Ad Tech Real-Time Bidding 101

What is Real-Time Bidding?

The real-time bidding approach was developed in the late 2000s out of ad networks dire need to utilize those parts of ad space inventory that were left unused for various reasons, most notably lack of demand from the advertisers.

How Real-time bidding works?

Real-time bidding is one of those things that are best described in practical terms.

  • The user visit triggers a request from the publisher to the Supply-Side Platform.
  • SSP analyzes the right and transfers it to the Ad Exchange.
  • AE connects with Demand-side platforms (AKA DSP) on behalf of the publishers.
  • Then DSP opens up an ad call bidding request to the available advertisers who enter the bidding process through the Demand-side platforms.

Benefits of Real-Time Bidding

The introduction of Real-time bidding into digital advertising became a game-changing moment for the industry. It completely transformed the way advertisements are presented to the user and introduced a completely new business model for advertisers and publishers.

1 Streamlining the process

The most significant innovation of Real-time bidding to ad tech operation is streamlining the process to its bare essentials. Instead of sweep buying of the bunch of impressions, advertisers can do a much more cost-effective per-impression buying process, which makes the most out of ad budget due to increased flexibility of the process.

2 Superior Efficiency & Flexibility

Campaign Performance and the ability to adjust the campaign accordingly are strategic priorities in an ad tech operation. RTB algorithm brings additional flexibility to the mix.

3 Price Optimization

Keeping an ad budget under control is one of the biggest challenges of maintaining an ad tech operation. Real-time bidding allows to automate that peculiar aspect and keep things within reasonable boundaries by setting specific price-requirements.

4 Anti-fraud

Ad Fraud is one of the biggest problems of the Advertising industry. Each year it eats up a significant part of the ad spending of advertisers. Given the lightning-fast nature of RTB operation — it seems like a tailor-made environment for massive fraudulent activity.

Challenges of Real-Time Bidding

1 Efficiency Scaling

Scalability is one of the biggest challenges of ad tech. Since the whole operation needs to maintain a high-speed reaction and adjustment to the incoming information — the scaling capacities of a DMP must be nothing less than exquisite, which is a challenge considering how much data goes through and how fast it must be processed.

2 Prediction Mechanism

The prediction mechanism is one of the most critical elements of an ad tech operation. As such, it must be tailor-made to the requirements of your process and deliver the results according.

3 Ad Fraud Detection

Overall Real-time Bidding is a much more controlled operation than other digital advertising types. However, its velocity (i.e., too much too fast) makes it much more ad fraud-prone to shut off any semblance of suspicious activity out of the equation and minimize the influence of ad fraud on an ad campaign.

4 Bid Optimization

The process of bidding is a balancing act — you need to know the approximate ranges of your spending and plan the whole thing in relatively long terms. The entire bidding process is organized around the campaign goals — how many clicks or conversions are expected and what can be considered a success.

5 Budget Control

The other important element of RTB optimization is budget control. The fact of the matter is — there must be boundaries of how much can for certain types of ads and over specific periods.

  • if an ad of a specific type delivers good results in a particular ad space — there are more of such ads placed;
  • if a specific ad fails to deliver in a specific ad space — it ceases, and resources are relocated elsewhere.

Conclusion

This article broke down all the significant challenges that come with the implementation of this process.

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