What is Real-Time Bidding (RTB) in Programmatic Advertising?

This is a big improvement from traditional ad buying, which was usually done manually and on a one-to-one basis — taking a lot of time and resources. Programmatic advertising, on the other hand, uses technology to help advertisers optimize their campaigns and budgets in real time, and deliver more personalized ad experiences across platforms.

Real-time bidding (RTB) was first invented in the early 2000s by Brian O’Kelley at Right Media. After realizing how difficult it was for brands to create large-scale deals with digital publishers, O’Kelley knew he needed to find a way to automate this process.

So he built a foundation for RTB — and the programmatic advertising world was never to be the same.

As programmatic advertising continues to grow — reaching $96 billion in spend in 2021 — RTB remains a go-to strategy for brands and publishers. Many know that if they want to launch a range of data-backed campaigns in relevant, brand-safe environments, RTB is a prime solution.

In this guide, we’ll help you make the most of your RTB programmatic buying by breaking down:

• What is Real-Time Bidding (RTB)?
• How Does Real-Time Bidding Work?
• The Difference Between RTB and Programmatic Direct
• The Benefits of RTB

What is Real-Time Bidding?

First, let’s answer this question: What is RTB in programmatic advertising?

Real-time bidding is the process by which advertisers bid for ad placements in a virtual auction, and as the name suggests, in real-time. Typically RTB is done by cost-per-thousand impressions (CPM). So relevant advertisers vie for inventory to get in front of publishers’ audiences, and the ones with the highest CPMs win the available slots.

What is the difference between programmatic advertising and RTB? Well, RTB is just one way to buy programmatic ads. Programmatic advertising can also be purchased through:

• Programmatic direct deals, which are forged directly between individual publishers and advertisers on a one-on-one basis
• Programmatic guaranteed deals, which offer guaranteed impressions at a fixed price
• Private marketplaces (PMPs), which are invite-only RTB auctions

While RTB isn’t the only programmatic advertising solution, it is one of the most popular because it’s cost-effective and easily scalable across publisher properties.

How Does Real-Time Bidding work?

RTB programmatic advertising is accomplished using a core group of technology platforms. These include:

• Demand-side platform (DSP). A DSP is a type of software that brands use to buy programmatic ad units from publishers.
• Supply-side platform (SSP). An SSP is a type of software that publishers use to sell programmatic ad units to advertisers.
• Ad exchange. This platform connects the DSP and SSP, and it’s where the actual programmatic transaction occurs. Taboola, for instance, is an ad exchange that’s integrated with many industry-leading SSPs and DSPs, helping thousands of publishers and advertisers more efficiently run their campaigns.

Using these platforms, here’s how an advertiser might go about the RTB media buying process:

• The advertiser uploads their campaign creatives and customer data to their DSP.
• The advertiser set its CPMs based on its budget and campaign goals.
• A reader visits a publisher’s webpage, where an ad unit exists and needs to be filled.
• The ad exchange is triggered to hold a programmatic real-time bidding auction to populate that ad unit.
• The ad exchange matches the data from the advertiser’s DSP with the data from the publisher’s SSP to find the most relevant placement for this reader.
• The advertiser with the winning bid gets the ad unit. Their creative is sent to the publisher’s SSP and delivered to the reader — instantaneously.

The Difference Between RTB and Programmatic Direct

When learning about real-time auctions, many advertisers might wonder, “What is the difference between RTB and programmatic direct?”

Programmatic direct is a form of programmatic ad buying, just like RTB. The big difference is that programmatic direct deals are built one-on-one between a publisher and advertiser. Still, it’s not a form of traditional advertising because the ads are distributed programmatically through the platforms outlined above, not manually.

RTB, on the other hand, is accomplished on a much larger scale, with potentially thousands of advertisers vying for one publisher ad unit at any given moment. For that reason, RTB can be more affordable and easier to execute but programmatic direct can yield more high-quality, premium ad placements and partnerships.

The Benefits of RTB

RTB programmatic advertising offers many benefits for brands looking to expand their reach and streamline their budgets.

The biggest advantages of RTB media buying include:

• Scalability. RTB allows advertisers to run potentially thousands of campaigns in real time all from the same platform: their DSP.
• Increased reach. Advertisers can use RTB to automatically place ads across a range of publisher properties without having to manually oversee the process.
• Affordability. Since advertisers can set their CPM bids, they know they’ll never pay more than they need to for ad inventory.
• Advanced targeting. Ad exchanges pull customer data from publishers and advertisers to instantly find the right audience for each campaign.

RTB and programmatic advertising will continue to open up new opportunities for advertisers to drive awareness, consideration, and conversions. As eMarketer reported, programmatic display ad spend increased 29% from 2020 to 2021, and it will soon account for over 90% of all digital display ad spend — more than ever before.

Taboola is prepared to help advertisers fully leverage the open RTB space. Taboola recently announced the launch of a new native bidding service, supported by Microsoft, a long-term strategic Taboola partner, allowing Taboola to extend its advertiser base to other supply types such as display advertising inventory, social networks, and others.