Advertising has been a part of the internet ecosystem since the very beginning. There has been a continuing focus on technology innovation to help advertisers derive maximum ROI from their ad spends on popular websites. Publishers have employed ad retargeting and personalized ad recommendations for long to provide visitors with the right ads with greater chances of conversion. Over time, intelligent programmatic methods became the norm achieving close to 65.3% of global ad spend share today. But now, one particular innovation has risen above the rest to become a core component of programmatic advertising. We are talking about Real-Time Bidding or RTB.
RTB comprises the entire sequence of steps beginning from the moment a user visits a publisher’s website until the moment a relevant advertisement is shown to the visitor to click or simply view.
Let us take a look at what happens between these two events in digital advertising.
The publisher passes on the information about the site visitor to a Supply Side Platform (SSP). The SSP evaluates the visitor’s core attributes such as location, gender, habits, etc., that may have been curated by cookies and other tracking mechanisms deployed in the publishing site. The SSP then passes this information to an Ad Exchange, which brokers a deal between advertisers and publishers. The ad exchange acts as the hub for both parties. The exchange then communicates with what is known as a Demand Side Platform, an SSP equivalent for advertisers. The DSP maintains information about the advertisement inventory such as the type of ad, the intended audience or geography for publishing, demography, or age groups that need to be targeted specifically, and so on. Once the DSP gets insights from the ad exchange on the type of ads displayed on the publisher site, the ad exchange starts the bidding process. Advertisers bid for the impression, and as with any bidding process, the highest bidder gets the slot from the publisher to display their ad.
At first glance, this working mechanism may not seem innovative or high tech. But here’s the surprise – the whole bidding process from the user visit to the bid winning ad being displayed happens in real-time. In fact, it takes less than 100 milliseconds for the entire transaction to happen. Fun fact – you take three times as much time as that to blink your eyes!
This impressive feat of speed and agility has become one of the defining elements of internet advertising and is one of the key enablers behind the USD 57 Billion of programmatic ad revenue in 2019. In fact, given the amount of content supported by advertising, it could be argued that this is one of the key enablers of the internet itself.
We have covered a simplified snapshot of how RTB and programmatic advertising work in an ideal case. In reality, complications abound. An RTB transaction occurs with the participation of multiple SSP and DSP providers that connect with the Ad Exchange, from which the publisher intends to monetize the available web real estate. To make the bidding process fast, profitable, and automated, there are several innovative and technologically advanced practices being followed by all parties involved in an RTB transaction.
Some of them include:
Using AI algorithms, DSP’s and SSP’s sort the most relevant advertisements from their respective ad and impression inventory providers. Algorithms train the system to identify the most relevant interest points of a visitor from the data collected and managed by the Data Management Platform of the publisher. This insight can then be used to filter choices with higher conversion potential.
Across publisher websites, as well as in Ad Exchanges, the use of big data analytics is the norm to process the large volume of data impressions and ad inventories that come in after bids. Not every impression gets sold, and not every ad in the inventory gets published. Without analytics, it would become difficult to analyze and derive reports and insights from billions of impressions across large ad networks.
User-Centric Design of Ads
While publishers maintain standard size definitions for ad impressions, advertisers are always trying to get creative to tailor the right message for conversion if they win the bidding process. For baking such agility into the ad design process, analyzing market trends and focusing on content that grabs attention in the fastest time becomes essential.
Today, advertisers demand transparent reporting of the ROI from their spending in digital ads. Additionally, reports suggest that by 2022, the costs associated with digital ad revenue fraud will hit peaks of nearly USD 44 Billion, and ad exchanges are under tremendous pressure to filter out fake impressions and create value for everyone in the ecosystem.
Real-Time Bidding has dramatically changed the digital advertisement landscape. By 2024, the RTB market alone will be worth USD 27.2 billion, according to reports. It is important for publishers and companies wanting to compete in the digital ad spending market to understand the potential of this innovative, technology-driven approach. That understanding may become the key to their ability to master programmatic advertising strategies if they are to derive maximum value from their ad investments.