Real-Time Bidding (RTB)
Real-time bidding (RTB) is the process by which individual ad impressions are auctioned and sold in the milliseconds it takes a web page or app to load, with buyers bidding programmatically on each opportunity one impression at a time.
Key takeaways
- RTB auctions a single impression at a time, in roughly 100 milliseconds, while the page or app loads.
- It runs on the IAB Tech Lab's OpenRTB protocol, which standardizes the bid request and bid response.
- Most RTB today uses first-price auctions, where the winner pays exactly what it bid.
- RTB is the mechanism; SSPs, DSPs and exchanges are the platforms that operate it.
How real-time bidding works
When a user opens a page or app, the publisher's supply-side platform sends a bid request describing the impression "” the placement, format, device, geo and any permitted audience signals "” to an ad exchange. The exchange broadcasts that request to connected demand-side platforms, each of which decides in real time whether to bid and how much. The highest bid wins, the winning creative is returned, and the ad renders. The entire round trip typically completes in under 100 milliseconds.
First-price vs second-price auctions
RTB historically ran second-price auctions, where the winner paid one cent above the runner-up. Since the industry's move to header bidding and unified auctions around 2017"“2019, first-price auctions became the norm: the winner pays exactly what it bid. This shift made bid shading "” algorithmically reducing a bid to avoid overpaying "” a standard DSP capability.
OpenRTB and the bid request
OpenRTB, maintained by the IAB Tech Lab, is the common language of RTB. It defines the JSON structure of the bid request and response so any DSP can transact with any SSP. Key objects include the impression, the site or app, the device, the user, and "” increasingly "” supply chain and identity objects that improve transparency and addressability.
| Auction speed | Typically under 100 milliseconds, end to end |
|---|---|
| Standard protocol | OpenRTB (IAB Tech Lab) |
| Dominant pricing | First-price auction |
| Granularity | One impression at a time |
Frequently asked questions
What is the difference between RTB and programmatic advertising?
Programmatic is the broad category of automated ad buying; RTB is one method within it. Programmatic also includes non-auction deals such as programmatic guaranteed and preferred deals that don't run a live auction.
How fast is a real-time bidding auction?
An RTB auction typically resolves in under 100 milliseconds, fast enough to complete before the page or app finishes loading.
Is RTB the same as an ad exchange?
No. RTB is the auction process; the ad exchange is the marketplace that runs it, connecting supply-side and demand-side platforms.
Does RTB use first-price or second-price auctions?
Most RTB inventory now clears in first-price auctions, where the winning buyer pays its actual bid. Second-price auctions were standard before the header-bidding era.