What is Real Time Bidding?

Real Time Bidding or RTB as it was known, was the initial name for online traded media via auctions. Real Time Bidding is the buying or selling of ad impressions through ad exchanges and platforms via Demand Side Platforms (referred to as DSPs).

Effectively the advertiser uses a DSP to bid on a publisher ad impression within milliseconds. They “bid” the price they are prepared to pay for that impression at the exact time. The closing price of that single ad impression is determined by various factors, but most importantly, immediate advertiser demand. i.e if there are a great number of advertisers bidding on that impression at that time, then the price will be higher compared to if there is only one advertiser bidding.

Another factor in determining closing price in Real Time Bidding is auction dynamics. Is this auction a second priced auction or a first priced auction?

These days the phrase “Real-Time Bidding” is has been replaced with the generic term of Programmatic Advertising.