Real-time bidding (RTB)

Real-time bidding is the engine inside most programmatic advertising. When you open a page, the publisher's SSP packages facts about the opportunity (site or app, ad size, rough location, device, any consented user IDs) into a bid request and sends it to many DSPs at once. Each DSP decides in milliseconds whether to bid and how much, and replies with a bid response. The highest valid bid wins, the ad is delivered, and the whole thing typically finishes in well under a second.

Most RTB traffic uses the OpenRTB protocol maintained by the IAB Tech Lab. Since around 2019 the major exchanges have run first-price auctions, replacing the older second-price auction model, and buyers use bid shading to avoid overpaying.

RTB made it possible to buy audiences rather than just sites, but it also created problems: huge volumes of bidstream data raise privacy concerns under GDPR, long chains of resellers add fees, and fraudsters can inject fake bid requests. Deals such as PMPs still use RTB mechanics but restrict who can bid.

Think of it like this

RTB is like an auctioneer who sells every single seat at a stadium, one by one, in the instant each fan walks through the turnstile.

An example

A reader in Lagos opens a sports page. The SSP sends a request to 12 DSPs; bids arrive at US$1.10, US$2.40 and US$3.05 CPM; the US$3.05 bid wins and the ad is shown about 200 milliseconds later.