Real Time Bidding, or RTB, is a technology by which ad impressions are auctioned in the mere milliseconds it takes for a user to open a webpage.
Several parties take part in the auction. Firstly, there’s the RTB system organising the auction. Secondly, there are websites selling ad impressions. And thirdly, there are ad placement systems, known as Demand Side Platforms or DSPs, which buy ad impressions for advertisers. Each DSP may have any number of advertisers placing ads through its service.
From a technical viewpoint, an RTB system is a technological platform enabling interaction between ad placement services with different interfaces, impression algorithms and placement conditions. Thanks to RTB systems, these disparate services can take part in auctions together. Several ad placement services take part in Yandex’s auctions, including two owned by the company – Yandex.Direct and AWAPS.
As soon as a user enters a site that is an RTB participant, the site instantaneously informs the system that it is ready to display an advertisement. At the same time, it transmits information about certain technical parameters (ad format, site address and so on) and – most importantly – the user’s identification number or ID. In such a way, it offers not only a vacant ad slot but also the opportunity to display an ad to a specific person.
Having received this information, the RTB system transmits it to auction participants. DSP systems analyse the attractiveness of the impression and submit their bids, based upon two factors: advertisers’ demands (target audience, price ceiling, and so on), and information about the user whose ID number is shown. For example, with the help of Yandex’s Crypta technology, AWAPS may determine that the user is, say, a female Muscovite aged 20-25 with average income level.
Once the bids have been placed, the RTB system selects the winner, who receives the right to display an ad. The price to be paid is the minimum sum necessary to win the auction – the second price plus the next price step (1 rouble per 1,000 impressions). For example, if one participant offers 100 roubles per 1,000 impressions, and another offers 95, the final price that the winner pays is 96 roubles.
RTB technology is advantageous for all participants in the process. Advertisers receive the possibility to achieve their goals (eg. increasing ad reach or optimising the price per impression), as they are buying not only an ad slot but also a target audience – for a price that suits them. Ad spaces earn greater income, as they are selling impressions to the highest bidder an auction. And the users see ads that are selected according to their interests. In addition, RTB technology facilitates the development of the advertising market as a whole and expands the possibilities of ad placement services.