Real Time Bidding (RTB) Waterfall and Best Practices to follow in RTB

Real Time Bidding (RTB) is a technology to help the publishers and advertisers to programmatically sell their inventory or purchase the inventory accordingly. The technology comes up with many pros and cons during the auction which will restricts the advertisers to participate in the auction.

Here’s an article to learn three basic auction types of Real Time Bidding and process of real time bidding before going through this article.

Let us learn about what happens when multiple ad exchanges are connected to the publisher ad server or if there is no advertiser to bid for inventory above the floor price set by the publisher.

Waterfall Method:

The publishers need to tie-up with multiple ad exchanges to fill their inventory at any given time to maximize the revenue. This process has called as waterfall method in programmatic advertising.

The name waterfall came from the process it is following by checking one ad exchange to another to find out the suitable ads according to the settings they have set in their Sell Side Platform (SSP).

The ad exchange will send the bid requests to all the eligible Demand Side Platforms (DSP) with a sequence to participate in the auction. The sequence can be changed at any time by the publisher based on the contract.

Let us learn the waterfall method using a few examples.

In the below situation, the first priority has given to Google Ad Exchange, but there are two new ad exchanges AppNexus and Rubicon will be participating in the auction based on the sequence. The floor price for this auction is set to $3.5 by the publisher. The ad exchange will allow the advertisers to participate in the auction if they are bidding more $3.5.  

The Ae Exchange will call for an auction to bid for the inventory, the Google Ad Exchange place a bid of $3.55 during the auction. Since this is a winning bid that clears the publisher’s floor price, Google Ad Exchange will win the bid and remaining two ad exchanges AppNexus and Rubicon do not get the opportunity to place their bids.

In the meantime, the publisher increases the bid price to $3.75 and the first ad exchange fails to meet the floor price. In this scenario, AppNexus will be called to participate in the auction to place the bid.

The AppNexus will place the bid of $3.60 during the auction and it does not clear the minimum floor price.

Finally, Rubicon will place a bid of $3.80 during the auction and it will win the bid by surpassing the floor price.

Best Practices of Real Time Bidding (RTB)

Real Time Bidding (RTB) can help improve the ad campaigns, however, you may need to take below pointers for consideration while selecting the platforms.

Select the Right Platform: There are many platforms available in the online advertising market and you review carefully by checking the type of inventory that is offering which is meeting your requirement. Also, it is suggested not to select the platforms looking at the brand rather focus on the following pointers.   

  • Pricing model
  • Features or functionality
  • Technology that is offering
  • Technical Support

Curate the Right Skills: You can use the agency, a specialist to manage the ad campaign or you will manage in house, there are many ambiguities while trading inventory using RTB which differs from traditional media buying skills. The required skills are data mining, testing frameworks, analyzing the reports, understanding the auction dynamics, and managing the campaigns within the platform. It is always suggested to ensure that you have right people with required skills to manage the ad campaigns to reduce the advertising cost.

Commitment: Real Time Bidding comes with an advance technology and requires some additional skills to manage the ad campaigns effectively. Since, you are using the advance technology, you may need to pay additional fees to use the platforms and may increase your advertising budget. Considering the advantages of using the RTB technology by paying additional platform fees, you may need to invest on acquiring the right skills to effectively manage your ad campaigns.

Conclusion: Real Time Bidding comes with multiple opportunities to effectively manage the ad campaigns using multiple platforms in the market. However, it may require acquiring the right skills to maximize the chances of meeting the business goals. We hope that we have covered some of the basics information in this article to understand the waterfall method and a few best practices to consider while choosing the right platform. Let us know your thoughts in the below comment section!