Real Time Bidding: MAXIMIZE MOBILE REVENUE THROUGH TARGETED ADVERTISING (devsbuild.it)

Real-time Bidding: Maximize Mobile Revenue Through Targeted Advertising

The downward trend of traditional display advertising in the digital era is so grim that it has stirred twisted humor. Solve Media captured the reality perfectly in a series of images that said people are more likely to survive a plane crash, scale Mount Everest or complete U.S. Navy SEAL training than to click a banner ad.

Do you even remember any of those ads that flash before you every day? If you do, you have impressive recall because ComScore reported that the average person is served a whopping 1,700 banner ads a month.

The good news is that advertisers feel your pain and are looking to achieve more efficient and targeted delivery of their messages through a growing sales channel called real-time bidding, or RTB. Instead of blasting their campaigns in bulk to one app at a time, they are using the targeting abilities of real-time bidding to reach a sometimes thinner but more attractive slice of audience -- a user more likely to see the ad and be inspired to act on it.

As RTB technology improves, this targeted approach to advertising could be a boon to mobile developers and publishers eager to maximize their revenue from the applications they create. Real-time bidding can help them in two ways: 1) App makers can more precisely advertise their own products to the consumers most likely to be interested in them; and 2) they can sell space within their apps to advertisers whose products appeal to similar audiences. The process also empowers both app makers and advertisers to adjust their marketing campaigns in real time as they learn more about consumers.

The idea of buying audience instead of inventory is taking off quickly. Parks Associates recently upgraded its early 2012 ad projections for real-time bidding in online display, forecasting that U.S. advertisers will spend $3.6 billion in 2013, which represents 40 percent of total online display ad impressions sold. By 2017, the ad spend will reach nearly $10 billion, or 83 percent of online display ads. Parks Associates expects the online trends to be seen in the app space as well and possibly at an even greater pace with the continued growth of mobile. eMarketer agrees with this as “RTB is becoming more mainstream, and mobile RTB in particular is still nascent but will drive future growth.”

Pierre Nagger, the European Union managing director for the digital marketer Turn, likens real-time bidding to the 1950s “Mad Men” era of advertising. It has “revolutionized the way we buy media,” Naggar told ExchangeWire. Advertisers at last have “the ability to place a true value on each buying decision.”

The rise in real-time bidding also comes as the focus in online ads shifts toward identifying users as they hop from device to device. “Pioneers of mobile RTB are developing sophisticated and creative ways to target and deliver ads to just the right consumers in a cookie-less way, which will give advertisers and their agencies the confidence they need in order to justify increased ad spend,” Dan Schwartz, co-founder and chief operating officer of the ad management platform Run, told Mobile Marketer.

But observers caution that RTB’s “solution” to problems with traditional display advertising comes with its own set of concerns, with publishers wary of its real costs. Naggar also points to the overabundance of granular data presenting a key challenge. “The true value [of RTB] can only be measured with data insights that give transparency to the worth of each and every consumer to the advertiser at a given point in time,” he said.

These are early days in the development and adoption of RTB and its complex data-driven ecosystem, so it’s the ideal time for the mobile community, including developers of mobile applications, to explore what it is, how it works, the benefits it offers to advertisers and publishers, and the obstacles and concerns about the ads.

The basics of real-time bidding

Parks Associates defines real-time bidding as the technology infrastructure and management systems that enable the automated, real-time purchase and selling of advertising. The term describes the entire process rather than the technology or an ad platform. It is a data-driven buying model through which ad agencies place auction-based bids for individual ad impressions instantaneously.

The alternative buying model is a static auction where advertisers buy audience segments by blocks of 1,000 ad impressions. By contrast, the RTB auction process takes place in milliseconds, hence the label real time. In its simplest terms, real-time bidding is the practice of valuing and bidding on display advertising one impression at a time. The process is often likened to Wall Street: Stock shares become available and buyers compete for them, with the highest bidders winning.

