Real Time Trading (RTB): A Comprehensive Guide for Profit

Real Time Bidding is also known by the abbreviation RTB. You must have heard this term more than once while working in marketing (unless, of course, you live in a cave).

What is RTB

The real-time trading platform allows you to efficiently use an advertising space (slot) by buying and selling it. RTB uses certain algorithms to help the seller get the maximum amount per impression and the advertiser to provide relevant traffic at the best price. The rate for each impression is constantly changing depending on various factors, such as: location, category, device, gender, age of the user, etc.
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All this looks very cool, however, if viewed from the side of the advertiser, then such a system puts each participant on an equal footing.

In an effort to succeed on the RTB exchanges, most buyers believe that the only way to get more traffic is to increase the cost per click (CPC). Yes, this is important, but at the same time CPC is just one of the factors for a successful “game” on the exchange.

As a result of this common misconception, RTB exchanges look like a very unstable tool for advertisers. The latter, in conditions of tough competition, constantly inflate CPCs, which leads to the most genuine “ bottom-up race ” in the world of online advertising.

Real-time bidding leads to a “race to the bottom” with the participation of buyers due to the constant increase in CPC.

But there is good news ...

We can reduce competition if we understand how RTB exchanges work.

How does it really work?

Whatever source of paid traffic you work with, the backend is provided by an ad server.

The ad server is responsible for computing: which ads will be shown for some milliseconds before the page loads. As soon as the “winner” is determined, its advertising is shown on the seller’s website or in the application, and the amount equal to the cost of the display is removed from the buyer's account.

Here I would like to tell you in more detail how the ad server calculates all the indicators based only on the price of the show.

You will probably ask: how does this work if I pay per click?

Even if you pay per click, most ad servers rate you based on eCPM (cost per 1000 impressions). For example, if the advertiser set 100 rubles per thousand impressions, then his eCPM = 100 rubles.

But…

With cost-per-click (CPC) rates becoming more confusing.

Let's say you bet 15 rubles per click, and you have an average CTR of 1%. This means that out of 1000 impressions, you will receive an average of 10 clicks at a price of 15 rubles per click. As a result, eCPM you will be 150 rubles. Here is the formula:

1000 * CTR * CPC = eCPM
In our case it is:
1000 * 0.01 * 15 = 150 rubles

Thus, in our example, all other things being equal, you would have won the auction at a rate of 15 rubles per click.

But there is one caveat: if the CTR falls to 0.5%, then you lose at an auction with 75 rubles from the eCPM.

Most buyers will simply raise their bid. Others will try to add new creatives (ad creative) or packages for advertising design. Another part of the advertisers will attribute the campaign to unsuccessful and again rush into battle.

Frankly, once your campaign reaches this point, it will not come to life on most RTB platforms. After the eCPM index falls and you begin to lose your position in the rating - write to go. It won't be any better.

The reason for this fall is very simple:

If your CTR fell even when your advertisement was shown first, just imagine what happens with clickability if you are in 2nd, 3rd, 4th positions ( hint: nothing good ).

Therefore, a vicious circle is obtained, and gradually your campaign will order a long life.

Bad CTR kills your advertising on RTB networks.

Multi-armed bandit

We are practically near the goal: here you can understand the reason why I am willing to share information.
When you create and set up your first advertising campaign in the RTB network, you do not have the opportunity to find out your current eCPM.

But there is one option:

Each ad server has its own algorithm, different from others. But all the servers do one thing fine.

You need to determine your eCPM score as quickly as possible in order to understand how your campaign will show itself compared to others: will it work better or worse?

Servers can do this using a multi-armed bandit algorithm.

In order not to go into technical details, let's say that multi-armed gangsters send most of the "twitching by the handle", or (in our case) all traffic to the best place at the moment. This process is known as resource utilization — sending most traffic to the current winner. There is also a research process when a certain amount of traffic is used to search for new (potential) winners.

Multi-armed bandits are used to determine your eCPM and ultimately position to display advertising.

Reduced CTR and increased traffic

As an example, consider a situation where 90% of traffic is sent to the current winner for advertising space, while 10% is used for research.

Suppose we have three advertisers: A, B, B. And here is the current winner, and each has one creative (advertising package). Under these conditions, the resulting traffic distribution is as follows:

A. 90%
B. 5%
AT 5%

This time A remains the winner, but now advertiser B has 9 advertising creatives, and B has only 1. Then the situation looks like this:

A. 90%
B. 9%
IN 1%

The examples above are relevant for most RTB platforms, as they calculate the current eCPM based on individual ad packages.

