Welcome, esteemed community! Most modern advertising networks operate on an auction principle where affiliates need not only to think through the advertising campaign in terms of concepts and creatives but also to devise a bidding strategy. That’s why we consider it extremely important to discuss how bidding and RTB in particular works.
Traffic from advertising networks is always paid. However, sometimes affiliates want to save money and start looking for UBT traffic sources. We discussed the difference between paid traffic and UBT in an article here. Enjoy the read!
What is bidding?
Like many other terms, ‘bidding’ comes from English, where “bidding” is the process of managing bids, and “to bid” is to make a bid.
In affiliate marketing, bidding is the process of managing bids for displaying ads. They are encountered in most advertising networks, from some no-names to Google and Facebook.
There are certain bidding strategies that can increase the effectiveness of an advertising campaign. A smart bid will increase the number of views of your advertisement, but you also have to consider the costs of your advertising budget.
It seems everything should be as simple as possible: place a higher bid than your competitors and get more leads. Profit! In reality, it doesn’t work like that because the profitability of your project would significantly drop, and there would be no talk of profit. That’s why it’s necessary not only to understand what bidding is, but also how the RTB auction works itself.
What is an RTB auction?
RTB auction is a real-time bidding auction. This technology in advertising networks helps to systematize the process of buying and selling advertising, creating competitive conditions, and allowing easier pricing in a niche. Accordingly, the more popular the niche – the higher the average bids, because there are more competitors.
The mechanism works as follows: the advertising network’s system sees almost identical ads, with the same target and GEO. To determine whose ad the recipient will see, the system looks at how much the advertiser is willing to pay for the ad space. The higher the bid – the more advantage you have.
From the script’s point of view, everything happens like this:
- The user visits a page where an advertising block is placed. The system determines his data: IP, cookies are considered. This helps to understand the target;
- Then, the received information is analyzed, and it is also provided to the advertiser;
- The system analyzes all available bids for this user, then chooses the advertisement for which the highest bid is designated. The person sees the most expensive ad.
It should be emphasized that all this happens within milliseconds, that is, virtually in automatic mode. Therefore, as an advertiser, you need to think through your campaign in advance to be able to compete confidently.
Regarding the price, despite the fact that an advertiser may set the highest price, they will not always pay it. Because the display occurs not at the highest bid, but according to the second-price principle. Yes, if you offer 5 cents per view, and your competitors 4, 3, 2 cents, then you not only win the auction but will pay just 4 cents, not 5.
There are also some limitations. For example, the advertising network also has the ability to influence the price of the advertisement. Mostly, they set only the minimum threshold from which bidding starts. Otherwise , the price is formed by the advertisers, which can be considered the most optimal and transparent price. Assuming we pretend that dumping doesn’t exist, of course.
What can bidding be like?
We have figured out what bidding is. Now let’s talk about its types. Generally, there are two:
- Manual bidding – this is manual work when you distribute the bids yourself. This work is not only for affiliates who work solo but also directly for media buyers who work in a team.
- Automatic bidding – happens thanks to the work of special software that responds to market dynamics, increasing or decreasing the bid.
No doubt, each of these two types is equally useful under certain conditions. If you have a lot of free time, manual bids will allow you to better balance and save on the advertising budget. Otherwise, you can use the automatic option, and spend your free time on more significant tasks.
Advantages of the RTB Auction
The RTB auction is an equally attractive system for both sides: both for the advertiser and for the advertising platform itself. The former have the opportunity to reach their target audience, and the latter – earn more money by selling advertisements at the highest offered price.
In addition, thanks to the ability to precisely adjust the target, the advertiser can be sure that they are only paying for targeted impressions. Indeed, this can justify situations when you have to place too high a bid. Because no matter how high it may be, you still know what exactly you are paying every cent for.
Modern advertising networks provide a large number of necessary tools that allow not only to track the views you have already received but also to analyze the course of the auction itself so that you can adjust to realities and adjust your bids.
Moreover, there are certain conditions under which you can receive traffic even if your bid is not dominant. However, according to the observations of many affiliates, the highest quality traffic comes only when you pay more for it. It’s easy to understand that networks thus motivate you to place higher prices, even if it’s not so necessary within the framework of your campaign.
Conclusion
If you plan to buy traffic through targeting, contextual, and any other advertising in networks, you will definitely encounter an RTB auction. This is where the key complexity of the work related to competition lies. You can experiment not only with bids but also with target characteristics to come out at the most acceptable price for you. But that’s a topic for another discussion.
If you still have questions, you can ask them in our Telegram community. The professional community will be glad to help you!
As always, with respect, your Geek!
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