What is an RTB auction in ad networks and how does it work?

RTB (Real-time Bidding) is a technology for conducting an online auction for the sale of advertising spaces on the network. The auction takes place in real time and determines whose ad will be shown to the site visitor.

There are three parties involved in the process:

• Advertiser (Demand-Side Platform);
• The platform where the ad is placed (Supply-Side Platform);
• Auction management system (RTB).

Mechanics in advertising networks

The RTB auction system is implemented on all major advertising platforms (Facebook Ads, Google Ads, various push networks, and others). As soon as the user opens the site, a request to display a banner and data about the user available for targeting is sent to the RTB network. Everything happens within milliseconds while the web page is loading. 

An auction takes place between advertisers, the main lot of which is the right to display a banner to a user. The one with the highest bid-to-CTR ratio wins (Facebook Ads still has a “relevance” score).
 

The final cost of the impression is calculated according to the “second price” principle:

Advertiser 1 bid $0.05 and Advertiser 2 bid $0.04. Advertiser 1 won, but he pays the price of Advertiser 2 + network step ($0.04 + $0.001 = $0.041).

Depending on the advertising platform, different factors can influence the outcome of an online auction. For example, Facebook has the most advanced RTB system and analyzes the maximum amount of data before displaying ads.
 

Factors that may affect the RTB auction

Exposed bid / campaign budget. The more money the advertiser bid, the higher his chances of being shown. Ads with big bids participate in expensive auctions with high traffic quality. Ads with small bids are the opposite. 

Start time. If the advertiser has set a daily campaign budget, the time of start determines its position in the search engine. When launching ads at 23:00, the site will try to implement the entire budget for the remaining hour, increasing the cost per click and offering more expensive auctions. Starting the presentation at 00:01, the network will distribute the same money for 24 hours, will focus on lower quality traffic and lower the banner in extradition.

Ad CTR. The advertising network is interested in showing ads more often, which the user is more likely to click on and convert. Therefore, focusing on the previous experience of impressions, it ranks them by clickability. Too high CTR for some sites (for example, Facebook) may mean that the webmaster uses a “gray” (in Fb it is called hype news) approach to promotion that violates the rules of the community. In most cases, this will serve as a reason for additional verification by the moderator. 

Interests. Before the start of the auction, the advertising network analyzes cookies / pixel tag / OS identifier / browser data / user's social network account, checks the compliance of the user's interests and targeting settings. Such a system helps to show ads to those people who are most interested in interaction.
 

AffJournal editorial comment

In arbitration, as in any business, it is important to keep track of the movement of funds. So, to understand how and how they are spent. The RTB system directly affects how effectively you buy ads and how much money you spend on it. Optimize, count finances, and you will profit.