The evolution of the RTB market began with the emergence of ad exchanges. For the past decade, these exchanges have been the primary way ad agencies have reached online audiences at scale and ad sellers have monetized unsold ad inventory. Agencies pay ad exchanges a fixed cost per thousand impressions, or CPM, to reach audience segments with the understanding that a portion of the online ads will not reach intended consumer targets.

As algorithms and data analytic strategies began to support the digital advertising market, advertisers’ quest for cost efficiencies and greater media campaign control and transparency intensified. This led to a new breed of advertising tools that emerged in 2007 to facilitate a more precise and timely digital media placement and sales approach. These platforms began to offer RTB solutions in 2009, providing even greater efficiencies and control over the online display advertising process. A Google white paper dubbed RTB “the missing piece.”

In the online display world, cookies provide the user’s browsing history, geography and demographics. They know when an impression is coming from a 30-something male sports fan from New Jersey who recently bought camping gear or when the buyer is a female executive in her 40s from Minneapolis, who shops while on work travel.

Mobile RTB relies on device identities such as identifierForAdvertising (IDFA) for iOS devices and Advertising ID for Android devices. Device IDs in mobile are similar to cookies in that they let advertisers know which content a specific mobile user is accessing and then can serve an ad targeting that user. Personal identifying information (address, credit cards, etc.) about the user is not provided, but the process does reveal behavioral, geographic and other data.

Using RTB technology, a publisher makes an online impression available and media buyers, working through the equivalent of trading desks, bid to purchase them one by one. Each advertiser can determine the value of an individual user and bid accordingly in a fluid, supply-and-demand marketplace. Because this is happening in real time -- literally in one-tenth of a second as a user’s page loads -- an advertiser can adjust to market conditions, gauge a campaign’s efficacy and make timely adjustments.

As an example of buying audience versus inventory, consider this: An advertiser buying in bulk might pay $5 per CPM on a premium app to reach the wide swath of its audience. With RTB, the advertiser instead might pay $12 per CPM to reach a highly-valued user, or as low as $3.50 for one less desirable. RTB also lets the advertiser buy in scale. He can reach his target on the app but also identify and buy that impression as it becomes available from literally millions of other publishers.

The auction atmosphere of real-time bidding drives up the price. Advertiser A and Advertiser B both are targeting the same desired user. If Advertiser A bids $2 per CPM and Advertiser B bids $1.50, Advertiser A will win the impression at $1.51.

The ability to identify users by their devices through the RTB process via device IDs is a key factor in setting ad rates for real-time bidding. Other factors include a user’s location, the category of the app, and whether the app is built on the iOS or Android operating systems or the mobile Internet.

Making the data-driven RTB process work requires a complex network of connections. Here’s an explanation of how the pieces fit together:

·         A user visits a Web page or an app that includes real-time bidding technology. The RTB process differs depending on whether the user is visiting a mobile site or app, but it starts by delivering an ad tag to an ad server through one of various methods.

·         An ad exchange that the publisher is working with makes multiple callouts to several demand-side platforms (DSPs) that advertisers use to get the best price for the available ad space. DSPs evaluate the bids, decide how much to bid based on their client-advertisers’ parameters and respond to the exchange.

·         The exchange selects the highest bid with a URL of the winning ad and returns that to the publisher’s ad server. And the ad server delivers the ad to the user’s app, concluding the process.

Speed is important to the process. On average, DSPs respond to bids within 150 milliseconds to ensure that ad opportunities are not lost because of delays in serving ads. Publishers and advertisers should keep tabs on their ad view rates to pinpoint any ad-serving latency and correct errors with the DSP. The chief concern is ensuring that DSPs respond in time.

Some mobile ad exchanges like Flurry and Smaato do not charge publishers extra for real-time bidding, instead, taking a standard cut of revenue the publishers earn. Publishers may set floor pricing as part of the process to keep real-time bids from lowering the cost of their ad inventory, but if they set the floor too high, they could forgo revenue opportunities.

