What is RTB and why it is important

Adapted from Internet Marketing Team

The publisher benefits from RTB because no impression is left unsold. In fact, RTB has mostly been used to sell remnant traffic, which is leftover traffic from direct deals. However, it’s increasingly used to sell premium traffic.

Meanwhile, the advertiser benefits from the massive amount of inexpensive, data-rich traffic made available by these exchanges. Benefits aside, real-time bidding has not been without controversy.

RTB: a work in progress

The primary issue with programmatic RTB is its lack of transparency. Often described as a black box, advertisers are concerned about price manipulation and ad placement.

The recent Youtube debacle, where big brand ads were placed next to extremist videos, exemplifies what is at stake when there is little to no transparency. But, advertisers are not completely devoid of fault.

There is consensus within the industry that advertisers have been prioritizing quantity over quality. Because of this, brands, advertisers and media buyers have been willing to operate in the dark.

Publishers are not free from risk either: many use Google’s ad server, which gives priority to their ad exchange. Additionally, real-time demand isn’t taken into account because waterfall ranking is based on estimated return.

Thus, the publisher isn’t guaranteed the highest price for an impression. Nonetheless, there is demand for greater transparency from both parties and versions, e.g. private RTB marketplaces, are gaining popularity, which will increase accessibility.

So, why is RTB important?

As mentioned above, RTB is the primary programmatic method employed and will continue to be so…at least in the near future. Why? It is by far the most accessible method for publishers of all sizes.

Other methods, such as programmatic direct and header bidding, require a scale and resources that present smaller publishers with impossibly high barriers to entry. Likewise, accessibility has improved for advertisers.

Specifically, they have greater access to impressions and at lower prices due to the sheer amount of supply and lower cost of acquisition. However, RTB is also important for a larger reason.

Programmatic RTB has changed the expectations of how media will be primarily traded in the future, be it through RTB or other methods. This not only applies to digital media, but non-digital as well.

Consequently, this calls every party to learn a new language and way of thinking to ensure that they are getting what they expect. After all programmatic, in all its forms, is already happening: are you doing what’s necessary in this brave new world?