How does Real-Time-Bidding work?
Targeting and Retargeting
Every time a user visits a website, the information is automatically saved as cookies in their browser, but why is it important and what information is stored?
Simply put, those small text files contain a lot of information about the said user allowing you to create a clearer picture of the user journey to help improve your business.
One example is the products that were searched for during the user‘s time, which any ecommerce website knows, is extremely valuable to any business. When visiting other websites, these saved cookies are analysed painting a picture of the user; the user becomes a person rather than another number. Clocking traffic to your website is important, but having their personality (and trends in spending for ecommerce businesses) can be even more useful.
Not only is the user’s interests during their visit to your site tallied, but the search history becomes visible too.
So you have a user’s statistics from your site as well as their search history. What happens to it now? These users are then categorised into certain customer-groups meaning advertisers now have the chance, via specific targeting and retargeting, to place their ads. The result is your ads becoming far more targeted extending your potential reach.
Now let’s see why publishers should use this fairly new technology…
Having that knowledge of users is clearly valuable, but in terms of maximising the advertising side, it is of great interest to any business to place their ads on websites which their potential customers visit regularly.
To predict these websites is very hard, but with the help of cookies, you can make an educated guess on when a potential customer will visit a certain website and place your ads accordingly. This results in many advertisers wanting to place their ads on particular websites to optimise their business to specific users that are more likely to convert to the website and improve KPIs.
User Frank searches for a new car. He visits an online-portal for new cars and searches for the best models there. In this connection, the browser saves cookies that state his interest in a new car and his search histoy.
Afterwards Frank visits an informative news website. This news website analyses Franks cookies and generates an user profile for him. The information in this profile may now be used to show Frank ads of interest and relevance to him on the news website.
This is when RTB and Geniad take action. Due to a innovative software, a particular space on a website can be offered to thousands of advertisers simultaneously within miliseconds in an online-auction. This happens everytime a new user visits a website with an implemented RTB software.
Within the auction, the advertisers bid a Thousand Ad Impressions (TAI) – the price on the available advertising space.The advertiser to bid the most wins the auction and may place his ad in said advertising space in the format stated.This process takes place while the website is loading for the user.
How is the global RTB-market going to develop in the future?
The RTB-market became a billionmarket in the last few years and it still offers a gigantic growth potential. IDC states that today up to 15% of the display market sales in the USA are generated with RTB with America and Britain both showing high expeansion rates. This equals a sum of 2.2 billion USD.
If that wasn’t enough facts, here is some important information from an IDC study about the estimated global development as seen below:
(Source: IDC 2012: „Real Time Bidding in the US and the world 2011-2016)
page 12, figure 1
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