Some ad exchanges offer dynamic floors to increase fill rates and optimize revenue for publishers so that advertising dollars are captured both below and above the floor while still averaging out at the desired floor price.  For example, if you set a soft floor price of $1 CPM, in many cases you may be receiving bid activity at $0.75-$0.90. With dynamic floors, an additional hard floor can be set at for example $0.60 so that you can still capture bids at $0.80. At the same time, you don't lose out at bids above $1 CPM and the end result is to maintain an overall eCPM of $1 or higher.

Publishers can benefit from real-time bidding with a significantly improved value for ad impressions. Consumers can see more relevant ads and advertisers can experience better performance of campaigns and increased return on their investments.

The benefits to advertisers

For advertisers, choosing a real-time bidding platform means first weighing the benefits of RTB against those of traditional mobile advertising, buying directly from the publisher.

“With direct buys, you are essentially buying impressions in bulk in order to have your ads seen in a specific context,” Ratko Vidakovic, director of marketing for the DSP provider SiteScout, wrote in Marketing Land. “You have the ability to filter the audience that sees your ads with targeting rules such as geography or browser type, to name a few of the basics. But you’re still ultimately targeting your ads to a specific website.”

Advertisers and agencies with brand sensitivities may favor direct buys and are willing to pay a premium price for such placement. They also may enjoy more creative room in working with the publisher directly and tapping into rich media formats such as page takeovers or video.

Yet that manual customization can take time and introduce human error. Real-time bidding is touted for improving the display ad value chain through its automation, with the DSPs and Ad Exchanges working in integrated partnerships. With real-time bidding, Vidakovic said there “are still manual elements (such as ad quality review, tech support and billing) but nothing close to what is necessary when dealing directly with publishers -- let alone a group of them.”

Metamarkets CEO Michael Driscoll states real-time bidding helps advertisers in three key ways: 1) It optimizes campaigns by testing simultaneous advertising strategies; 2) it gives advertisers the ability to change ads quickly in order to boost effectiveness; and 3) it increases the return on investment by identifying the fraudulent inventory of ghost publishers, which place some 40 percent of mobile ads, according to Trademob.

“Real-time bidding allows advertisers to reach the right user, in the right place, at the right time -- and assign an individual value to a particular ad impression.”

Pubmatic described the value to advertisers concisely in a white paper on the topic: “Real-time bidding allows advertisers to reach the right user, in the right place, at the right time -- and assign an individual value to a particular ad impression.”

For advertisers to get involved in mobile RTB, they must have a bidder. Some RTB exchanges like Google AdExchange or Yahoo Rightworks use proprietary technology, but the majority of them are standardizing on OpenRTB, an industry consortium with a subcommittee on mobile led by Nexage, Pubmatic and Smaato.

Standardization has fueled growth in the number of mobile-focused DSPs. Some app developers have even built bidders to launch their own ad campaigns to promote downloads of their apps because they know who their existing users are via device IDs and can target new users intelligently.

Some DSPs, Human Demand and SiteScout, work on a software-as-a-service basis.

The benefits to publishers

But what about publishers? Although RTB is sometimes heralded as a “revolutionary force” in digital advertising, app publishers still approach it with some wariness.

Real-time bidding can bring value to the vast and vacant pools of inventory that sit on most publishers’ apps. As much as 70 percent of inventory is unsold or sold for little, the digital marketer Acuity found. The firm added that small publishers don’t have sales teams that “can properly sell their quality, targeted inventory, leaving them wanting more from display.”

RTB can level the playing field for publishers who are not considered “premium” because they are buying audience. Using device IDs, they can identify unique users so if an advertiser is interested in targeting specific users based on their interests, it doesn’t matter whether the user is on The New York Times mobile website or on a lesser-known game app.

The estimates of increased yields for publishers that use real-time bidding vary from as much as 15 percent to 300 percent upswings in digital sales.

Publishers using real-time bidding also can achieve savings by reducing the manual labor required in direct sales. While the advanced technology required for RTB is costly, AdInfo predicted the cost will decrease. And the estimates of increased yields for publishers that use real-time bidding vary from as much as 15 percent to 300 percent upswings in digital sales.

