Thanks to Real Time Bidding (RTB) many advertisers are seeing an excellent return on their investment in online advertising and many publishers are selling out of their stock of impressions. But what is RTB and how does it work?
RTB is a system that allows various advertisers to bid in real time for a certain impression on an advertising platform. A number of different players take part in the process:
A profile is created based on user browsing history. Advertisers can bid to display their ads to the users they want to target. Once the winner of the auction has been decided, the ad is inserted in a matter of milliseconds.
The benefits of this system are clear: from the advertiser’s point of view, it allows for cost optimisation and better segmentation of the users that will be targeted by the ads. As for the publishers, it offers them an easy way to sell their advertising inventory.
These campaigns can be run using different remuneration methods: CPM, CPL, CPC or CPA. Perhaps the most interesting for the advertiser is CPA, since they only pay per performance of a certain action; for example, a sale. There are certain companies in the online marketing sector that are able to manage campaigns and be paid for certain actions providing various conditions are fulfilled. These agencies can work in the entire consumer purchasing cycle:
Prospecting: this targets users who have not yet visited the advertiser’s site, but whose browsing habits suggest they could be interested in purchasing a similar product to that offered by the advertiser. These campaigns tend to be costly and have a low conversion rate, but they are useful for attracting “fresh”, qualified traffic to the site.
Retargeting: this targets users who have already visited the site and shown interest in some of the products. The conversion rate of these campaigns is higher, since the aim is not to attract new users but to encourage those who have already visited the site to come back and finish the transaction.
Postargeting: this aims to increase average user spending by presenting complementary products to those they have just purchased; for example, if someone has booked a hotel room, they might also want to book an excursion in the same area, making it worth showing them an ad for such products.
The benefits of combining RTB campaigns with CPA compensation methods should now be clear:
Online marketing is evolving, as seen in the optimisation of investments and the segmentation of campaigns. It will be interesting to see the impact this has on other channels of communication between companies and users, such as call centres, email marketing or text messages, but this will be discussed in another post.