June 21, 2016 | Business | by Xavi Beumala

RTB: A Brief Refresher on Everybody’s Best Solution

If you haven’t been keeping up with the intricacies of real-time bidding (RTB), it’s understandable—RTB can be a confusing topic to grasp. But considering that real-time bidding (RTB) is expected to rise at a compound annual growth rate (CAGR) of 24.78 percent between now and 2020, according to a recent report from Technavio, this is a good time for a refresher course on what makes RTB different, and how publishers, both big and small, can take advantage of it. The RTB growth rate projections in that report are obviously big news for the advertising industry as a whole, and, more specifically, for the mobile web advertising industry, which made up 41 percent of the RTB market last year. Ultimately, the RTB market share for mobile web is expected to overtake the mobile applications share, possibly as soon as 2017.

Traditionally, advertisers bought space on websites preemptively. If you visited a website about motorcycles, you would mostly see advertisements about motorcycles. RTB allows for a more tailored user experience. When a user opens a web page, the ad exchange is notified of the page’s inventory, and bidding immediately begins to determine which company fills that space. Companies can see information about the user, and determine if it is worth bidding for an impression on that page. So if a user has also been browsing the web for vacation packages, a vacation agency might think it’s worth it to bid for ad space on that motorcycle website. The best thing is that this entire process, from the time the user logs onto the website, to the time the website communicates with the ad exchange, to the time the ad is placed on the page, takes about 100 milliseconds. Compared to the traditional approach to buying ad space, the RTB solution is clearly better for the advertiser, the publication or blog, and the user!

There are two other terms you need to know: supply-side platform (SSP) and demand-side platform (DSP). Both SSPs and DSPs work toward the same goal, but from different sides. While SSPs work to maximize the money that the publisher gets for selling advertising space, DSPs work to get the advertising space for the lowest price possible. Supply-side platforms allow publishers to manage their entire inventory across multiple ad exchanges. They make it quick and efficient for publishers to get the highest rates on all of their inventory, optimizing the monetization efforts for the website. After the SSP goes through the ad exchanges, the DSP bids on the advertising space.

So why is this good for publishers and advertisers? The biggest reasons are speed and simplicity. There’s no need for prolonged negotiations between advertiser and publisher to set a price for the advertising space. It’s a much more cost-effective way to generate sales on a website. Moreover, automation is less expensive than employees—who don’t always get the job done right and on time.

If your publication isn’t already using a supply-side platform, now could be the right time to make the switch. Internet advertising is expected to surpass television ads next year, according to a PwC report, and by 2020 mobile will account for 49 percent of mobile advertising revenue in the United States. These numbers coincide with the real-time bidding shift to mobile and signal a bright future for online advertising. Using real-time bidding, and using it on mobile, can greatly impact your publication or blog in the best possible way, both in the present and future.