Real-time bidding offers particular value to mobile publishers that sometimes face inventory glut even more acutely than other publishers. “The presence of excessive mobile inventory, particularly on the Web side, drives publishers to embrace RTB in order to monetize unsold supply at efficient price points,” said David Scatterday, who is in charge of senior product marketing for mobile at DG Media Mind.

Metamarkets’ Driscoll shared with Adotas the example of a metropolitan newspaper to show how real-time bidding can optimize pricing: The paper “sets an ad floor level of $1 CPM. With real-time analytics, the newspaper may discover many buyers bidding 95 cents for ads targeting a specific consumer group. The newspaper can then lower the floor to make sure it does not miss out on this revenue opportunity. Without analytics, the newspaper could have lost the opportunity -- for just a mere nickel!”

Obstacles and concerns to overcome

Some publishers have legitimate concerns about real-time bidding. AdPushup co-founder Ankit Oberoi described them on his company’s blog. One concern is data leakage during the RTB process. Oberoi said that advertisers who buy impressions to target an audience with specific demographic and behavioral characteristics can collect data about those consumers via real-time bidding and then run separate campaigns using less expensive inventory.

Real-time bidding also may foster the cannibalization of inventory through ad exchanges. Although floor prices are designed to combat that, Oberoi said some publishers may lose control over the pricing process because of an oversupply of inventory. “These lower prices would in turn compete with the inventory sold directly by publishers, negatively impacting all the revenue streams of the publishers,” he said.

Publishers further worry about the impact real-time bidding could have on their brands when they relinquish direct control over their ad space. They don’t want low-quality ads or inappropriate content on their sites, although Oberoi said block lists that filter certain types of ads can help tackle that problem. Blocklisting is more effective and automated in RTB compared with ad exchange because it can be supported programmatically.

A 2012 study by Casale Media echoed those concerns of advertisers and publishers and added others. The study said advertisers want “greater emphasis on inventory quality, more guarantees for brand safety and greater transparency in reporting.” More than three-quarters said they would spend more through RTB platforms if there were greater emphasis on quality or viewable impressions. The good news on that front is that mobile RTB offers more transparency and the ability to enforce viewable impressions because individual apps, often via the app store URL, and mobile websites are visible to advertisers placing bids.

Publishers also want to make sure they can monetize through RTB without cannibalizing current sales efforts, and more than half fear that using RTB will eliminate the “human element” of ad sales. “Relationships still matter," said Andrew Casale, Casale Media’s vice president of strategy, so proponents of real-time bidding “need to articulate how technology has vastly improved the experience for buyers and sellers."

The promise of RTB in the mobile space

While cookie-blocking technology is an obstacle to digital advertising via desktop computers, the mobile market actually could gain an edge if such filters gain more traction. The mobile ad exchanges are using Device IDs rather than cookies to build user profiles that provide useful information for more targeted advertising. 

Many exchanges are working with DMPs like Factual to build user profiles based on geo-behavioral patterns using anonymous identifiers. Factual is able to take location data and turn it into demographical, geographical and behavioral data to more accurately represent the user. The Exchanges use this information to enrich the data it provides to DSPs which is used to better target its advertising.

Device IDs can capture the common, multi-screen experience of users hopping between desktop, phone and tablet to consume digital information by taking a snapshot of each device and then applying proprietary algorithms to match that snapshot to the same listing in the device ID database.

Device ID raises hopes that digital advertising finally will fulfill its potential of revealing intimate knowledge about consumers.

“We’re observing your behaviors and connecting your profile to mobile devices,” Eric Rosenblum, chief operating officer at Drawbridge, told The New York Times. Drawbridge, a startup founded by a former Google data scientist, is one of several companies that is developing device ID technologies. It claims to have matched 1.5 billion devices, which enables it to serve mobile apps based on sites users have visited.

