Advantages and Challenges of Real-Time Bidding in Online Advertising

By Marianne Chrisos - Last Updated on January 6, 2020
Advantages and Challenges of Real-Time Bidding in Online Advertising

Much of digital advertising as we know it is driven by the power of programmatic ad buying. State of Digital describes it by saying, “programmatic marketing is a way to target what types of audience you wish to show your advertising to. Which can encompass segments across demographics such as age, gender, social standing, to geographic in certain areas of the country? As with Paid Search you can also limit the ads to times of day and frequency. You can decide which publishers you want your ads to show on. This way you are only paying for highly effective ads delivered to the right people at the right time…No longer a buyer agrees to run a certain number of ads with a publisher and is locked into the contract. Programmatic media buying, marketing, and advertising is the algorithmic purchase and sale of advertising space in real-time. During this process, the software is used to automate the buying, placement, and optimization of media inventory via a bidding system. Automating the process means that it can be done in real-time and doesn’t rely on the human touch, manual insertions, and manual trading.”

Marketers have found this to be effective in two ways. The first is that it helps target your ideal audience quickly and accurately so that your messaging can be more impactful. The automated nature of the ad buys- and the ability for them to be optimized based on your parameters – means that ad buyers don’t have to struggle so much to place their ads and optimize them throughout their run to maximize their effectiveness and maximize their spending.

As with anything, though, programmatic buying, particularly the concept of real-time bidding, has positives and negative aspects depending on your business goals and other factors

Real-time bidding, or RTB, is as the name suggest, related to the process of bidding for programmatic ad space. Sellers of the ad space make it available for buyers and publishers who bid on it. Mobile Marketer notes, “RTB is the programmatic trading of mobile ads based on algorithms. By bidding for inventory in real-time, advertisers can access impression-level attributes very specific to their audience and are likely to pay less because they eliminate most of the friction from the sales process…Real-time bidding promises to impact the way in which ad inventory is traded and can significantly boost performance, according to a new report from Adfonic. However, it still comes with some challenges for marketers and its future role is by no means guaranteed”

Advantages of Real-Time Bidding

#Improved performance

With RTB, advertisers can use one dashboard interface to control their campaign, as opposed to communicating with a number of vendors or publishers. This means performance can be observed in real-time, giving advertisers more agility.

#Better targeting

Real-time bidding offers advertisers the ability to truly segment to the audiences most likely to be interested in their product or service. Retargeting involves displaying ads to those who have displayed some interest in the company or product already, either through an online search or website visit. RTB does the rest by decoding what websites the target audience spends their time on and when and enables ads to be retargeted accordingly.

#Reduced cost

RTB lets you spend smarter. Each impression is targeted so that you’re not buying ad space in bulk and wasting those impressions and budgetary dollars on unnecessary and uninterested market segments. It also means that you can enforce a frequency cap on your ad inventory and limit the number of time each viewer will see your ad, which is a smart way to optimize ad spend and also protect the integrity of your brand, as constant ads and other forms of customer communication can become a customer deterrent.

Challenges of Real-Time Bidding

1. Targeting on mobile

“Mobile first” is the rallying cry of marketers everywhere, and mobile is where most of the cons of real-time bidding occur. Desktop or computers connected to a hardwired network have cookies to rely on for tracking user history and targeting across the web. On mobile, it’s harder to track certain aspects of online behavior or verify a unique user ID, both of which are key to successful programmatic ad delivery.

2. Banner ads on mobile

Some marketers are concerned about the future of banner ads on mobile devices. Will they play a significant role in the future? This is an important question to ask, as RTB primarily handles display and banner ads. There is a feeling among marketing experts that as mobile advertising becomes more advanced, it will evolve into more interactive marketing and banner ads will be phased out, meaning RTB will be an ineffective way to handle their mobile marketing needs.

Overall, real-time bidding offers advertisers the ability to gain more relevant impressions and customer engagement. Businesses with a strong display advertising presence find it to be an overall useful and effective tool in their marketing tool belt.

Marianne Chrisos | Born in Salem, Massachusetts, growing up outside of Chicago, Illinois, and currently living near Dallas, Texas, Marianne is a content writer at a company near Dallas and contributing writer around the internet. She earned her master's degree in Writing and Publishing from DePaul University in Chicago and has worked in publishing, advertising, digital marketing, and content strategy.

Marianne Chrisos | Born in Salem, Massachusetts, growing up outside of Chicago, Illinois, and currently living near Dallas, Texas, Marianne is a content writer at a c...

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