What is Real-Time Bidding (RTB)?
The automated process of buying and selling ad inventory through instant auctions that occur while a webpage or app loads.
Real-Time Bidding (RTB) is a programmatic advertising process where ad inventory is bought and sold through automated auctions that happen in real-time, typically within 100 milliseconds of a user visiting a webpage or opening an app. When a user loads a page, an auction occurs where multiple advertisers bid for the opportunity to show their ad to that specific user.
Why It Matters
RTB revolutionizes digital advertising by making it more efficient, targeted, and cost-effective. Advertisers can bid on individual impressions based on user data, ensuring ads reach the most relevant audience. Publishers benefit from increased competition for their inventory, often resulting in higher eCPMs compared to traditional direct sales or fixed-rate networks.
How to Calculate
RTB metrics include: Win Rate = (Won Bids ÷ Total Bids) × 100%, Bid Response Rate = (Bid Responses ÷ Bid Requests) × 100%, Average CPM = Total Spend ÷ (Won Impressions ÷ 1000), and QPS (Queries Per Second) for measuring platform capacity.
Industry Benchmarks
| Category | Average | Good Performance |
|---|---|---|
| Mobile RTB Win Rate | 1% - 5% | 8%+ |
| Desktop RTB Win Rate | 2% - 8% | 12%+ |
| Bid Response Time | 50 - 100ms | Under 50ms |
Best Practices
Optimize bid algorithms based on historical performance data. Use first-party and third-party data for better targeting precision. Implement frequency capping to avoid oversaturating users. Monitor latency to ensure bid responses arrive within auction timeframes. Set appropriate bid floors to maintain inventory value.
Examples
An e-commerce app uses RTB to bid higher for users who have previously made purchases, achieving 40% higher conversion rates. A gaming advertiser implements dynamic bidding that automatically increases bids for high-LTV user segments during peak gaming hours.
Notes
RTB processes billions of bid requests daily with response times under 100ms. Privacy regulations like GDPR and iOS 14.5 have impacted RTB by limiting user data availability. Header bidding and server-to-server connections are enhancing RTB efficiency and reducing latency issues.