For those of you unfamiliar with RTB, real-time bidding was developed for cost-per mille (CPM) and cost-per acquisition (CPA) campaigns. While the bulk of mobile advertisers are performance advertisers who buy downloads, brands are catching the mobile fever thanks to the realization that Internet-connected users are spending more time on mobile devices.

But if you’re familiar with brands, you’ll know that it’s not always an app that they’re looking to promote in the market. Instead, brands seek to raise their brand awareness. In mobile ad speak, this means promoting brand campaigns on a CPM or CPA basis. And if you’re wondering, it’s the financial brands like credit card companies who want to pay per new registration and e-commerce sites that pay for every item added to the shop’s e-cart that might run a CPA campaign.

More importantly because CPM advertisers aren’t interested in downloads, not to mention CPM campaigns are typically far more costly than a CPI or even CPC campaign, RTB gives more power to those brands looking to get a bigger bang for their buck.

Traditional mobile advertising requires advertisers to buy traffic in bulk with limited targeting capabilities – like buying users from USA, using Android Jellybean, and on a tablet. Brands on the other hand look beyond acquiring a general demographic of users and understand that each type of user holds a different value to the advertiser.

This is where mobile RTB comes in to play. Mobile RTB ensures the quality of the traffic because of precise targeting capabilities, network efficiency (ensuring ads are delivered to devices), and the automated bidding on traffic (making the buying of traffic much more efficient and faster for the advertiser).

Understanding the mechanics of real-time bidding

To touch on the technicalities of RTB, the term itself is a general all-encompassing jargon for what’s actually comprised of multiple parts. Confusing I know, but bear with me.

To define RTB the technology encompasses multiple products: an ad exchange, supply-side platform (SSP), and demand-side platform (DSP). Although typically mobile RTB networks will offer one or two of the above products, whether it’s a SSP and ad exchange, DSP and ad exchange, or any of the above individually.

Defining the RTB products

For the sake of clarity, I’ve defined SSP, Ad exchange, and DSP for you:

Supply-side platform (SSP) – network of app publishers (those who display ads in their app in exchange for revenue)

Ad exchange – The technology (the brains) that facilitate the bidding (from DSP) and selling (from SSP) of mobile ads. This is where the platform decides which ad, when, where, and how to display the mobile ad.

Demand-Side Platform (DSP) – The DSP interfaces with agencies or advertisers, stores user targeting parameters set by these advertisers, and on behalf of the advertisers the DSP automates the traffic buying process.

While mobile ad networks won’t offer all three products, due to the complexity of it all, most will work with third-party RTB networks or utilize their existing network traffic and advertisers to fill in the gaps. This might mean that a DSP and ad exchange RTB network will integrate with a SSP to tap an existing third-party source of traffic; or this DSP/ad exchange might also tap into its SDK traffic to deliver brand advertiser’s ads.

An example of how mobile RTB works

A typical transaction begins with a user visiting a website. This triggers a bid request that can include various pieces of data such as the user’s demographic information, browsing history, location, and the page being loaded. The request goes from the publisher to an ad exchange, which submits it and the accompanying data to multiple advertisers who automatically submit bids in real time to place their ads. Advertisers bid on each ad impression as it is served. The impression goes to the highest bidder and their ad is served on the page. This process is repeated for every ad slot on the page. Real time bidding transactions typically happen within 100 milliseconds from the moment the ad exchange received the request.

The bidding happens autonomously and advertisers set maximum bids and budgets for an advertising campaign. The criteria for bidding on particular types of consumers can be very complex, taking into account everything from very detailed behavioral profiles to conversion data.