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Key Acronyms you should understand to survive in the Disruptive Digital Marketing arena: RTB

PUBLISHED ON 18 NOVEMBER, 2014

New technologies and the Big Data revolution are changing the scope of the digital marketing world and it is getting incredibly easy to get lost in the heap of endlessly emerging acronyms. Long ago we got used to all those CPMs, UXs and B2Bs, and now we find ourselves overwhelmed by mushrooming RTBs, DPMs, SSPs, and so forth.

How do you find your way along this thorny path?

This series will try to help you out, by addressing the most disruptive acronyms in the contemporary digital marketing arena in the most digestible and comprehensive way.

To start with, we are going to examine a highly popular acronym – RTB.

WHAT?

RTB, or Real Time Bidding, is a subset of programmatic buying, in which the whole process of ad buying and selling is both automated and real time. While in the past it was used by publishers to get rid of leftover ad space inventory, RTB is now rapidly gaining popularity across the marketplace given its numerous advantages for both publishers and advertisers. The figures speak for themselves: RTB is supposed to intensify at a 59% compound annual growth rate through 2016 with global spending to amount to $13.9 billion by that year’s end, says the IDC.

WHO?

Agents involved in this complex system include:

Advertisers / Buyers, tired of wasting money on a CPM system that does not reveal the value of each impression, and time, on manually contacting the publisher to buy their ad space. In RTB, the process is automated by employing DSPs, or Demand-Side Platforms (brace yourself, more acronyms are yet to come), to optimise marketing campaigns. DSPs store the parameters indicated by the advertisers, such as specific audiences or price floors, to then automatically bid on their behalf.

Publishers / Sellers are the websites who are selling their inventory of ad impressions. They, in turn, may be unsatisfied with the traditional display system since it leaves a vast amount of their inventory unsold. They can make use of SSPs, or Supply-Side Platforms (told you, RTB is all about acronyms), to maximise their benefit from the selling of impressions, as well as set pricing floors to stay in control of their offer.

Ad exchanges, often compared to stock exchanges, bring advertisers and publishers together in one single place where they can negotiate the terms of their deal. Auctions that take place in real time and milliseconds allow advertisers to bid for impressions offered by publishers.

HOW?

 

1. When a consumer visits a website, their browser sends data about them and that website to an ad exchange.
2. The ad exchange holds a real time auction, offering the inventory provided by the publishers to the DSPs, who place their bids according to the parameters set by the advertisers.
3. The highest bid wins and the ad is served on the publisher’s website, the whole process lasting no longer than the time it takes the website to load. Only 150 milliseconds, and the consumer receives a highly personalised ad based on their past online behaviour.

WHY?

For advertisers, RTB is a real treasure in three ways:

• Firstly, they no longer have to rely on their gut instinct when purchasing ad space and hoping to reach the right audiences. RTB enables extreme personalisation and precise targeting, which means that each ad will be served to the exact person whose interests match the specific ad content.
• Secondly, RTB saves advertisers’ money on wasted impressions.
• Thirdly, RTB’s automated nature helps to save the time that it would take a human agent to make decisions during the bidding process.

Publishers, who may be initially suspicious of RTB, can also largely benefit from it:

• To ensure advertisers are not bidding too low or provide low quality ads, publishers can set minimum prices and thus stay in control of the process.
• They can sell up their inventory without wasting time on classifying it and reaching out to qualified advertisers.

 

As you can appreciate, RTB’s mechanism is far from easy to follow, but definitely worth trying given its numerous advantages and rapidly expanding online presence. LUMA Partners has attempted to categorise the different agents and platforms that participate in this complex system, resulting in the following LUMA Display Ad Tech Landscape:

 

What are your thoughts? Do you see RTB as another perplexing trend or an exciting yet-to-be-unleashed possibility?