Concept of Real-time Bidding on the Internet

What if we say that you are nothing but an inventory for the digital world? You are an eyeball, or impression in technical terms. Have you ever wondered why a particular brand’s ad pops up every now and then and is everywhere, like on your social media platform or when you’re browsing different websites? There is a lot of work being done for every search that you make, and the speed of all this work is beyond general human comprehension. Every time you search for a particular keyword, there are companies fighting among themselves in an auction to showcase their advertisement to you, and the person who is ready to pay the most is the advertisement shown to you.

In this article, we'll look at the concept of real-time bidding, how it works, and what benefits it has for both consumers and businesses.

Concept of Real-time Bidding

Companies have realized that the only thing that sells in the market is what is visible to customers. Hence, the digital world came up with the concept of real-time bidding. So every search a user conducts has specific keywords associated with it, and the relevant companies for those keywords are bidding on you to display their advertisement. You are now an impression or an eyeball for them, and you have your own worth. Your worth is determined by your past shopping history, the time that you spend on each website, the content that you read, your demographic information, the things that are in your cart, and others. Companies would want to bid for users that have a high chance of buying the product and would want to pass on the not-so-worthy consumers or would bid less for the inventory that is not that reliable.

How Does Real-time Bidding Operate in the Backend?

This is something that happens in milliseconds, and if you knew the amount of data that browsing websites or data brokers use, you would be astonished. So here is a detailed analysis for your understanding −

  • The web crawler program installed on every browsing site collects information about you and your search history. The information is generally how much time you have spent on a particular page, your shipping cart, the number of orders you have made, your personal information, and others. It even collects information regarding your geographical location, demographics, and habits. lifestyles, personalities, and others through your social media platforms like Facebook likes, Twitter retweets, Instagram comments, and others.

  • The companies sometimes even collect data from secondary big data institutes, commercial services, or government records.

  • Data is also collected by unblocked channels like YouTube and BuzzFeed without you knowing about it, or when you double-click on certain links. The social media platforms have also joined hands with the blocked sites to provide them with data.

  • This solid data is regularly updated by the data brokers on a monthly, annual, weekly, or real-time basis.

  • The brokers sometimes also do predictive analysis regarding which page the consumer might land on next. What attributes or text messages can persuade the user to make the purchase decision? What factors make them revisit the page or click on specific ads and such?

  • With all of this information, your scoring has been done as an impression or an eyeball, and it is in accordance with the site. Every time you come online, the hustle starts.

  • The part that makes the decision regarding which company to push forward to is known as the "brain," and the "pipe" announces every time an impression comes online.

So this is a crisp description of how and where the data is collected by the data brokers and the web crawlers, how this data is used to perform predictive analysis and give every user a rating, and then it is used by the pipe and brain to push forward the highest-bid company and their ads.

The Various Advantages of Real-time Bidding for Both Consumers and Companies

  • Targeting the right consumer set − real-time bidding helps companies target the most potential consumers. The conversion ratio for every ad being shown is high, and all of this happens because of the AI and the vast amount of data that it uses to make these decisions.

  • Enhances the consumer search experience − It helps the consumer get the most relevant product details and hence saves their time and effort in searching between different brands, comparing them, and making the purchase decision.

  • Shortens the decision-making process − It assists in shortening the purchase decision-making process by displaying relevant products based on data and predictive analysis.

  • Interlinks all the sites for ads − Since all of them are interlinked, it also helps the company showcase the ad again and again at different times and on different websites.

  • Wider target audience − It helps the companies reach a wider segment of the consumer base, irrespective of their demographics, psychographics, and other differences.

We see the workings of real-time bidding every time we are online or on our phones. For example, if today I am playing a game on my mobile phone and I see a popup or an advertisement blocking my gaming experience, Well, all the companies have bid on me, and the highest-paying company was able to showcase their ad to me in milliseconds. This happens on social media platforms (Twitter, Instagram, Facebook, Hike, and others), OTT platforms, browsing websites, music applications, and others.

The concept and process of real-time bidding may seem too technical and complicated, but it helps the company because all these calculations are to be done by AI. Real-time bidding helps the company secure a potential set of impressions or inventory that they think has a higher chance of conversion and then targets them on different websites or platforms at different times. It benefits the company by increasing brand awareness and conversion rates.

Updated on: 17-Mar-2023


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