RTB inside out!

This article has little to do with affiliate marketing as such, but it deals with a lot of relevant notions and touches upon one of the ecosystems that function within an advertising network, an area that usually remains obscure to an ordinary user.

Only a few people actually know what an ad network is engaged in behind the scenes, how it selects ads to display, how its economic structure functions and what it is based on, and, most importantly, what methods and tools are employed to provide for the real-time buying and selling of ad impressions.

I’m going to dwell upon RTB (real-time bidding) as one of the means of interaction between publishers and advertisers.

What is RTB?

RTB (real-time bidding) is an ecosystem where advertising inventory is purchased and sold on a real-time basis and which involves both sellers (SSP – supply-side platform) and buyers (DSP – demand-side platform). There are also other sides to the ecosystem, i.e. trading desk, DMP and so on.

All those connected to the ecosystem can offer an ad platform or a certain ad format to a multitude of buyers throughout the world in a matter of milliseconds, as well as to acquire and process user data and select a campaign that best matches a particular user according to certain criteria.

To make it clear straight away, we are not going to consider display formats (formats involving creatives, namely video ads, native ads, push notifications), as there are lots of details and nuances involved in working with them, but we’ll focus on the conventional popunder format with a redirect link as advertising material instead.

As openRTB was initially designed primarily for display ads, you won’t find such format as popunder/popup in the official protocol documentation which is available on IAB sites. To trigger an auction request, in the majority of cases you should submit a GET request, which is basically a URL with certain tokens and filled parameters. The response is usually given in the form of a JSON structure or an XML markup language. There are certain networks that customize openRTB, but this is by no means compulsory for working with this format.

A brief overview of the auction process

As I have mentioned above, a seller who has, for instance, a platform with JavaScript or a redirect link can run an auction with all of the interested buyers within a platform where the seller is registered as an SSP. Each buyer receives a limited amount of user data and can subsequently set a bid to show their ad campaign to a particular user. The simplest user data set includes an IP address, user agent and the seller’s internal ID, as well as some technical parameters that determine only the expected response format.

When the auction is open, each buyer connected to Ad Exchange receives a request and is supposed to select an ad campaign, set a bid and send a link, or respond that they don’t have any relevant ads.

Each auction takes about 200 milliseconds as stipulated by technical specifications, but, of course, there are certain exceptions. In any case, each side seeks to stay within this time frame; otherwise, it can at the very least result in lost auctions or even lead to excessive delays in the opening of ads in a browser and subsequent loss of a user, which causes discrepancies between a seller’s and a buyer’s statistics.

Pros and cons

Like any technology, RTB has its pros and cons. When it comes to advantages for sellers, the platform selects the highest bid on an impression and therefore the seller’s income is rising. As regards buyers, they can choose an auction to compete in, as well as to develop and implement their own trading strategies that will enable them to optimize their budget and reach the required KPI at a reasonable price.

Of course, 99% of those using this technology are businesses with enough capital to develop or purchase white label solutions for acquiring traffic or connecting their sites to an RTB platform. Moreover, a complex and expensive infrastructure is required to process a tremendous number of requests within milliseconds.

At first glance, a reader may be inclined to think that RTB is an easy way to make money, as the only thing you have to do is just resell your traffic, and that’s it. However, there are lots of pitfalls within the economic model of this business that can undermine your efforts to generate income and even drive some business owners into bankruptcy. In 99% of cases, it is an ad network that receives an income from such a product through the RevShare model that enables networks to take their commission from each bid. And, of course, this is viable only given huge traffic volumes provided by a supplier and the relevant demand, i.e. solvent advertisers.

By way of conclusion, I’d like to share with you some statistics pertaining to this sphere: virtually all advertising networks in the market employ the RTB technology to a greater or lesser extent. This way of interaction between publishers and advertisers is currently the only convenient and transparent one when it comes to carrying out display ad transactions on major sites with branded (and not only branded) advertising. However, as regards the popunder market, this technology has become obsolete due to poor quality control on both sides, whereas when it comes to push notifications, it’s still gaining traction and is emerging as a leader in terms of the selling and reselling of this traffic type.