US online advertising market. However, a recent study from Forrester predicted that RTB spending will increase 130% from 2010 to $823 million in 2011.

RTB technology is at the forefront of innovations in the advertising world. This platform is not only allows access to the majority of the world’s leading exchanges, networks and premium sites, it also contains superior targeting methods and advanced bidding options.

Source: crowdscience.com

Why Do Publishers and Advertisers Have Separate Ad Servers?

At first glance it might seem confusing why Publishers and Advertisers both maintain their own Ad Servers. After all, what’s the point of forcing a browser to make so many trips across the internet, bouncing from Ad Server to Ad Server when technically all you need is a single Ad Server to deliver an ad?

The answer is mostly convenience, but also so Advertisers and Publishers can audit each other when it comes time to bill.

Ad Servers are convenient because they allow Publishers and Advertisers to centralize the nuts and bolts of getting an ad on a web page. If an Advertiser bought media across ten different sites for example, without an ad server every time they wanted to change their creative assets they would have to talk to ten different publishers. Not only that, but when it came time to report on how well their campaigns did, they would have to compile ten different data sources into a single report. For a sophisticated advertiser advertising multiple products to multiple audiences with multiple messages, this quickly becomes unmanageable and is distasteful from the start.

However, with an Ad Server, an Advertiser can update their creative in a single place, whenever they want, and do so without needing to contact a publisher. Moreover, they can pull reporting on-demand from one place that uses the same tracking methodology.

Publishers maintain an Ad Server for the same reasons – they have multiple clients running multiple creatives for varying amounts and with different targeting requirements. Publishers also want a single source for reporting, and where they can efficiently track that they are delivering on schedule so they can bill clients in full.

Lastly, separate Ad Servers allow both parties to maintain their own independent set of reports. This forces both parties to rely on the technology when it comes time to bill rather than each other’s honesty. Of course, using two Ad Servers that count at different times, even milliseconds apart creates the possibility for Ad Serving Discrepancies, the bane of Publishers and Advertisers alike.

Source: www.adopsinsider.com