Start Your Weekend Off Right

Toronto – Canada

One of my professors actually showed me this ad, I feel less cool for admitting that, but it’s a great ad.

Real Time Bidding, the Auction You’ve Never Heard Of…

Toronto – Canada

There is all types of funky stuff happening below the surface of the internet that we don’t know about. For example there is an auction going on in your home right now, but you weren’t invited…mainly because you’re the one up for auction. It’s called Real Time Bidding (RTB).

Sold! Sold! Sold! BTW this is not how it works anymore.

It is the latest trend in online advertising that helps advertisers target their main audience. It is a complex yet, genius system that ensures the message gets to the right destination. So how does it work?

First lets take a look at the landscape. Before RTB if you wanted to buy ad space you could select space on a website or search engine that was frequented by your target audience but you couldn’t necessarily guarantee that it was a perfect fit. For example if you were targeting baseball enthusiasts you could advertise on a sports website, but the website’s content might be geared towards other sports as well, thereby making your message irrelevant to other users. It’s a common problem experienced by all types of advertising mediums.

Here is how RTB is different, it generates a profile about the user from his/her path through your website and sends it to a central location. It compares the generated profile to criteria set out by advertiser’s target audience, and sells it to the highest bidder. Imagine two car companies wanted to reach 18-25 year old females that are environmentally conscious. Advertiser A is willing to pay $100 to show his advertisement to this demographic, but Advertiser B is willing to pay $150. If an RTB enabled website has a user that meets this criteria, it sells the ad space to the highest bidder in a matter of seconds.

Obviously I have simplified this method considerably, there are complex algorithms involved in generating a profile and selling the ad-space. The criteria for a certain profile is also quite specific, this means that Advertiser B, wouldn’t win the auction every time. Advertisers also distinguish how much they are willing to pay for certain profiles so there can be considerable differences between competitors.

It is a method that has gone to great lengths to help generate content for a specific audiences. Other mediums such as television, radio, or print can only give a glimpse of who the audience maybe when a commercial hits the air, whereas RTB creates a much more targeted approach.

Here is a simplified technical break down of how this whole process works (burrowed from Wikipedia):

1. A user logs onto a webpage that uses real time bidding
2. The user’s browsers receives the html for the webpage. Imbedded in this html is a URL tag for an ad request
3. The user’s browser makes a call out to the ad server
4. The ad server calls out trying to get the best price
5. Multiple advertiser platforms evaluate the bid request and decide how much they want to bid and respond with bids to the server
6. The server selects the highest bid with a URL of the winning ad and returns that to the browser of the Internet user which started all these transactions

Its an interesting, slightly complicated system, but don’t be surprised if the majority of online advertising moves in this direction.