It seems strange, but:

The ad server has no idea, the same is creative or different. Simply put, the more creatives you place in your campaign, the more likely that your ad will be selected in the research phase.

Do you know what is the most interesting here?

Here everything happens by chance! One of your ads can get a higher CTR than the other, despite the fact that they are exactly the same. It may even happen that one of the creatives that received a higher clickthrough rate is in the advertising chain, as a result of which your campaign will shoot to the first position immediately, even if the CPC was significantly lower than required.

The more ads you have in a campaign, the higher the likelihood of getting advertising traffic.

Bidding strategy

I am constantly being asked the following question: “Brent, my advertising manager told me that the top bar of the CPC has risen to X dollars, what to do?”.

To start:

Treat all information you receive from a manager with skepticism. Their job is to sell advertising space at the highest possible price.

Then:

Never build your entire betting strategy on how to beat the current maximum price. This maximum bid can be set for a single placement or a specific type of device. And, perhaps, it was appointed by the one who does not care about the effectiveness of its advertising.

Attempting to launch a non-optimized campaign with the same CPC at the maximum rate is usually equivalent to a death sentence for a bank account tied to your advertiser's account.

So, we have already learned: the more advertising, the higher the chance of success.

It is also important to split all the ads, which will allow you to increase the likelihood of being selected as the winning advertiser

Let's say your daily advertising budget is 100,000 rubles, and you would like to buy Russian mobile traffic. Then, instead of creating one ad campaign with a daily budget of 100,000 rubles and targeting Russia, set up several campaigns as follows:

RU - iPhone - 300 × 250: 25 000 rubles. @ 5 rubles CPC
RU - iPhone - 300 × 50: 25 000 rubles. @ 5 rubles CPC
RU - Android - 300 × 250: 25 000 rubles. @ 5 rubles CPC
RU - Android - 300 × 50: 25 000 rubles. @ 5 rubles CPC

Each campaign contains the same set of banners (10 pieces).

Want to try a different ad pack of the same size? In this case, the campaign should be divided as follows:

RU - iPhone - 300 × 250-1: 25 000 rubles. @ 5 rubles CPC
RU - iPhone - 300 × 250-2: 25 000 rubles. @ 5 rubles CPC

I personally prefer to run the campaign with the lowest possible rate. This allows you to know how much traffic I can get at this price, as well as analyze the quality of incoming traffic. If for some reason I do not receive the necessary traffic, only then I raise the rate.

Never start with a maximum CPC, gradually reducing the price.

Record your CTR and CPC figures immediately after you start receiving traffic. After some time, your advertising campaign will subside due to " banner blindness " among users. As soon as this happens, do not rush to raise the rate, let it work further. Create a copy of the campaign, if possible.

The new campaign will go through the same phase of research, and you will have a chance to get traffic again.

Setting a maximum CPC bid on RTB networks is usually a losing strategy.

Optimization strategy

One of the remarkable features of RTB-exchanges is the possibility of a meticulous choice of an object for a bet.

That is why ... most advertisers fail miserably in their campaigns.

If you find that a separate KPI ( key performance indicator ) works effectively, then it would be logical to remove all other indicators. In theory, optimizing an active campaign should be beneficial. However, there is a possibility that the changes will affect eCPM, which, in turn, will lead to a reduction in traffic ... or even worse: a drastic change in your places in the advertising server rating, which will entail a change in the display of advertising in various placements and etc.

Thus, if you find a certain efficient KPI, make a copy of the campaign and make the necessary changes in the copied version. This will allow you to understand how the changes have affected the work of the campaign. If you notice a positive effect, then you can pause the old ad. If the new version of the campaign was a fiasco, you can continue to collect information from the original.

The best solution to successfully optimize a campaign in an RTB network is ad cloning.

ACCORDING TO :

• The more ads, the more chances to get high eCPM.
• Divide all campaigns to increase your chances of winning an auction.
• Do not change the campaign settings after launch.

Now each advertising server, of course, has its own nuances.

Also, each seller eventually develops its own strategy of work on the exchange.

These are my rules that I follow when working with most RTB channels, and which I consider to be successful.