How does RTB work?

What is real time bidding and what are the basic principles of work? Simple answers to interesting questions

Recently, analysts have called RTB one of the main trends in digital advertising. On the one hand, it is nice to see some new words besides the ongoing “everything will be social”, “everything will be video” and “everything will be mobile”, on the other – it’s okay if the matter were limited to one abbreviation. Together with real-time bidding platforms, such (seemingly) similar things like ATD, DSP, SSP, and DMP came to the lexicon of advertisers.

Different traffic is sold through RTB advertising by such companies as Polus.media. The creation of private premium exchanges reduces the risks of a similar situation. Plus, in conditions when an audience is bought, not an advertising space, it is more correct to divide the inventory not into “good” and “bad” but into “rich” and “poor” with data. People visiting premium resources go not only to them, therefore. If they can be identified on other sites, advertising will also be “slightly premium” there. As the amount of information for any inventory increases, you can find data that will make it attractive to certain advertisers.

RTB is in some way a result of the evolution of the advertising ecosystem. To survive, agencies also need to develop, otherwise at some point in the future they may find themselves in the position of Galapagos turtles. The logical path of the evolution of the agency is the addition of its arsenal to ATD platform (Agency Trading Desk). This is a platform (if roughly, a set of algorithms + a team of specially trained people) that can translate client requests into a language understandable to an RTB system — what/who specifically needs to be purchased, what goals and other parameters for this, what flexibility to allow. In general, the function of agencies with ATD remains the same – to remove from the advertiser the care of placing advertising in the media. They just now know how to do more and can work on new fields.

Considering that in the next 3-5 years, according to forecasts, the share of RTB sales of premium inventory from all media advertising is unlikely to exceed 10% (see IDC and PubMatic reports) large “traditional” agencies still shall not worry about their core businesses. Nevertheless, an additional 10% of the market is an incentive to think about participation in auctions via RTB.

It is not clear who will be located on the site. The most common way to lever this fear is to give the platform the opportunity to determine the conditions defining who can participate the auction: companies filtered by domain, by subject of heading, simply by moderating the list or defined otherwise. Such a solution is offered, in particular, by Google and AdFox. You can also send a stream of advertisers through direct sales, but, of course, it limits the available inventory and associated income.

The fear of any platform is to lose control over the inventory, and it would be extremely attractive for an advertiser to buy cheaper premium traffic, bypassing the direct sales department through the “black door of the RTB”. If a few years ago, in the period of the formation of the technology, such a threat really existed, now the tools to eliminate it have been developed and are being actively used.

One of the solutions is to provide sites with the opportunity to regulate the amount of data disclosed about the inventory. They can send the address of the page with the banner space to the DSP to bid, or they can completely anonymize the traffic without revealing the site section, the site name, or the content theme. It is logical to expect that the display of banners with 300×250 pixels “somewhere on the Internet” according to the results of the auction will sell much cheaper than the “banner on the top resource”. However, the risks in the first case are significantly less — less tempting to transfer all budgets to RTB, bypassing purchases in personal sales. Depending on what information is known, different price offers will be received, so here each site can find the optimum amount of information disclosed for it.

Another solution is direct regulation of access to premium inventory so that direct sales won’t be avoided. Since the beginning of 2012, Yahoo has followed this path, obliging all advertisers buying residual inventory through its Right Media Exchange, to stop using intermediary structures and enter into a direct contract with the company.

It is becoming commonplace to create private (closed) RTB exchanges, such as publishing houses in the United States (Gannett with The New York Times Co, Hearst, and Tribune; USA Today, Conde Nast).

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