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What is RTB?

RTB (real-time bidding) is a modern method of buying online ad space in an auction model. The method is based on specialist data-exchange platforms, which aggregate the offers from publishers and advertisers, to conduct dynamic auctions of online advertising space in real time. The RTB model adopted by Adfocus uses automated optimisation algorithms that help to fit a customer profile to an advertiser’s offer and select the potentially most relevant ad displays. Since the algorithms are geared towards optimising spending, the system automatically minimises display costs. While boosting advertising performance, the system also assists marketers in how to run campaigns.

The method of buying display space in real time has introduced a number of changes, compared to previous models. First of all, it is a novel way of understanding what advertising space is. In the RTB model, you buy displays generated for users who meet criteria defined by an advertiser and not ads displayed on some particular websites. The centre of gravity has been shifted from buying advertising space over to a user who visits it.

RTB technology has opened up a host of new possibilities for advertisers, to boost the performance of online advertising:

  • the effectiveness of reach: optimisation algorithms have a two-tier approach. On the one hand, they allow to engage the most desirable users, while on the other, the model has been programmed to cut costs. Owing to this, advertisers can serve ads only to the most relevant users and pay less than they would in the former models;
  • personalised message: because advertisers bid on impressions displayed to appropriate users, ads can be made more relevant to the target group;
  • conversion-oriented: automated optimisation and precise segmentation drive the chances of conversion or purchase thus making sense of performance-based pricing models, such as CPA, CPS and CPL;
  • effective solutions for e-commerce: the use of new technologies, personalised retargeting in particular, improves the engagement of users who visit online shops, which indirectly translates into increased sales volumes.
RTB model
RTB model. Source: IAB presentation, The Evolution of Online Display Advertising.

 

RTB model has been successfully used for several years now on Western markets both in branding campaigns and performance marketing. The share of RTB in online spending has been on a steady increase and so is the number of marketers who appreciate the potential of the model. The forecasts are more than optimistic. The IDC report from October, 2012, predicts that by 2016 the global spending on RTB will have reached 13.9 billion US dollars. Compared with 1.4 billion dollars in 2011, it yields an annual growth rate of 59.2%.

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