What is real-time bidding (RTB)?

Glossary What is real-time bidding (RTB)?

The definition of real-time bidding (RTB)

Real-time bidding ( RTB) is a subcategory of programmatic media buying. It refers to the practice of buying and selling ads in real time on a per-impression basis in an instant auction. This is usually facilitated by a supply-side platform (SSP) or an ad exchange.

An SSP is software that lets publishers sell display, mobile and video ad impressions to potential buyers – automatically and in real time. This includes ad exchanges, networks and demand side platforms (DSPs), giving publishers greater control of their inventory and CPMs.

Real-time bidding illustration

How does real-time bidding (RTB) work?

At any given moment, multiple advertisers can bid on a single impression of a publisher’s inventory, then the winning ad (with the highest bid) is shown to the user. Through RTB, advertisers can apply fine-tuned targeting and focus on the inventory most relevant to them. This, in turn, yields better ROI and higher eCPMs. RTB also allows advertisers to adjust their campaign budgets in real-time in order to optimize campaign performance.

Take, for example, the moment in a mobile game where the player watches an ad between game levels. At that moment, the mobile SSP runs an auction for all of the advertisers interested in showing an ad to that player. The advertisers make their bid and, in a split-second, the highest bidder is chosen. Their advertisement is then served to the player.

Publishers and advertisers can both set parameters for RTB, such as minimum prices and maximum bids, as well as prioritize specific deals and inventory.

Why is real-time bidding important?

RTB is effective for advertisers and publishers. Let’s take a look at how RTB is useful for each:

  • For advertisers: RTB means more streamlined, efficient and targeted buying. It provides them with the ability to fine-tune targeting and focus on the most relevant inventory results in higher ROI. Ultimately, users see more relevant ads.
  • For publishers: RTB increases revenue and fill rates by opening inventory to a wider variety of buyers in a competitive auction. Finally, publishers gain visibility of who is buying which inventory and can leverage this knowledge to charge more for their premium placements.

RTB and AppLovin Exchange (ALX)

AppLovin Exchange (ALX) is the leading mobile in-app real-time bidding exchange, connecting buyers to over 60,000 mobile apps on over 1.5 billion mobile devices across the world. ALX works with 150+ DSPs to provide marketers, agencies, and ATDs access to a large volume of inventory. In the ALX auction environment, high-quality inventory is bought on a per-impression basis. Buyers gain direct access to the most competitive auctions with in-app SDK integration.

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