Introduction to Real-Time bidding (RTB)

What is RTB?
RTB is short for Real Time bidding. Before explaining what RTB is, let's take a look at some of the traditional purchase modes in the current display ad market:

CPM: cost per 1000 impressions-pay for each 1000 impressions
CPC: cost per click-pay by each click
Monthly flat: monthly advertising space
Daily flat: advertising space package day

Compared with the traditional purchase method above, RTB is bidding based on the impression of each advertisement.

What is market efficiency?

The preceding payment methods for traditional media purchases share one thing: CPM, CPC, monthly subscription, and day-of-Service (advertisers) the bidding price at the time of purchase is fixed (assuming that the advertiser and agent have set a price of 10 RMB/CPM and a budget of 10000 RMB, in general, regardless of the quality of the media, the advertising effect, the price offered by advertisers is always 10 RMB/CPM until the budget of 10000 RMB is spent ). It is because of the fixed price that we can see the lack of efficiency in the market. What foreigners call marketinefficiency.
In economics, defining a market efficiency has a basic model called market equilibrium. When the supply curve and the demand curve) the crossover is called the equilibrium point, also called the market equilibrium price.


It is recognized by the academic circles that both price and transaction volume are the most efficient at this intersection. If we move this theory to the display-type advertising market, the goods to be traded are the impression of each advertisement. The demand side is the advertiser and agent, and the supply side is the major media, the bid strategy that maximizes the benefits is to provide different bid prices in the context of the support for the Swiss auction mode based on the impression demand of each advertisement. Here, we will add that the so-called Swiss auction Vickrey auction is commonly known as the second priceauction, that is, the final price paid by the winner of the auction is the increase of about 10 percent on the second high price.

Demand and Supply in the display advertisement market

The difference between the display ad market and many other markets is that, in general, the market supply curve is the publisherinventory (perfectly inelastic), which is as follows:

That is to say, the resources that the media generally sells in the market are fixed. Therefore, in an efficiency market, the ecpm benefits and absolute benefits achieved by the media depend entirely on the number of advertisers (demand curve ). The media premium that people witness in China over the years is also due to an increase in demand.

Bidding-impression-basedbidding for each impression

RTB bids for each impression, because more and more buyers choose to control each click to control each impression. Each impression has different browsers, different ISPs, different frequencies, and different interest attributes. Therefore, each presentation is used as the purchase unit, with technical support, it becomes smooth.

How can I purchase RTB? Innovation brought about by the exhibition advertisement market ecosystem blueprint and RTB in the United States

Luma partners in the U.S. market is hailed as the investment institution that best understands the display advertising market. The following blueprint also comes from:

Now let's take a look at the simplified diagram of the RTB purchase mode:

In fact, in the U.S. online advertising market, innovations in many different models, such as SSP, DSP, and Ad Exchange, are brought about by purchase models such as RTB, in the RTB simplified diagram, we can see the different business models brought about by each link:

Publishers = Media
Bid requester = aD exchange, SSP, and yield MANAGER & Optimizer
User Data = Data Management Platform dmp
Bid responder = demand side platform DSP
Advertisers = advertisers and buyers