Real-Time Bidding Explained: What It Means and How This Form of Programmatic Buying Will Enhance Your App Install Campaign Performance

Mapendo Team
May 27, 2022
Real-Time Bidding Explained: What It Means and How This Form of Programmatic Buying Will Enhance Your App Install Campaign Performance

Real-time bidding (RTB) is a word that is being used more and more, but not everyone knows what it really means. It refers to the world of digital advertising and the purchase of traffic on the internet and it is:

“a means by which advertising inventory is bought and sold on a per-impression basis, via instantaneous programmatic auction, similar to financial markets” -(From Wikipedia)

It is used for app install campaigns, web campaigns and other types of digital advertising.

Why is it being talked about more and more? Because it is getting bigger and bigger, real-time bidding’s share of advertising is 3 times bigger than it used to be 3 years ago. It is a big deal and advertisers need to know what it is and how it works because it is becoming more and more popular and essential for a programmatic app campaign.

Media Buying, Programmatic Media Buying and Real-Time Bidding (RTB)

One important thing to specify is the difference between RTB and programmatic advertising because the two terms are often used interchangeably, but they are not the same thing.

Let’s start from the beginning saying that Media Buying is the process of buying advertising spaces. Then there is Programmatic Media Buying or advertising which is the automatic process of buying advertising spaces on sites & apps that uses data insights and algorithms in order to buy traffic and generate sales for a given online service. Programmatic media buying includes Real-time bidding but also guaranteed direct buying, preferred bids and private exchange buying.

Real-time bidding (RTB) is a form of programmatic media buying that refers to the practice of buying and selling ads in real time on a per impression basis in an instant auction. It is used in a programmatic app campaign.

In short, Real-time bidding is a subcategory of programmatic media buying that is programmatic because the buying process happens through an automated bid (in an auction). Thus, Real-time bidding uses programmatic advertising, but not all programmatic advertising uses RTB. Some advertisers might however buy from publishers through direct agreements that don’t involve a bidding process in real time.

The Actors Involved in Real-Time Bidding (RTB)

Let’s now look in more detail at the players involved in Real-time bidding and how this type of programmatic media buying for app install campaigns works.

The actors involved are:

  • Advertisers= for example app developers that want to advertise their app.
  • Publishers= app owners who sell advertising space in their app.
  • Demand-side platforms (DSPs)= technology platforms that allow advertisers to be connected directly to publishers selling their ad inventory through a marketplace. DSPs are nowadays definitely an important part of the programmatic business and of programmatic app campaigns because they allow advertisers to buy ads faster and more efficiently. They are very useful in an app install campaign.
  • Supply-side platforms (SSPs)= technological tools used to coordinate the distribution of advertising space between app publishers and app advertisers in an automated way. These platforms help to optimize the availability of in-app advertising space that would otherwise go unused and is a key player in programmatic app campaigns.

In the RTB instant auction, supply-side platforms (SSPs), on behalf of publishers, and demand-side platforms (DSPs), on behalf of advertisers, sell and buy ads. Thus, in an RTB auction, DSPs bid in real time on ads provided by SSPs. With Real-time bidding, each advertiser can bid on the impressions of a target audience.

How Does Real-Time Bidding (RTB) Work? The Process in 3 Steps

Real-time-bidding (RTB) exchanges function similarly to the stock market’s algorithmic trading.

Within the context of app install campaigns, advertisers bid on ad inventory at the impression level in real time, and the highest bidder for that particular impression wins the impression. Like ad networks, they partner with app developers and mobile website owners in order to show ads to their users. They provide full transparency as to where the ads are shown, and the quality of their traffic is usually good.

To make the process behind the operation of RTBs clearer, we can divide it into 3 steps:

  1. In the RTB auction, an SSP makes advertising placement available on publishers’ apps via an RTB exchange.
  2. The DSPs make an offer (which must comply with the targeting criteria previously set by the advertisers). That is, advertisers only bid for impressions that meet the targeting options they have. There are many targeting options that can be selected, such as device, operating system version, country, ISP (internet service provider), connection (wi-fi or mobile) and even age and gender.
  3. The advertiser who makes the highest bid gets the impression and their ad will be shown in the publisher’s app.

Importantly, the whole process takes just a few milliseconds and is all programmatic. This is very convenient to use when you run an app install campaign.

There are 3 different types of traffic acquisition or ad placement within these RTB exchanges:

  1. Standard auction: as we described above, in this case the SSP makes advertising placement available on publishers’ apps, DSPs make offers that comply with the criteria set by advertisers and the advertiser who makes the highest bid gets the impression.
  2. Private deals: in these cases, there is the negotiation of private agreements between DSPs and SSPs; the two parties set a fixed price and there is no auction because only that particular DSP can buy traffic from a particular SPP.
  3. Private auction: this is a variant of the private deal where there is an auction, but only between selected DPSs that have made arrangements with an SSP.

The payment method is the CPM (Cost per mille) which is:

“a measurement used in advertising, estimating the cost per 1000 views of an advertisement” - (From Cambridge Dictionary)

Meaning, it is the cost an advertiser pays for one thousand impressions of an advertisement. It is calculated by dividing the cost of an advertising placement by the number of impressions (expressed in thousands) that it generates. CPM is also really useful for comparing efficiency of various advertising placements and in evaluating the overall costs of advertising campaigns and app install campaigns.

Advantages of Real-Time Bidding (RTB) in App Install Campaigns

RTB is an effective way to run a programmatic app campaign and brings numerous benefits to an app install campaign for both advertisers, publishers and all those involved.

It enables advertisers to complete more efficient and targeted purchases, allows them to optimize impressions, narrow targeting, leverage new insights and trends based on user behavior. Also, one of the main pros of RTB is the transparency of the process.

For publishers it is effective because it allows them to increase revenue because in an RTB auction there is a high number of buyers and therefore more competition and higher prices for their ad inventory.

So, in the context of a programmatic app campaign, the main advantages of Real-time bidding are: automation (because it makes the process quicker), reach (since RTB offers the largest pool of world’s demand), and transparency.

Before Real-Time Bidding (RTB) and Programmatic App Campaigns

Quick and easy, isn’t it? You may be wondering “How was this done before programmatic media buying?!”

Well, before real-time bidding, advertisers would pre-purchase all advertising inventory from publishers for their app install campaign. Then advertisers would search websites to buy advertising space from where they thought their target audience would visit. A publisher would then create a media plan with the type of advertising units available, the price and the number of impressions they can deliver in a given period of time. The advertiser and the publisher would then sign a document called an “insertion order” which needed a signature.

Real-time bidding has offered a faster and more practical alternative to this time-consuming process because bids are made in online auctions in real time, thus avoiding the organization of direct agreements with publishers. Thanks to RTB, programmatic app campaigns are easier and faster.

Mapendo and Real-Time Bidding (RTB)

Mapendo is a mobile DSP integrated with more than 10 exchanges, where we buy ad placements programmatically from SSPs. We are 100% specialized in new user acquisition and app install campaigns. Thanks to our proprietary technology we are able to automatically optimize the traffic towards install and post-install events relevant for our clients and aligned with their business KPIs. Our algorithms are able to assess billions of impressions and give a response in milliseconds. In addition, Mapendo is a fully managed performance-based DSP, which means that our clients pay only for the results that we are able to deliver such as installs and in-app events (i.e. purchases, deposits, first ride, etc). Furthemore, fully managed means there is a team of experts who will take care of every aspect of your programmatic app campaigns, from the set-up and the launch to the optimization.