What is RTB?
RTB stands for Real Time Bidding. It’s a bidding technology which uses third party technology to price and bid on individual user’s display advertising on millions of websites.
A DSP Platform centralizes bidding and placement of display advertising. The first step is to send requests with users’ display information using its data tracking capability. The second is DSP platform using a predictive algorithm to calculate users’ display value and send back the bid price to bid responder. Finally, orders are sent to an ad exchange system, ad code delivered to major media then passed on to end users.
Advantages of RTB
Why is the RTB system so successful and popular?
It brings higher ROI (return on investment) for the three parties involved in advertising campaigns – publishers, agencies and advertisers.
It is a system that brings a win-win-win situation. Online advertising company Avazu has replied related questions. Market equilibrium is a classical model in economics which maximizes total surplus. When supply meets demand at the interface, there’s neither lack of resources because of overpricing nor wasted resources.
The RTB system is designed to allow smart data management to minimize or eliminate inefficiency.
Applying this theory to display advertising market, the good exchanged is the advertisement display, the demand comes from the publisher or agency, while the supplier is the publisher. The bidding strategy, which maximizes yield, is to provide different bidding prices for every advertising space according to demand.
Generally, publishers can increase advertising sales, automate the sales process and decrease the cost. And the direct benefit for publishers and agencies is the increase in efficiency and ROI.
This article, however, won’t discuss all the amazing RTB related excitement that has come out of 2016, but rather discuss what the future is for the biddable display arena. My predictions for RTB in 2017 are as follows.
1. Rich Media Ads
Ad formats are becoming increasingly engaging and interactive. Dynamic creative allows advertisers to insert images and text based on combinations of variables, which isn’t just limited to e-commerce products.
In 2016, expect travel and publishing advertisers to use dynamic capabilities more creatively to create highly targeted and flexible ad copy. In addition, the use of rich media and engagement ads will continue to grow.
Engagement metrics will be optimizable, meaning advertisers are able to judge performance of ads even when users don’t leave the publisher’s website. This means publishers and advertisers share the benefits of engagement ads.
Free products like Google Web Designer, which allows for free creation of rich media ads, will help advertisers create these ads quickly and efficiently.
Expect more rich media and engagement formats which are easier to create and easily made dynamic.
2. Social Networks
The recent agreement between Google’s DoubleClick Bid Manager (DBM) and Facebook is a huge step forward in the alignment of social websites and biddable display. DBM advertisers will be able to reach first party and third party audience lists on Facebook and target them cross devices.
Expect more social networks to make their inventory available to exchanges in 2017.
3. Branding Metrics
Auditing the value of display campaigns has never been more important. Advertisers are becoming more aware of the optimization opportunities within biddable display and are understanding how direct conversions can be achieved through highly targeted and strategically run RTB campaigns.
DSPs will strive to provide new metrics to prove the value not only of direct conversions from display campaigns, but also the impact of visibility of display ads on brand recognition and awareness.
Expect more insights on viewability of ads and the impact on search to come in 2017.
4. Programmatic Video
DBM have recently created an option for in-stream video advertising via real-time bidding. This allows video ads to be served across a number of video exchanges, of course YouTube being the biggest.
Expect the CPM bidding model to be refined to allow for cheaper and more direct conversion options from biddable video. The number of video exchanges continues to grow, and it’s in their best interest to make their inventory available in the biddable space. Note this isn’t limited to just DoubleClick; video via private auctions on premium inventory is being discussed by a range of DSPs and publishers.
Expect expansion of biddable display throughout 2017.
5. Private Marketplace Deals
Similar to the addition of social networks allowing their inventory to be targeted via demand-side platforms like DBM, an increasing number of publishers will be using DSPs as a way to easily make their premium content available to a larger number of advertisers. This helps bridge the gap between reservation display and exchange buying, meaning that advertisers can reach premium content which may have previously been only available via direct reservation deals, and premium publishers still have a choice over the brands who have access to their highly valuable inventory.
Expect even larger volumes of premium inventory to become available via auctions.