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Knowledgebase IAB What is Real-Time Bidding (RTB)?


What is Real-Time Bidding (RTB)?

Last Updated: November 23, 2020

Real-Time Bidding (RTB) is the buying and selling of online advertisement impressions through real-time auctions by supply-side platforms (SSP) and demand-side platforms (DSP).  The SSP are the publishers offering the ad space, and the DSP are the advertisers looking to purchase ad space.  When a user visits a website and an ad impression loads, that impression is passed to an ad exchange. The impression is auctioned off to the highest bidder. The highest bidder’s ad loads on the webpage in milliseconds.

Real-Time Bidding allows advertisers to set target filters and parameters to invest in the impressions that matter most to them. They can then analyze which impressions are the most valuable to them so that they can purchase their ads all in one place.

Not only does real-time bidding allow advertisers to place ads on a myriad of websites, but it also minimizes the time it takes to coordinate with a website publisher to select ad placements and pricing. The automation behind real-time bidding allows advertisers to make smart, data-driven decisions in real-time.

Privacy in Real-Time Bidding Advertising

The Information Commissioner’s Office (ICO) in the UK published a report about the use of personal data in RTB advertising. There are some key privacy challenges that arise from the exchange of personal information, but the ICO has not provided any legal guidance due to the complex nature of the online advertising space. The ICO provides a few issues for organizations in AdTech to take into consideration to re-evaluate and improve their standards.

  1. Gather information in a lawful way. Most importantly, only process personal data that you have a “lawful basis” for. Because subsequent processing of personal data that isn’t in a “special category” does not require consent in GDPR, organizations usually use the “legitimate interest” legal basis to process the data gathered during RTB. However, the ICO suggests that organizations don’t use this as a legal basis and instead ensure that they’re obtaining consent for the data that they’re gathering.
  2. Provide detailed, transparent notice about what data is collected in RTB. While not even the organization will always know exactly who will get access to the personal data of the users during RTB, they should still look for ways to be as transparent as possible about what data is gathered as well as a notice that the data could be shared with third-party companies.

How does RTB Advertising work?

When an ad impression loads in a web browser, the user on the page is passed to an ad exchange. The user impression is then auctioned off to an advertiser that will willing to pay for the highest bid. The winner of the highest bidder’s ad then loads onto the webpage in a matter of milliseconds. Advertisers typically use demand-side platforms to help them decide which ad impressions to purchase and how much to bid on them based on a variety of factors.

real-time bidding

Is RTB the Same as Programmatic Advertising?

While these two terms are used interchangeably, they are not the same. Real-time Bidding is a form of programmatic buying.

The programmatic ecosystem encompasses the means of RTB, but it also includes guaranteed direct buying, private exchange buying, and preferred deals. Programmatic includes all marketing campaigns that are involved in an offer which is supported by a supply-side platform and a demand by a demand-side platform. It simplifies the process of transactions by connecting the SSP and DSP entities.

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