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What is RTB? Complete Guide to Understanding Real-Time Bidding (Part I)

By now you’ve probably heard about real-time bidding (RTB), the technological breakthrough that’s made it possible for advertisers to use data to target individual users in real time. In recent years, RTB has exploded onto the digital ad scene and the fun is just getting started. According to eMarketer, we can expect double-digit increases in RTB spending each year through 2017.

But if you’ve heard of RTB and the programmatic marketing revolution it gave us, there’s a good chance you’ve also heard some inaccurate things. Because while programmatic marketing may no longer be breaking news, it’s still not very well understood. Let’s take a quick look at why RTB really matters, how it has evolved, and what you need to know to get started.

Why RTB is a Big Deal

If you don’t follow the ad world closely, you could be forgiven for wondering why there’s been so much hype around RTB. In this case, though, the hype is justified. RTB isn’t just another digital technology. It’s a fundamentally different way of thinking about advertising. Before RTB, digital advertisers were still operating in the same basic way as print advertisers. That is, they were buying up advertising real estate based on the audience a given publisher was expected to bring in. RTB was a breakthrough because it moved the focus from the whole audience to the individual. In other words, RTB moved advertising out of the realm of educated guesses and into the realm of a programmatic science.

Take, for example, the case of a premium coffee brand. Before RTB came along, the coffee brand’s best bet was to advertise on premium sites in the hope that the audience was close enough to its target audience. But when RTB came along, the coffee brand no longer had to waste money on guesses. It could target users who had read articles about coffee or coffee makers, or searched for coffee products online. It could show ads to users who visited its site without making a purchase or even to users who had searched for a competitor’s products.

The Evolution of RTB

As more and more data has become available in recent years, programmatic marketing is only growing more powerful. Now that same coffee maker can use more than just site visits and searches for targeting. An advanced form of retargeting, known as Programmatic Site Retargeting (PSR), allows advertisers to target based on everything from items placed in a shopping cart to the time of day. It’s now even possible to target based on a user’s offline purchases. And the ads themselves are no longer limited to display. Targeted video pre-rolls are growing more common by the day. Meanwhile, smart brands are using the lessons of RTB to build dynamic websites that change according to the user’s data profile.

Getting Started with RTB and Avoiding Mistakes

Now you know why RTB matters and how it has evolved. But that still leaves a big question: How do you actually get started? The first step is choosing a a DSP (Demand Side Platform). It’s the DSP that makes it possible for marketers to place their bids in an ad exchange. Particularly for marketers who are new to programmatic, choosing the right DSP can make all the difference. Simply put, you’re looking for a DSP that has all the third-party data you might need, access to all the exchanges, including Facebook’s increasingly important FBX, and tech and support teams that can make sure going programmatic never leaves you with a headache.

But that’s not all. You’re also looking for a DSP that knows how to avoid the common mistakes that still creep into many RTB campaigns. Common problems include:

Too Many Vendors

A lot of marketers discover the power of RTB and then quickly sign up a bunch of different DSPs. Having too many vendors is a bad strategy, even if it appears as though they’re all producing a pretty good ROI. Remember, your bidding against other parties in these exchanges. If you’ve got more than one vendor bidding on your behalf in an exchange, you’re driving up the price of your own impressions.

The Wrong Metrics

When it comes to measuring the success of your campaign, remember that click-throughs can’t be the only metric. In fact, click-throughs tend to reveal almost nothing about the impact of a display campaign. That’s why more and more marketers are turning to view-through attribution. View through looks at conversions from people who were exposed to your ad, rather than only those who clicked on it.

The Wrong Creative

All the data in the world can’t help you if you’re targeting users with a terrible creative. And, frankly, now that A/B testing is so easy, there’s no longer any excuse for running an ineffective creative. Nor is there any excuse for showing consumers the same creative over and over. To make sure your users never feel as though they’re being stalked, make sure your DSP understands the importance of frequency capping.

If you’re new to the world of programmatic marketing, this might sound like a lot of information to absorb, but have no fear. RTB might sit atop complicated technology, but the fundamental concept is fairly straight forward: When you’ve got data and a way to target specific individuals, you’re going to be a much more powerful marketer.