March 30, 2020
How Does Real-Time Bidding Work? | Explained in Under 5 Minutes

How Does Real-Time Bidding Work? | Explained in Under 5 Minutes

Two dollars going once…going twice…sold
to the highest bidder! Hey there! You might have guessed it, but in this video,
we’re going to be discussing real-time bidding in advertising. What exactly is real-time bidding, and how
does it work? Keep watching to find out. What is real-time bidding? Real-time bidding (RTB) is an automated digital
auction process that allows advertisers to bid on ad space from publishers on a cost-per-thousand-impressions,
or CPM, basis. CPM is what you pay for one thousand people
to see your ad. Like an auction, the highest bid from relevant
ads will typically win the ad placement. The RTB process occurs in milliseconds before
a website even loads. You won’t even notice it happening! That’s faster than I can even say this sentence! RTB in advertising is a part of the programmatic
advertising process. It involves three platforms for ad buying: Supply-side platforms (SSPs) Ad exchanges Demand-side platforms (DSPs) These different platforms work together to
get ads in front of the user. Before explaining how the different platforms
work together for real-time bidding, let’s talk about what each platform does. What is a demand-side platform? A demand-side platform allows an advertiser
to buy ad space and manage their ads. It’s a place for advertisers, who have a
demand for ad space. An example of a demand-side platform would
be Google Ads. What is an ad exchange? In between the advertiser and the publisher
is the ad exchange. You can think of the ad exchange like a market
with vendors and buyers. Google Ad Manager includes an ad exchange,
formerly known as DoubleClick Ad Exchange. What is a supply-side platform? A supply-side platform is what publishers
or website owners use to help them sell their ad space to advertisers. Publishers use the supply-side platform to
supply the space for ads. Google Ad Manager also includes a supply-side
platform, known previously as DoubleClick for Publishers. How does real-time bidding work? The RTB process starts with you. When you click a link to go to a site, real-time
bidding begins. When you arrive on a site, before the page
loads, the site’s publisher sends available ad space dimensions to the supply-side platform. Then, the supply-side platform looks at your
cookies. This is data from your web activity, your
interests, demographics, and more. This data helps determine what ad would be
relevant to you. Next, the demand-side platform assigns a value
to the user and places a bid on the ad space based on that information. Just a reminder, this happens between the
time you click on a search result and the time the page loads. Finally, the supply-side platform receives
the bids and picks a winner based on the highest and most relevant bid. Once an ad gets chosen, the website loads
and you see the winning ad on your screen. That’s a lot of complex steps in a short
period of time. I’ve never been to an auction that operated
that quickly, for sure. Let’s put this into perspective. Say you run an automotive business that sells
parts for sports cars, and you want to use real-time bidding to get your company’s
name in front of people looking to buy new parts for their car. Someone in your target audience who frequently
researches parts for sports cars visits a popular racing blog that just so happens to
have ad space. If your ad has the winning bid, it will be
on that website in front of someone interested in what you’re selling. You’re able to target an ultra-specific
audience with real-time bidding, which can help you deliver an excellent ROI for your
business. How much does real-time bidding cost? The cost of RTB varies, depending on other
bids and what you’re targeting with your ad, like Keywords, Location, Demographics,
and Interests. It’s all about what you want to invest in
your ads. You can pay anywhere from $2500 to upwards
of $15,000 for a campaign, but you’re not limited to that range. Keep in mind that real-time bidding operates
on a CPM basis, so your bid can be something like $1 or $2. You control your budget with real-time bidding. Why use real-time bidding? RTB can save you valuable time when it comes
to your ad campaigns. The process is automated, so once you’ve
set your parameters, you let it work for you. Real-time bidding is also cost-efficient because
you set your budget. Google used programmatic advertising, for
example, and saw their CPM decrease by 30%. With real-time bidding, you’re also making
sure your ad is relevant to the user. You’re not spending money on people who
have zero interest in your business. So those are the basics of real-time bidding. If you liked this video, check out another
one of our digital advertising videos: What is Digital Advertising? Don’t forget to subscribe to our YouTube
channel for videos covering a TON of digital marketing topics. See you soon!

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