Digital Advertising: Programmatic

Real-time biddingis the next evolution in how you deliver ads, providing real time integration between serving systems in which a programmatic instantaneous auction is held to buy and sell ad inventory on a per-impression basis. The idea behind this system is that advertisers decide whether or not they want to show an ad at that given time, and if so, how much they are willing to pay. In a real-time bidding environment, marketing buyers bid on an impression ad by proxy, meaning that the criteria of ads they are interested in are pre-determined, so that when the criteria are met, the bid is placed automatically, based on the amounts already determined. The buyer with the winning bid has their ad displayed on the publisher’s site.

How RTB Works

A user visits a website. This immediately triggers a bid request to an ad exchange. Information about the user’s demographic information, browsing history, location, and the page being loaded is sent to multiple advertisers, who then place bids in real time to place their ads. The highest bidder wins the bid and their ad is displayed on the page. This process is repeated for every ad slot on the page. The transaction happens within about 100 milliseconds from the moment the ad exchange receives the request.

The advertisers identify the type of consumer that they are targeting and then the bidding occurs based on criteria that has been determined. The formula is often very complex, taking into account everything from very detailed behavioral profiles to conversion data.

Benefits of RTB

Bidding on an impression by impression basis ensures that you are only paying for impressions that are relevant to your business, thus saving money. An added benefit is that you can control where your ad appears, preventing your ad from appearing next to unscrupulous content, allowing you to set the brand safety levels with which a company is comfortable. Furthermore, you will know exactly where your ads are appearing. In addition, RTB campaigns work on nearly any screen imaginable, whether it be desktop, tablet, or mobile devices, which means you can reach users regardless of the device they are using.

Facebook’s RTB Platform

Specific users can be targeted within Facebook by running dynamic RTB campaigns. Instead of utilizing Facebook’s Marketplace advertising, which targets users based on information in their profiles, advertisers can now use the 1st and 3rd party audience lists that allow you to remarket to existing users and prospect to new audiences as well. The Kaizen platform used by Facebook RTB continually optimizes the target audience through the duration of the campaign based on previous performance. In other words, as a campaign starts, the platform identifies specific characteristics of users who would most likely respond to an advertisement and pushes the ad to the user. If the user fails to respond, then the characteristics are altered based on the cumulative data that is gathered.

Demand Side Platforms

Demand side platforms (DSPs) give buyers direct RTB access to numerous sources of inventory. Imagine being able to determine the likelihood of a user converting to a sale before you pay to advertise to them. DSPs have the technology to determine the value of an individual impression in real time (less than 100 milliseconds) based on what is known about a user’s history. This allows the advertiser to market to only those users who have a high likelihood of conversion.

Supply Side Platforms

Supply side platforms (SSP) comprise a technology platform that enables publishers to manage their advertising impression inventory and maximize revenue from digital media. SSP interfaces to an ad exchange on the publisher side, which interfaces with a DSP on the advertiser side. Many large publishers use a supply-side platform to automate and optimize the selling of their media space.

It is believed that RTB platforms will continue to grow as more and more social media, premium publications, and even search engines get on board with RTB. The reach with RTB has potential to be huge.