AD TECH INSIGHTS
by Roman Vrublivskyi
Posted on Dec 18, 2023
Deep Dive into RTB Strategies and Margin Types for Maximum Impact
by Roman Vrublivskyi
by Roman Vrublivskyi
Programmatic advertising offers multiple ways to purchase ad placements, but RTB is the most popular option. Since RTB technology implies automation and high personalization, this is not surprising.
However, you need to know more than the RTB definition to make the most of your ad exchange. How does it work? What are different margin types? What mistakes to avoid? In this guide, we will answer these and other questions. So, let`s explore the nuances of RTB programmatic advertising and gain insights on how to make the best of it.
What does RTB stand for? Let’s start with the basics. Going over the RTB definition, RTB stands for real-time bidding, and this technology is designed to automate the process of buying and selling ad inventory through auctions. It operates on the principle of demand and supply. Publishers offer their ad inventory via ad exchanges (or networks). In turn, advertisers bid on the inventory. The highest bid wins.
What is RTB in marketing? RTB revolutionized digital marketing and advertising by significantly reducing the amount of manual work, especially for marketers.
In traditional digital advertising, they need to look for relevant publishers manually, get in touch with them, ask for their requirements, etc. RTB eliminates all these processes and allows advertisers to deliver their ads to the most relevant audiences within just a couple of seconds (or even faster).
As for publishers, RTB is their guarantee that they will receive the highest possible payment for their inventory.
This way, summarizing what does RTB stand for in marketing, all the parties involved can focus on their core tasks instead of doing everything manually. Yes, some settings are required, but establishing the connection between advertisers and publishers is automated.
A real time auction does not take place on its own — the RTB ecosystem involves several key components:
So, how does ads bidding work? Here is the RTB process explained in detail.
First, a user visits the publisher’s website, and the browser collects their data. Note that more and more programmatic advertising platforms are switching to contextual targeting instead of cookies, which is a benefit since cookies are steadily fading away.
Then, the publisher’s website creates a bid request to inform an SSP that the ad impression is available.
After this, a supply-side platform analyzes the request and sends it to a DSP, along with the available data and information regarding the bid floor.
Prior to the above-mentioned steps, advertisers set their campaign parameters via a DSP, which involves adding creatives, setting targeting and daily spend, etc. Then, after a DSP receives the request, the platform analyzes its relevance compared to the specified parameters.
The bid is sent to the ad exchange if the impression is relevant.
The RTB auction starts on the ad exchange. After the winning ad is identified, it is sent to the publisher and displayed to the user. The entire ad bidding process may seem complex, but it happens automatically within a very short time.
What is real time bidding, and what does it provide? RTB offers multiple benefits for all the parties involved, and this is not only about automation. Here are the advantages of using RTB technology for advertisers.
With RTB in marketing, marketers do not buy just an ad placement. Instead, they purchase an audience, meaning that their ads are delivered exactly to those users who are likely to get interested in their products or services.
Since real time bidding process allows precise targeting, the conversion rate and income will increase, as well as the ROI of the ads.
Launching ad campaigns via a real-time auction gives advertisers full control of their budget. They set the bids on their own, preventing unnecessary expenses. Besides, they can adjust their bids in real time according to the results of the auctions. In general, RTB is among the most cost-effective options in digital advertising, as marketers can spend their budgets on high-value impressions.
In traditional digital advertising, advertisers need to reach out to publishers and ask them for reports on their campaigns. This can be time-consuming, especially if a marketer cooperates with multiple publishers. Besides, tracking the performance in real time is impossible, and the reports an advertiser gets may be already irrelevant.
With programmatic, tracking and analysis get much easier. Advertisers can monitor the performance of their advertising campaigns on their own and get real-time reports. This way, their strategies get flexible, as they can adjust them in real time without waiting for publishers to provide them with some data.
Programmatic solutions often have rather strict requirements for publishers so marketers can be sure that their ads will not be displayed on websites with improper content. In addition, a lot of demand-side platforms offer extra features to help them ensure brand safety. For instance, this can be an opportunity to create a black- and whitelist of publishers.
One more threat to a brand may become fallacies in advertising, as despite some of them can be effective in the short run, but most of them tend to affect the brand’s credibility. For publishers, displaying such ads, it is important to evaluate the content they show, very properly.