The company does this matchmaking by working in partnerships with publishers and ad exchanges. The partners send a notification every time a user visits an app or a website. Drawbridge analyzes the notifications for behavioral patterns and applies statistical modeling before assigning a user an anonymous identifier.

For example, if a user checks a news website each morning from home, looks at the same news app from his phone in the office, then browses it from the tablet in bed at night, Drawbridge can determine that all of the devices belong to the same person. The company also told The Times it is making progress distinguishing between users, such as spouses, who might share a tablet at home.

"RTB is becoming dominant in mobile marketing as we speak,” Matevz Klanjsek told CRM Buyer. “I would go so far as to call it a new era for mobile marketing.”

Device ID raises hopes that digital advertising will finally fulfill its potential of revealing intimate knowledge about consumers. The Times reported that major advertisers are getting behind the concept, with the technology being used by American Express, Expedia, Ford Motor and Groupon. BlueCava CEO David Norris advises advertisers to explore device ID technology proactively -- “before the cookie crumbles.”

Such advanced technology options make real-time bidding a promising option for both advertisers and publishers. A May 2013 BI Intelligence report found that real-time bidding grew significantly across the mobile advertising ecosystem in 2012. Statistics from the report further highlight the technology’s value in the mobile marketplace:

The Alliance polled several major mobile RTB Ad Exchanges that indicated significant growth from Q1 to Q3 2013. Exchanges polled saw a 46.5% increase in the number of auctions for Mobile RTB and a 320% increase in Mobile RTB revenue. Although this was not a scientific study and, therefore, may not be a complete representation of the industry, the members of the Alliance Business and Revenue Working Group agree with this trend.

“[RTB] technology is just starting to conquer the market, but analysts prognosticate its fast growing popularity – the current share of RTB in overall impressions number is about 15% and the worldwide spending by 2016 is estimated as $14 billion.” The Adinch article acknowledges that there are some hurdles with mobile RTB but consumers and advertisers are increasingly accepting the data exchange, which allows consumers to get relevant offers and advertisers to gain a client.

Matevz Klanjsek, chief product officer and co-founder of the mobile ad company Celtra, told AdExchanger in May that while the size of the RTB market in mobile was only 10 percent then, it is expected to reach 30 percent this year. And Fred Hsu, the CEO of the mobile demand-side platform RTB.com, is even more bullish. "RTB is becoming dominant in mobile marketing as we speak,” hetold CRM Buyer. "I would go so far as to call it a new era for mobile marketing."

Because mobile is a relatively immature market, it can learn from its more experienced elders. “It's still a young market and one unburdened by the inefficiencies of direct sales process,” Jay Stevens, senior vice president and general manager of international at Rubicon Project, wrote in an op-ed for The Guardian.

Stevens said the overhead associated with planning and buying a traditional display media campaign can be significant. It’s a manual process that can require “42 steps managed by a dozen pairs of hands, which takes the agency 15 hours to execute.” And the cost is fixed whether the campaign budget is $100 or $1 million.

Ultimately, the success of mobile real-time bidding may depend on whether mobile inventory becomes, as Stevens hopes, just another ad size inside the design-side platform that the trading desk uses. “If mobile advertising were a simple bolt-on to programmatically traded display, complete with quality mobile sites and apps, and similar controls to the ones publishers are used to when they sell direct, the sky becomes the limit,” he said.

“We have been talking about data impacting advertising for some time,” Flurry CEO Simon Khalaf told VentureBeat last month. “Four months after our launch of our real-time bidding marketplace, we have the living proof. It’s changing advertising dynamics and making it highly effective.”

Mobile ad and analytics company Flurry points to recent case studies where RTB data is driving strong results for some of its advertisers and publishers. In one case, an ad buyer CrossInstall used Flurry’s analytics to seek users who were most likely to download a specific app, which resulted in 40% more users downloading the app.

“We have been talking about data impacting advertising for some time,” Flurry CEO Simon Khalaf told VentureBeat last month. “Four months after our launch of our real-time bidding marketplace, we have the living proof. It’s changing advertising dynamics and making it highly effective.”

