If you spend any time researching how online display advertising works, it is very likely that you will run into the term RTB, or real-time bidding. Real-time bidding is a method used to buy and sell ad inventory on the majority of publisher sites, and is rapidly becoming the industry standard.  Here we take a look at how RTB works, and discuss what this means for local business advertising.

The Basics of Real-Time Bidding

Just as the word “bidding” suggests, this is all related to how advertisers buy ad space from website publishers, something we discussed in an earlier article on how ad exchanges work. What makes RTB special, is that the transactions occur at the moment a viewer arrives on the publisher website and starts to download the website.

How Ad Exchanges Work

To make this possible, advertisers set up the parameters of their campaigns in advance with the exchange. These look like lists of sites that the advertiser prefers to appear on, and also can include parameters such as the geo-targeting requirements, and behavioral and contextual targeting specifications. In addition to this, the advertiser sets the price they are willing to pay for these display ad placements. The exchange sorts through the bids from all of the advertisers that want to advertise to that viewer, and sends the ad from the winning bid to the publisher network.

RTB Growing in Importance

When RTB was first introduced, it was positioned as a method for publishers to auction off their remnant inventory, meaning any ad placements that the publisher was not able to sell directly through its own sales force. This gave RTB something of a negative reputation as offering lower-quality placements.  As advertisers have come to appreciate the precise targeting capabilities that only RTB can provide, however, publishers have been forced to offer premium inventory to meet the demand. It is for this reason that spending on RTB has been the fastest growing segment of online marketing, with a projected annual growth rate of 59% per year through 2016, according to IDC.  In a survey conducted by Pubmatic, ad agencies ”reported improvements in ad effectiveness anywhere between 20% and 150%,” due to reductions in waste thanks to RTB.

RTB is Key for Local Advertising Online

For advertisers whose customers are in their backyard, RTB is the key to making online display advertising both affordable and effective. This is because it allows them to target their entire ad budget to viewers who live within their preferred target geography.  What is really exciting is how differently display advertising works from traditional advertising like print.  For print advertising, you have to commit your budget to specific magazines or newspapers in advance, regardless of how wide the readership actually is.  With display, on the other hand, the budget only gets spent as viewers actually pull up the web page.

Want to learn more about how an online display advertising campaign can benefit your local business? Contact us today for a consultation that will show you where your customers can be reached online.