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Real-time bidding is automated and thus is always a type of programmatic advertising, but not all programmatic advertising is real-time bidding.

Here’s a simple real-time bidding example. Let’s say a user is playing a game on their phone where ads appear between levels. In this short window of time, the ad exchange receives information about the page user through first-party cookies.

RTB auction is similar to the functioning of financial markets and their exchanges, except that ad impressions are being traded instead of stocks or fixed income securities.

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With RTB technology, brands can automatically place ads in relevant spaces without much effort. Using their DSPs, they set up their targeting requirements. The DSPs select suitable impressions on open auctions, bid on them, and purchase. Aside from being a huge time saver, RTB makes paid marketing campaigns more productive and cost-effective by letting advertisers to: Minimize the manual labor involved in online advertising and hire a smaller team. Get access to the biggest selection of digital ad spaces and formats on the web.

Due to the nature of RTB, there is a risk your ad may appear on a site with content you wouldn't want your brand associated with.

But even for experienced marketers, real-time bidding can be a very confusing concept. So let's break down what RTB is, how it works, and the pros and cons of using it — all while keeping it jargon-free.

RTB with its precise targeting has made online advertising more effective for both publishers and advertisers. It helps advertisers achieve better ROI website on their marketing budgets, whereas through monetization of remnant ad inventory it helped increase the revenues of publishers. These are just two of the many benefits of RTB for the online advertising ecosystem.

On the publisher side, RTB can help increase revenue by opening inventory to more buyers simultaneously. Publishers can also gain valuable insights into who is buying their inventory, which can help them determine what to charge for premium impressions to maximize revenue.

All the requests and responses are managed automatically by the RTB algorithms running under the hood of SSPs, DSPs, and ad exchanges. Those algorithms send and receive RTB data, complete transactions, and deliver the ads to be shown on ad spaces. The ‘common language’ that SSPs, DSPs, and RTB exchanges use to talk to each other is called RTB protocol. It’s a standard communication protocol that defines how bid requests and responses should be written and what data they should contain. RTB Doesn’t Equal Programmatic Advertising

Publisher Uses SSP: A publisher integrates their website or digital platform with a supply-side platform (SSP) to manage and offer their ad inventory to potential buyers in real-time.

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Supply Side These are the publishers. Within the app, publishers determine which ad formats and sizes to allow and then make these ad spaces available to bidders looking to have their ads placed.

It’s important to note that advertisers don’t pay for each individual impression. Instead, publishers charge based on eCPM, or the cost per thousand impressions.