Modern display advertisement is all about real-time optimization – the ability to engage target audiences with precision and scale at the right time and for immediate results. But the real time truth about this kind of strategized adoption in a digital advertisement is that it gives marketers access to large pool data insights belonging to various time-frames.
This is the fundamental shift that differentiates real time bidding from negotiable display buys.
Real Time Bidding is the Future of Online Advertisement
It is different from static bidding models in the sense that exchanges are able to facilitate an auction on the basis of ‘one impression at a time.’ In a traditional display advertisement, an advertiser is required to buy a certain number of impressions in bulk and at a fixed rate.
This can lead to varying results for not all investment on the impressions can generate the same results. Some may prove to be less effective than others while some may turn out to be an utter waste of investment.
In real time bidding, an advertiser can narrow down the target engagement based on a user’s online behavior. It allows a buyer to determine the value of an impression before deciding upon the price at which one is willing to buy in real-time.
With Real Time Bidding Comes Cost per Action
In the online world, the path to purchase is not always linear. An advertisement online may have different degrees of effectiveness on the target audience behavior. Some buyers are more likely to purchase a particular product immediately, while some may not. Therefore, it is of utmost importance for digital marketers to forecast the degree of detrimental burn before it turns into an issue.
In real time bidding, each impression is presented with a unique cost and a unique value. It is a process that requires a buyer to consider the inventory on an ‘impression-to-impression’ basis. Hence, the focus on a buyer should be more on value-centric investment and less on cost-centric investment.
To give you a more generalized example of how real time bidding (RTB) works in digital advertisement, let’s take a close and simplified look into the RTB landscape first.
Real Time Bidding
Image Credit: Omnicore Agency
The RTB landscape comprises of three agents. They are –
- Demand Side Platforms (DSPs)
- Ad Exchanges
The Publishers – They are the owners of an online publication, where the inventory is available for sale.
The DSPs – The DSP or the Demand Side Platform enables the agencies to automate an advertisement purchase online. This is done on behalf of the advertisers and obviously requires different targeting methods, strategies, and parameters in order to reach the right audience market.
The Ad Exchanges – These are the open marketplaces that enable advertisers to bid on, evaluate and purchase an ad inventory from the publishers, on an impression basis through real-time auction.
The RTB Cyclical Process Takes 100 Milliseconds to Complete
RTB Cyclical Process
Image Credit: Periscopix
An RTB campaign is set up on the DSP by the agencies, keeping in mind the different factors like budgets, frequency caps, historical and real-time data, goals, etc. The advertisement is set up keeping in mind the different the worth of each impression, based on the ROI goal of an advertisement.
The inventory to the ad exchange is provided by the publisher. When a user visits a particular website and an inventory begins to load, the ad server is notified about the possible availability of an ad space.
The information is then matched with different parameters of data to determine the unique value of an advertisement, which is then displayed on the publisher's web page. When an auction begins and a bid is selected based on the real-time market demand, then the ads will appear on the webpage of the publisher.
A real time bidding auction is made possible with the help of two distinct interconnected layers. They are:
- Real time bidder (Brain)
- Real time bidding API (Pipe)
Here is a graphical representation of the two technology layers that make the RTB auction:
Technology layers of RTB
Image Credit: Periscopix
The role of the pipe is to funnel information (like the target audience and the ad space) from the ad exchange to the brain.
The brain, on the other hand, evaluates the value of each impression. This helps determine whether an impression should be actually bid upon. In RTB, the process happens every time an impression is announced and the brain gets to evaluate it.
By considering the inventory in this manner (i.e. on a per-impression basis), buyers can become more selective in their purchase of a suitable advertisement inventory. They can place premium bids on the inventory and audiences of higher value to the advertiser while pass on the inventory and audiences of the least value to the advertiser.
Programmatic buying of ads has not only helped to simplify the process: advertisers can now purchase and sell media in real time. The data that is gathered allows an advertiser and a marketer to optimize their campaign from the day of launch itself.
This makes a display ad more user intent. RTB helps one to focus not just on targeted keywords but on targeted audiences. And that is what cuts online marketing irresponsibility in PPC ads short.
Some of the advantages that a Real Time Bidding can have on your display ad:
- Bidding on Relevant Impression: Marketers can bid on impressions that are relevant to their business
- Daily Optimization: Real time bidding allows marketers and advertisers to optimize their marketing campaign real time and in accordance with the behavior of the target audience.
- Wider Outreach: There are more than 16 ad exchanges on the internet, which are categorized accordingly. From targeting broad range customers (for example – football fans) to narrowing the search down to a particular niche, RTB makes your promotional campaigns widespread.
- Better Transparency: With real time bidding optimization, you can decide your advertisement real estate in the digital world after a careful evaluation of the data metrics. The process also makes you aware as to where your ads will be appearing online and based on which behavior.
- Private Marketplace Deals: With RTB, marketers can make their campaign based on individual impressions. This allows them to take advantage of the private market deals and at unique prices, determined according to higher customer behavior impressions. An executive who is searching for an airline ticket in order to attend a conference in Los Angeles will turn out to be a more valuable prospect compared to someone considering a casual weekend gateway. In that case, the impression that is delivered to the executive is higher compared to an impression that is delivered to the traveler.
RTB Optimization in Display Advertisement
In the past few years, the role of display advertisement has changed drastically. It can be seen as a combination of two distinct advertising channels – search and display. This kind of cyclical approach can leverage both a brand’s awareness online and improved ROI. With RTB optimization, a marketer can make the best of both the channels, thus transforming the objective of generating click triggers into conversion possibilities.