Digital advertising has grown strongly in the past few years. Advertisers are now trading their ads programmatically and, along with publishers, are demanding and investing in developing programmatic technology.
Real Time Bidding (RTB) has opened the floodgates for companies to purchase ad inventory in bulk through ad exchanges. The automation of the purchasing inventory, using machines and algorithms, has led to the growth of the Global RTB market.
In fact, RTB has become so monumental in advertising that the market is expected to generate almost US$35 billion in revenue, growing at a CAGR of 41.18 percent for the 2014-2019 period.
What is Real Time Bidding (RTB)?
RTB is an online bidding process that allows marketers, advertising agencies, and media buying agencies to trade display advertising inventory in real time. The vendors provide a suitable platform to carry out this auction process.
When a visitor visits a publisher’s website, it sends a request to the vendor. The vendor sets a floor price for that visitor and various advertisers are allowed to check the visitor and the floor price and bid accordingly. Then the winning bid is selected by the vendor and the ad of the winning bidder is displayed for the visitor.
Types of RTB
Indirect RTB
In indirect RTB, the publishers sells their inventory using middle men, which includes ad networks, ad exchanges, SSPs, and DSPs. The publisher does not have any control over the process.
RTB is usually used to sell inventory that publishers are unable to sell directly. Indirect RTB comprised the majority of the global market in 2014, but with increasing prices and the number of middle men involved, many publishers are opting for direct RTB. This is reflected in the declining market share of indirect RTB.
By 2019, direct RTB will overtake indirect RTB in market share.
Direct RTB
In direct RTB, the publisher has direct contact with the buyer. This removes the middle men and reduces the overall cost. The publisher has control over the process.
In direct RTB, publishers are concerned about pricing as they may not have complete control over it. This process favors the buyers as it is cost-effective and provides more transparency. In order to overcome the concerns of publishers over pricing, RTB allows them to set a minimum price at which their impressions can be sold.
In addition, they have control over the type of advertisement shown on their website. Because of these benefits and the elimination of middle men, the market is expected to grow exponentially during the forecast period.
Advantage to Publishers and Advertisers
Buying and selling video ads on an RTB ad exchange platform benefits both the advertisers and the publishers. It helps publishers increase their revenue as there are many buyers bidding for every open spot, and it enables publishers to enhance their business by approaching novel advertisers.
Advertisers have the option of choosing the criteria of the audience based on demography, geography, language, frequency, and other factors. They can re-adjust their budget on a real-time basis based on the data available. Because of these benefits, publishers are increasingly monetizing their ad inventory while advertisers are increasing their spending on programmatic platforms.