Now, let’s take a look at the RTB benefits for website (and not only) owners.
Within a programmatic ecosystem, publishers can offer their inventory to a larger and more diverse pool of advertisers from all over the world. This can help increase both the fill rate and revenue.
For advertisers, this advantage works as well. Access to multiple publishers can help them enter new markets when needed.
RTB auctions do not simply select the highest bids for publishers — they choose among the ads that are relevant to the publishers’ audiences. For instance, if a website provides content on parenting topics, ads promoting laptops will not be displayed there. Instead, a publisher may get ads about toys and other products related to children.
Programmatic ensures relevant ads for website visitors, so their experience will not be interrupted, only complemented. Therefore, if the website offers quality content, they will keep visiting it and help a publisher monetize ad inventory.
While advertisers benefit from ad spend optimization, publishers monetize their inventory on their own terms. After determining the pricing, the RTB auction ensures they receive the highest possible revenue.
Besides, with RTB, publishers can monetize even the ad inventory that was not in demand before, maximizing their revenue.
Since publishers take part in RTB auctions via supply-side platforms, they get better control over their inventory. For instance, they may block certain ads or approve advertisers they prefer to cooperate with. Everything can be done from a single platform.
Talking about what is an RTB meaning in marketing, real time bidding is beneficial not only to advertisers and publishers but also to ad exchange owners. They can generate and maximize revenue from media trading on their platforms by applying different margin types.
Margins are an integral component of the RTB toolkit, and the profit is generated according to the markups applied to a DSP and every publisher. Here is an example of how this works:
There are several types of margins to consider. The first one is fixed margin, and its definition is pretty straightforward — it is a specific percentage added to the request’s bid floor.
Adaptive margin implies automatic calculation of the margin set according to the recent activity. The system considers the most successful net transactions that occurred within 24 hours.
As for the margin range, you define both minimum and maximum margins on your own. Then, the system checks the trading history and applies the most suitable margin from the specified range.
| Fixed Margin | Adaptive Margin | Margin Range | |
| Strengths | You are in full control of your earnings;- Selecting lower percentages can help you generate more deals. | The process of selecting the margin is automatic;- Advertising bid optimization, as well as driving revenue, gets easier. | The process is partially automatic, still providing you with some control; increased flexibility. |
| Weaknesses | It may be challenging to decide on the right percentage to ensure stable income;- You may miss a trading opportunity if your percentage is too high. | Lack of control. | If your minimum and maximum rates are too high, it can be challenging to generate revenue. |
Being an owner of an ad exchange may sometimes be challenging, especially if you are new to RTB auctions and programmatic advertising in general. Here are several mistakes that you should avoid:
To choose a margin type, you should, first of all, identify your current goals and needs, as well as the desired level of control. However, even if a fixed margin seems the most effective and brings good results, consider experimenting with the adaptive and range options to check how this can help you drive revenue.
When your margin is low, this can help you generate a higher number of deals. However, if it is too low, your income can be affected. And if the percentage is too high, the number of deals may decrease.
If you need to specify an exact percentage for a fixed margin or a range, start small and experiment with higher percentages.
When you need to set your margin manually, avoid assigning the same percentage for each of your SSP and DSP partners. For instance, for those DSPs that bid with high prices, you may want to set up a higher percentage. Experiment with different percentages to see how this can help you drive income.
To drive income effectively, you need to know what exactly is happening on your ad exchange. Therefore, continuously analyze RTB data to detect weaknesses and opportunities. This way, you will enhance your strategy.
Managing an ad exchange is the opportunity to generate income from media trading; however, building such a solution from scratch is not a must. In-house development or outsourcing usually takes a lot of time and investments. Instead, you can benefit from white-label options.
With SmartHub white-label solution, you will get your platform ready within 5-7 days and start trading straight away. And this is not the only benefit:
Using SmartHub is the way to maximize your revenue potential without diving into a time-consuming and complex development and maintenance process.
For example, Mobupps reached a 371% ROI growth within 6 months, while the increase in profit reached 207%. Apart from providing the company with a white-label solution, SmartHub’s team has also developed a couple of individual features to ensure the platform meets all the requirements.
Does SmartHub seem like a perfect solution to you? Then get in touch with us and get a free consultation!
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