Real-time bidding

Real-time bidding (RTB) is a means by which advertising inventory is bought and sold on a per-impression basis, via instantaneous programmatic auction, similar to financial markets. With real-time bidding, advertising buyers bid on an impression and, if the bid is won, the buyer’s ad is instantly displayed on the publisher’s site.
Real-time bidding lets advertisers manage and optimize ads from multiple ad-networks, allowing them to create and launch advertising campaigns, prioritize networks, and allocate percentages of unsold inventory.

The whole RTB mechanism connects publishers, advertisers, SSPs (Supply-Side Platform), DSPs (Display-Side Platform) and data providers. Each part of the mechanism is doing their job simultaneously, so the whole auction process takes less than a second.

In real-time bidding (RTB), the second-price auction gives the winner a chance to pay a little less than their original submitted offer. Instead of having to pay the full price, the winning bidder pays the price offered by the second-highest bidder plus $0.01. The final price of the impression is known as the clearing price.

Cost of RTB campaigns depends on the scale and websites on which the ad will be displayed. Marketers sets the maximum price per bid (e.g. 1$) and sets the maximum budget for the ad campaign.
There are 4 possible methods of cost calculation:

CPM (Cost of 1000 views) – the cost that an advertiser pays for one thousand views or clicks of an advertisement.
CPC (Cost Per Click) – also known as pay-per-click, it is an online advertising model in which an advertiser pays a publisher when the ad is clicked.
CPL (Cost Per Lead) – digital advertising pricing model, in which for acquiring new contact to potential buyer (e.g. for filling the sing-up form).
CPA (Cost Per Action) – also known as cost per conversion, is an online advertising pricing model where the advertiser pays for a specified action, such as click, sale of form sign up.

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