Real Time Bidding (RTB) on ad exchange platforms is similar to the stock market. The amount of demand at the moment determines the price of the stock. An ad exchange is a platform where Publishers sell their ad space and Advertisers can buy it.
Like the stock market, RTB ad exchanges deal in supply and demand. Depending on the desirability of ad space (supply), demand emerges. As demand rises, the price of the ad space supply rises. Publishers win by creating demand and increasing ad value. Advertisers win by reaching highly targeted audiences.
For more information about ad exchange platforms, check out our recent post Ad Exchange Platform: Breaking Down Complex Technology.
The RTB Ecosystem Defined
The RTB ecosystem has three elements: Advertisers, Publishers, and Ad Exchanges.
Advertisers buy ad space through a Demand Side Platform (DSP). A DSP is a tool that automates purchasing online ads.
Publishers sell ad space on their website. They provide their inventory through a Supply Side Platform (SSP).
RTB Ad Exchange platforms connect advertisers and publishers, by facilitating the purchase of inventory. Many ad exchanges are DSP-SSP hybrids, like AppNexus.
How Do RTB Ad Exchanges Work?
Real Time Bidding (RTB) is an auction where impressions are bought and sold in a fraction of a second. When a user visits a website, the auction occurs automatically on a RTB Ad Exchange platform.
Advertisers implement a bidding strategy on the Ad Exchange platform. This bid contains different types of information such as demographic data, location, browsing history, etc. Ad space goes to the highest bidder. As a result, their digital ad is instantly shown on the website property of the publisher.
This process occurs within 100 milliseconds for each ad unit on the website. In other words, the process occurs during the brief spans of time between a URL click and page load.
How Does the RTB Ad Exchange Benefit Advertisers?
Ad Exchanges use data and algorithms to the benefit of both Advertisers and Publishers. In short, Publishers maximize revenue through a highly competitive auction. So how does RTB benefit Advertisers?
Efficient Media Buying
Audience targeting is extremely focused through ad exchange platforms. Ad efficiency skyrockets with RTB, due to efficient spending and robust targeting possibilities. In other words, Advertisers bid on the most relevant, valuable users. Therefore, Advertisers waste less money on irrelevant users.
Successful Campaign Performance depends on reaching relevant, valuable users. Advertisers see a higher ROI when ad targeting is highly specific. In addition, Advertisers can manage their campaigns in real time and adjust bidding and targeting.
Real-Time Insight and Strategy
The impression data from a RTB Ad Exchange is extremely valuable to Advertisers. RTB makes it possible to recognize which audiences are more valuable. Therefore, Advertisers can adjust their targeting strategies. In addition, RTB enables Advertisers to refine their overall marketing strategies quickly and effectively.
RTB Ad Exchanges
In conclusion, RTB Ad Exchanges are a win-win for both Advertisers and Publishers. RTB enables the buying and selling of ad space to happen instantly and effectively.