Advantages and Disadvantages of Real Time Bidding (RTB)

Real Time Bidding (RTB) technology enables the advertisers and publishers to buy and sell their inventory programmatically. Considering the technology enhancement, RTB comes with some advantages and disadvantages from both the advertiser and publisher end.

Before we discuss about pros and cons of RTB, we would suggest that you go through the article What is Real Time Bidding (RTB)? How Does RTB Work? This article will help you explaining the basics of RTB technology.

RTB has created a greater visibility through technology on how advertisers are placing their bids and where publishers are serving the ads. These metrics can be tracked real time using this technology which is missing in the traditional advertising.

Let us discuss some advantages and disadvantages of Real Time Bidding (RTB) in the online advertising domain..

Advantages of Real Time Bidding (RTB)

Improved Inventory Pricing: Publishers have a control over setting the minimum bidding price or the floor price for their inventory and that can be changed at any given point of time to maximize their revenue. RTB demand helps the publishers to optimize their floor prices according to the demand and this information can be analyzed using various granular reporting options in the Supply Side Platform (SSP) connected to Ad Exchanges. Using the historical bid pattern, the publishers can set the higher bidding price and increase the CPM value in their direct selling process.

Managing Remnant Inventory: This is one of the biggest challenges for most of all the publishers to fill all the ad units at all the time. However, in some cases, publishers may serve the house ads that may not generate the revenue. Enabling the ad exchange to manage the remnant inventory, publishers will get a fair price by making available their inventory in all the ad exchange auctions. This will help the publishers to fill all the ad inventory at any given point in time and help to generate revenue from each impression it is serving.

Ad Unit Modification: Publishers have a control over all the ad inventories they have enabled to serve the ads through RTB. The publisher can change the floor price based on the demand along with the ad unit placement and targeting option at ad unit level. This will allow publisher to test their ad unit to maximize the revenue on a timely basis.

Improved User Experience: Through Real Time Bidding, the publishers can serve the relevant ads to their users using the technology and data collected through ad requests. This will also help the publishers to achieve the ad campaign goals by increasing the click through rate by serving the relevant ads. The publishers can also share the user activity data with the advertiser, or they can target the relevant targeted audience to serve the specific’s advertisers ad in their future ad campaigns.

Quick Solutions: RTB enables the publishers and advertisers to access the performance data in real time to take necessary actions to achieve their business goals. This data is crucial to improve the ad delivery by optimizing the campaigns in real time. The publisher can increase the floor price for top performing ad units to maximize the revenue and lower the floor price for the ad units which has lesser fill rate to minimize the revenue loss.

Disadvantages of Real Time Bidding (RTB)

Despite of having multiple advantages of using Real Time Bidding, it still comes with disadvantages while serving the ads. Here are some of those disadvantages.

Compromising User Data for Targeting Purpose: This is one of the major drawbacks of Real Time Bidding as the publisher need to share the user data with advertisers to serve the relevant ads at all the time. There are many countries introduced the new law like GDPR and CCPA to secure the user data of their citizens which is impacting the granular level of targeting through RTB.

No Guaranteed Deal: Unlike programmatic guaranteed deal, the real time bidding is purely depending on the demand and supply rule to fill the available inventory. The publisher will maximize the revenue on a few ad units and lesser revenue on a few ad units because of the demand or number of buyers are participating in the auction to serve the ad at that moment. Also, there is not any guarantee that the ad will be filled through RTB all the time as it is dependent on the buyers’ interest to serve the ad. This has a direct impact on the publisher revenue and publisher needs to keep tracking their ad unit revenue and optimize accordingly.

Brand Safety: Publishers wanted to have a control over ads serving by the advertisers to maintain the quality of the ads and safety of their website. Similarly, the advertisers wanted to ensure that their ads are serving at the agreed and appropriate ad slots instead of serving some other pages which are not generating any returns of investment. To resolve these concerns, the publishers and advertisers can include the third-party platform to blocklist specific types of ads and page contents.

Conclusion: Real Time Bidding creates an environment to both the advertisers and publishers to have a maximum control over the ad serving activities, optimizing the floor prices on a timely basis, managing their inventory effectively and improving the user experience by serving the relevant ads. However, it comes up with some challenges like compromising the user data for better targeting, there isn’t any guarantee on serving the ads at all times, and brand safety from both the parties. These are some of the pros and cons that we discussed in this article, but would request you share other advantages and disadvantage that you may be aware in the comment section to discuss further.