What is real-time bidding?

Real-time bidding (RTB) is an automated process where programmatic media buying occurs within an ad exchange. It allows advertisers to bid for ad inventory in real time, which means transactions happen in milliseconds as a webpage loads. When a user visits a website, an ad request is sent to an ad exchange, and advertisers bid on the available ad space. This process displays the highest bidder's ad to the user almost instantly.

RTB is an important part of digital advertising because it places ads more efficiently and precisely. It uses data to match the right ads with the right audience and uses the ad budget more efficiently. The two sides of this process are demand-side platforms (DSPs) and supply-side platforms (SSPs) for buying and selling ad inventory, respectively.

How does real-time bidding work?

RTB works through a digital auction system where advertisers bid for real-time ad inventory. When a user visits a website or app, the website’s ad server (or the software development kit if via a mobile app) sends an ad request to the SSP, who manages ad inventory. The ad exchange receives this information from the SSP and then broadcasts this request to multiple DSPs. Each DSP evaluates the bid requests using algorithms that consider factors such as user data, bid amounts, and targeting parameters. The DSP with the highest bid wins the auction, and its ad is displayed to the user—all in a split second.

The ad exchange is a marketplace connecting advertisers and publishers. It makes bidding easier, so the highest bidder's ad is served in milliseconds. The entire transaction is completed in real time, allowing for efficient and targeted ad placements. SSPs represent the publishers in this process, managing their ad inventories and making money by connecting to various ad exchanges and DSPs.

Demand-side platforms

DSPs automate buying ad impressions in real time so advertisers can manage multiple ad and data exchanges through one interface. DSPs analyze incoming ad requests and decide how much to bid based on the advertiser's campaign goals, budget, and target audience. They use data from various sources to determine bidding strategies so ads reach the most relevant users.

DSPs streamline the advertising process by offering advertisers control over their campaigns. This allows them to adjust bids and targeting in real time, resulting in more successful campaigns and more effective use of the advertising budget. 

Supply-side platforms

SSPs manage a publisher's ad inventory in the RTB process. They connect publishers to multiple ad exchanges and DSPs, maximizing ad revenue by ensuring that inventory is sold to the highest bidder. SSPs provide publishers with several tools for maximizing revenue: 

• Setting floor prices to make sure the inventory is not undersold.

• Controlling ad quality by disqualifying non-compliant or undesirable ads.

• Providing detailed analytics to track performance, optimize yield, and improve bidding strategies.

SSPs help maintain the balance between maximizing revenue and ensuring a quality user experience by offering insights and ways to improve ad inventory value.

Why is real-time bidding important?

RTB streamlines the digital advertising process, offering several advantages:

• Efficient ad spend: RTB allows advertisers to target specific audiences, using the ad budget effectively by bidding only on relevant impressions.

• Increased ad revenue: Publishers benefit from competitive bidding, potentially increasing ad revenue as multiple advertisers vie for ad space.

• Access to large ad inventory: RTB provides advertisers access to a wide array of ad inventories across various publishers, improving reach and exposure.

• Improved targeting: Programmatic media buying through RTB provides more precise targeting using data, improving ad relevance and effectiveness.

• Real-time results: RTB delivers immediate feedback on ad performance, allowing advertisers to adjust strategies promptly for better outcomes.

At what point does this get creepy?

However, while RTB helps vendors target ads more precisely, it raises the issue of data collection and dissemination without user consent. The bidding process often involves sharing sensitive information, which raises concerns about data protection and user privacy. Ad fraud is another significant issue, where fraudulent actors exploit data vulnerabilities within the RTB process by stealing campaign budgets, accessing user data, or manipulating ad impressions, all of which lead to financial losses for advertisers. Finally, involving multiple parties in online advertising makes it harder to determine who’s responsible for privacy breaches.

Data protection authorities, such as the General Data Protection Regulation (GDPR) or the Federal Trade Commission (FTC), are increasingly scrutinizing these practices to ensure compliance with regulations and safeguard consumer interests in digital advertising. The challenge lies in balancing effective personalized advertising with privacy, an area requiring continued attention and innovation.

Data rules in real-time bidding

Real-time bidding participants must follow data usage policies. These rules ensure that AdTech companies handle user information responsibly. Advertisers using Google platforms, for example, must follow guidelines that protect user privacy and regulate the data collection processes. These policies help maintain a balance between effective advertising and user privacy.

Real-time bidding platforms

So, who are the major RTB platforms? They include:

• AppNexus: Provides both DSP and SSP solutions and is known for its flexible and transparent platform

• Google Ad Manager: Integrates both DSP and SSP in its ecosystem, offering tools for both advertisers and publishers

• Rubicon Project: An SSP specializing in optimizing publishers' ad inventory and connecting to various demand sources

• The Trade Desk: A DSP known for its data management capabilities and reach across ad exchanges

These platforms support various targeting options and analytics, so advertisers can fine-tune their campaigns and publishers make more money. With a transparent and real-time auction environment, RTB platforms help streamline the digital advertising process, making it more efficient and effective for all parties involved – including the user.

Bringing innovation to real-time bidding with Aerospike

The RTB ecosystem is complex and operates at breakneck speed. It’s a bit of a balancing act, one that requires advertisers and publishers to manage massive amounts of data while keeping privacy, accuracy, and performance afloat. As the AdTech sphere evolves, addressing concerns such as signal loss, data security, and performance bottlenecks will be paramount to guarantee future success.

Aerospike’s AdTech solutions offer companies the means to overcome these challenges and improve RTB results. With Aerospike's massively scalable, millisecond latency, real-time database, you can:

• Accelerate bid responses: Aerospike’s low-latency architecture can process massive amounts of data within milliseconds, ensuring DSPs and SSPs react faster in real-time bidding environments.

• Enable real-time user profiling: Manages billions of user profiles with minimal infrastructure, thus maintaining data accuracy while enabling personalized ad targeting.

• Mitigate signal loss with graph models: With Aerospike Graph, AdTech platforms build stronger identity graphs, improving ad targeting as third-party cookies become a thing of the past.

Aerospike equips AdTech platforms with mission-critical tools to improve targeting, boost revenue, and ensure compliance with evolving data regulations.