Real-Time Bidding (RTB): A Comprehensive Guide to Profit

Original author: Brent Dunn
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Trading in real-time (Real Time Bidding) are also known by the acronym RTB. You must have heard this term more than once while working in the field of marketing (unless, of course, you live in a cave).

What is RTB?

The platform for trading in real time allows you to rationally use an ad slot (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 bid for each impression is constantly changing depending on various factors, such as: placement, category, device, gender, age of the user, etc.

All this looks very cool, however, if you look at the advertiser, a similar system puts each participant in equal conditions.

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

As a result of this widespread misconception, RTB exchanges look like a very unstable tool for an advertiser. In the conditions of fierce competition, the latter constantly inflate prices per click, which leads to the real " race to the bottom " in the world of online advertising.

Bidding in real time leads to a “race to the bottom” with the participation of buyers due to the constant increase in cost per click.

But there is good news ...

We can reduce competition if we understand the principles of operation of RTB exchanges.

How does this really work?

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

The ad server is responsible for computing: which ad 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 impression is removed from the buyer's account.

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

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

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

However ...

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

Let's say you bid 15 rubles per click, and your average CTR is 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, your eCPM 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 drops to 0.5%, then you will lose at an auction with eCPM of 75 rubles.

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 classify the campaign as unsuccessful and will rush into battle again.

Frankly, as soon as your campaign reaches this point, it will not come to life on most RTB platforms. After the eCPM indicator drops and you begin to lose your position in the ranking - write is gone. It won't be any better.

The reason for this drop is very simple:

If your CTR fell even when your ad was showing first, just imagine what will happen to clickability if you are in the 2nd, 3rd, 4th positions (hint: nothing good ).

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

A poor clickthrough rate kills your ads on RTB networks.

Multi-armed bandit

We are already almost there: you can understand the reason why I am ready to share information.
When you create and set up your first advertising campaign on an RTB network, you have no way to find out your current eCPM.

But there is one option:

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

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

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

In order not to go into technical details, let's say that multi-armed bandits send most of the "twitches", or (in our case) all traffic to the best place at the moment. This process is known as resource utilization — sending most of the 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 your ad position.

Decrease in CTR and increase in traffic

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

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

A. 90%
B. 5%
B. 5%

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

A. 90%
B. 9%
B. 1%

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

This seems strange, but:

The ad server has no idea, is it the same creative or different. Simply put, the more creatives you place in your campaign, the greater the likelihood 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 may get a higher CTR than the other, even though they are exactly the same. It may even happen that one of the creatives with a higher clickthrough rate is in the advertising chain, as a result of which your campaign will shoot immediately to the first position, even if the CPC was significantly lower than required.

The more ads you have in your campaign, the more likely it is to get advertising traffic.

Bid strategy

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

To start:

Treat all the information that you receive from the manager with a degree of skepticism. They have such a job - to sell advertising space at the highest possible price.


Never build your entire bidding strategy on breaking the current maximum price. This maximum bid can be set for any one placement or a specific type of device. And, perhaps, she was appointed by someone who does not care about the effectiveness of his advertising.

Trying to run an unoptimized campaign with the same CPC at the maximum rate is usually tantamount to a death sentence for a bank account tied to your advertiser account.

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

It is also important to share all advertising, which will allow you to increase the likelihood of being selected as a winning advertiser.

Let's say your daily budget for advertising is 100,000 rubles, and you would like to buy Russian mobile traffic. Then, instead of creating one advertising 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 another 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 launch a campaign with the lowest possible bid. This allows you to find out how much traffic I can get at this price, and also analyze the quality of incoming traffic. If for some reason I don’t get the necessary traffic, only then I raise the bid.

Never start with maximum CPC, gradually lowering the price.

Record your CTR and CPC immediately after you started 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 bet, let it work further. Create a copy of the campaign, if possible.

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

Assigning a maximum CPC bid to RTB networks is usually a losing strategy.

Optimization strategy

One of the great features of RTB exchanges is the ability to carefully select an object for a bet.

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

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

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

The best solution for successfully optimizing your campaign on an RTB network is to clone ads.


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

Now every ad server, of course, has its own nuances.

Also, each seller eventually develops its own strategy for working on the exchange.

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

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