Define It – What Is Real-Time Bidding?

With the ecosystem providing insights on “programmatic buying” and “programmatic selling” last week, we reached out to a new group of executives to define one of the key underpinnings of programmatic media – whether display, mobile, social, etc. – and asked:

“What is Real-Time Bidding?”

Click below or scroll down for more:

Scott Spencer, Director of Product Management, Ad Exchange, Google

“Real time bidding (n); 1) A technology introduced in 2009 to make it easier for ad networks to buy only the inventory they want. 2) A common buzzword that is part of everyone’s business plan in 2013. 3) The act of buying digital inventory from multiple publishers on an impression by impression basis, typically involving an auction pricing mechanism. 4) One of the biggest opportunities for publishers to participate in new media spend, but not a panacea if done in isolation. (See “premium ad server”, “dynamic allocation”). 5) A big part of what inspires me and the editors at AdExchanger to come into the office every morning.

Synonyms: programmatic buying, informed purchasing, NASDAQ for ads

Example: Wow, the ad space I make available for real time bidding is crushing it!”

Paul Dolan, Managing Director North America, Xaxis (WPP)

“Real-Time Bidding (RTB) is the interface into an auction marketplace constructed on the foundation of Programmatic Buying & Selling.

Smart Advertisers leverage RTB as one of many ways to target audiences wherever they may be in the digital space.”

Jeff Green, CEO & Founder, The Trade Desk

“Real-Time Bidding means that every online ad impression can be evaluated, bought, and sold, all individually, and all instantaneously. It is the future of all online advertising and enables exchanges and buyers to work together to programmatically sell and place bids on ads. It allows every impression to be cost effective, and to be placed in front of the right person, at the right time. When using RTB, it is the buyer’s challenge to score every user on a variety of attributes, and place the right CPM bid and right creative in front of that user. RTB eliminates broad placement of ads and systemically allows each ad to be presented with intent behind it, based on available data to the buyer.

RTB is the center of the spot market for video, display, mobile, and social advertising today. And the RTB spot market is the foundation for the next generation forward market.”

Josh McFarland, CEO, TellApart

“RTB is like online shopping . . . at once a mere convenience and also a game changer. Did we shop before the internet? Yes. And yet now we have more options, shop more efficiently, can personalize our experiences, and yes – often find better prices. As a result, we shop more and the total commerce pie has expanded.

Now, offline stores are integrating the benefits of internet-connected shopping with mobile apps, real time inventory, and real world personalization. The lines are blurring into an incalculably better omnichannel experience for us all.

As with the advent of online commerce, so too will RTB prove to be the backbone of all future marketing efforts. With the backdrop of holiday feasts behind us, who can argue with expanding the pie?”

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  1. If I have to define it one line, I typically define RTB for my clients as “Massive Scale Display Media auctioned on a per Impression Basis”

    A more detailed definition that I have seen resonating with clients is –
    RTB is an automated process which allows media buyers to evaluate, bid on and purchase ad inventory on a per impression basis.

  2. + 1 on Scott’s 4 points, only caveat would be that Right Media was ‘real time bidding,’ where the platform required that the POV on the impression be held inside of RMX (manually entered or via API). This started in 2004, and was a huge change – optimize price against inventory, rather than inventory against price as DCLK had done for years. The latest version of RTB (circa 2009) allowed for the decision logic to sit outside the platform where the supply was without pushing the ad call to the buyer (eg daisy chaining).

  3. Assuming RTB is “real-time bidding”, that was created in 1996-1997 by Flycast. Oh, stop you’re groaning! At the time, Flycast had built a desktop application (hmmm, DSP?) that allowed buyers to set – among other parameters – in an “AdAgent” aka persistent technology, their bid prices on impression-level inventory across a network of web publishers – down to the page level – all of whom had tagged their inventory with a Flycast tag. Flycast servers were able to understand, quite simply, in real-time, at ad call, “Sold or Unsold ad space? If sold, DART or Imgis or AdForce, or whomever serves the ad. If unsold: What buyer’s “AdAgent” parameters make this unique impression a). a biddable impression, and b). priced accordingly above the publisher’s floor, and c). which of those AdAgents is willing to bid the highest CPM for this unique impression at this moment in time?” No data overlays at the time. Remember: DCLK + Abacus and the ensuing brouhaha were but a twinkle in our eye at the time. Ask Dilip DaSilva of Tribal how he defines RTB. He cracked the code on real-time ad decisioning and serving as I recall. Followed by, Right Media, and others. Now, whether or not RTB requires data overlays to incorporate audience-based attributes is quite an interesting debate since unlocking and enabling data in real-time ad environments has only recently come to fruition. But good old fashioned RTB pre-dates 2009 by quite some time IMHO.

  4. Brutus Gordianus

    What again is an impression? Now you can buy it with 100% confidence, sir, without ever leaving the comfort of your living room! Never mind that an impression is a completely abstract concept which represents value only because we agree that it does and yet…poof! it doesn’t because now we say it is worthless.

    The Confederacy and Weimar Germany had a more reliable system of value and money.

    One word of advice, Mr. Advertiser: Mind the middlemen.