Real Time Bidding ABC:

Real Time Bidding ABC:

Buying digital ads in real time has become a common thing. It is widespread in the US, in many big European countries and is becoming more popular in smaller markets as well, still mostly with Facebook and Google Adwords ads.

This article will give you a short and hopefully a clear overview of platforms where you can buy digital ads in an auction in real time.

When in 1995 only a few web pages existed, today there are billions of them. The possibilities of buying digital ads through different programs are growing in vast speed since spending money on traditional digital advertising is no longer effective for the media or the client. As digital media buying takes too long, as there are millions and millions of sites and hundreds of different target groups. At the moment, advertisers pay a fixed price for showing their ads, it doesn′t matter if the target group is right or not. When you buy a digital ad through a program, you can target just the right groups, people who are valuable for you. Programs like Frank help you save time and get great results.

What is Real Time Bidding?

Buying in real time means buying and selling ads in auctions that are happening in real time. The auctions are held in the moment the webpage is loading?—?in a fracture of a second the program decides which ad suits the web page the best and what is the price for displaying the ad. The auction mediators are usually advertising networks or the seller’s program. The pages itself do not control what ads will be best for them.

How does Real Time Bidding (RTB) work?

The moment the user arrives on the web page, the platforms will receive a real time info that User X has arrived on web page Y. Platforms have previously gathered and saved information about User X and now they analyse quickly, what kind of ads will be most relevant for User X at this point of time. If two advertisers would like to show their ads to User X (based on the previously gathered information), the ad of the advertiser who pays more in the auction, will be displayed first. If the User spends more time on the page, other ads will also be displayed. As said, this is all done in micro seconds.
In a traditional digital media, each showing has a certain price. In RTB the price is shaped based on how much an advertiser is willing to pay for one contact from a certain target group member and on what web page the ad is displayed. When in many countries (USA, UK, Denmark etc.) you can also target by age and gender, in some markets you can limit your audience still only by interests, text content, time, device and some other technical functions.

What is the Demand-side Platform (DSP)?

This platform is mainly used by advertisers and agencies to buy ads automatically. The platform enables to buy ads faster (without previous booking) and with bigger control (changes can be made constantly). The choice of formats is wide, you can choose video, text or regular banner ads.
An advertiser can buy ads for a large number of portals through DSP. During the buying process the program considers the clients’ location and their previous internet history. The ad sellers make their inventory available through a market called the ad exchange. DSP automatically decides which ad is reasonable to buy and which not and all that in real time.
As an example, look at Frank (https://www.startfrank.com). Frank provides the fastest and easier way to setup a campaign. After a fast setup their advanced system will start delivering clients to your website.

What is an Ad Exchange?

The Ad Exchange can be compared to a stock exchange. When the stock exchange links buyers with stocks, the ad exchange links buyers with ads through DSP. Ad exchange has all the inventory of partner media companies until someone wishes to buy something. Through ad exchange the media companies can maximise on their free inventory. It used to be that on bigger markets you could use it to sell impressions that were left over, but now the selection is getting wider and more premium placements have been added.

What is a Data Management Platform (DMP)?

Simply put, this is a data storage that gathers information, sorts it out and then releases it in a way that is useful for the publisher and other businesses as well.
It is like a database that is primarily used by advertisers to filter cookies and to create user segments that would match certain groups. DMP helps to collect information from previous campaigns so that in the future, the targeting could be improved. Often the data is collected from the campaigns of all the clients and then merged into one big data storage. Many companies have started to sell their user`s information so that the ads would reach the right target group.
DMP and DSP work together. When DSP is used for buying, DMP is only for storing data so that DMP could buy the right audience.

What are the negative aspects?

It may seem like the perfect system?—?you place your bet and everything works automatically. Unfortunately, it isn′t quite so. Like in buying traditional media, the RTB also has some aspects you should keep in mind.
For example, if you set a day′s budget with a large publisher (1000 €), you get an exact amount of displays for it. With RTB it works a bit differently. You pay for displays that have happened but the number of displays can be different on different days. One option is to calculate the minimum number of displays. You can also set the campaign period and budget. However, this is often not the smartest solution because the cost of a click can grow and the wanted result may not be achieved.

It would be better to monitor the campaign as it continues and play with the frequency of displays. You should think about if it is useful to display and ad to a person who has seen it 20 times already but still hasn′t clicked on it. How many times did the ad appear on the viewer′s screen and not out of the screen? All this data can and should be monitored constantly. This way you also won′t become annoying for the potential customer. 
Advertisers often worry about if their ads will appear on unwanted pages. Unfortunately, it is not possible to control the page content 100% and the ad may sometimes be displayed on pages which content is of questionable value. On most platforms you can activate brand protection strategy that brings the number to that kind of pages to a minimum. A bigger problem is that the ads will be displayed in pointless pages. Fortunately, this does not affect the results since you only pay for clicks or conversions. 
All of these things the previously mentioned platform does for the client!
You probably have visited web pages that use remarketing strategy for ads. It is an effective method and many clients complete the required action on the home page. But even after the client has made an enquiry or a purchase, the ad will continue following him. In order to not become annoying, you should end displaying the ad to those who already did the desired action. This way clients will not get annoyed by you and minimise the danger that they won`t buy your product out of spite.

As a conclusion:

A media company sells its inventory through exchanges. Through DSP the advertisers can participate in an auction to buy that inventory. Advertiser, who is willing to pay the most, wins the auction and his ad will be displayed on the page. You can also add DMP which will make the targeting even more precise.

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