Real Time Bidding is a basic feature of todays DSPs, SSPs and Ad networks. One can say it’s an auction, which is true, but it also has its peculiarities. Regular auction simply sells items for the highest bid, but RTB don’t. Yes, it chooses the highest bidder, but it lowers the bid in some cases.
DSP and SSP RTB
RTB is a process which lets Advertisers to set bids and buy publishers placements to reach relevant audience. Its an auction which is performed in a couple of milliseconds. User is browsing through the internet, when suddenly he hits publishers website. RTB goes off when the user starts loading the webpage. Publisher sends a request to SSP, SSP offers DSP to reach that user on that website, DSP provides advertisers bids.
Advertiser with the highest bid wins, but he pays only the second highest bid +1 cent. That gives higher income to publishers, but keeps advertisers spendings reasonable.
RTB sells every single view that way, that’s why it’s more effective than static auction, which sells several thousands of those.
DMP, Data Management Platform
Data Management Platform is a very important part since programmatic RTB highly depends on user data. It’s almost impossible to make a DSP or SSP, that will know all information about all the users on the internet. Here when DMP comes in handy. It collects info and sells it to SSPs and DSPs.
Here is how Real Time Bidding works and how such precise targeting is possible. The process may seem complicated, but it takes a lot more time, than the website takes to load.
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Also published on Medium.