Game or app publishers use “Flurry Personas,” the categories of gamers or app users the company has created to target people based on demographics, interests, usage and geography. Once a developer turns on a Flurry flag inside an app, an alert goes to the Flurry Marketplace to make an ad spot available for real-time purchase. An ad buyer can look at the flag and determine if the app, and its associated Flurry Persona, is a good match. This approach provides publishers insights on how to better engage, retain and monetarily value their users.

The app publisher iLegendSoft told VentureBeat that its ad revenues tripled thanks to Flurry’s RTB marketplace. Once they were given precise audience targeting information, advertisers reacted by bidding up prices. All this is evidence that “the vision of bringing precision targeting to advertising works,” Khalaf said.

Keith Petri, senior vice president of business development at eDealya, sees three challenges that need to be overcome to spur the growth of mobile RTB. First, people need to adopt mobile as a means of ordering consumer goods and paying for items to generate an immediate and easily trackable return on investment. This will boost the average revenue per user. Mobile RTB also needs more engaging ad units, he said, and the targeting data needs to be improved.

How publishers can get started

Mobile publishers that are ready to start monetizing their content with real-time bidding, can start by picking an ad exchange with mobile RTB services. Many mediation platforms that aggregate mobile ad exchanges, including MoPub, Nexage and Smaato, also provide RTB exchanges.

Mediaplex president David Yovanno said in a white paper on the topic that real-time bidding “represents a giant step toward the concept of personalized marketing that is clearly where our industry is ultimately headed.

When choosing an ad exchange, publishers first should consider what countries each platform covers and how relevant they are to the desired audience. Other considerations include the type of ad-serving that appeals to the publisher, how much the platform charges for basic ad-serving and whether it charges for data.

Publishers also need to have a larger advertising strategy in place. Real-time bidding is an emerging industry, so publishers should not rely on it alone. A solution that combines real-time bidding with other forms of advertising through an ad exchange is the ideal solution.

One publisher with 300 million impressions per month told an Application Developers Alliance focus group that he uses real-time bidding in conjunction with static ad exchanges. He runs multiple marketplaces through Burstly and MoPub but said static exchanges are currently outperforming RTB exchanges. That is why a broad ad strategy is ideal.

An official with a mobile ad exchange acknowledged that some more established publishers may generate more revenue with traditional ads. However, she added that real-time bidding is outperforming overall expectations.

Mediaplex president David Yovanno said in a white paper that real-time bidding “represents a giant step toward the concept of personalized marketing that is clearly where our industry is ultimately headed. While RTB is not for every brand, it’s clear that more and more brands are seeing their objectives fit with this approach to media buying.”

One thing is clear: Targeting is the future of advertising in the digital age. The 2002 movie “Minority Report” imagined that future more than a decade ago in a scene where advertisers used technology to identify Capt. John Anderton (played by Tom Cruise) as he walked by their displays. It became a brief reality this year when high-tech trash cans in London targeted passersby with ads via their smartphones.

While those specific approaches may be too invasive for consumer comfort, research commissioned by both Google and Yahoohas demonstrated that consumers do respond positively to ads that are more relevant to them. A study conducted for Yahoo that gauged people’s physical responses to ads indicated that relevant ads get 25 percent more of their time. A Google-backed study that analyzed consumer eye movements of business-to-business purchasers revealed that they were 24 percent more likely to purchase a particular brand when exposed to relevant ads.

Real-timing bidding makes it possible for publishers and advertisers to achieve such relevancy without being too invasive. By analyzing people’s device IDs, their locations and other useful information, real-time bidding can simplify the advertising process and help pinpoint the right products to pitch to the right consumers.

Glossary

Ad call -- the action that occurs when a Web browser asks an ad server or ad exchange to deliver an advertisement. Source

Ad exchange -- a network that auctions each mobile/online ad impression in real time among multiple advertisers, selling the impression to the highest bidder. Ad exchanges create a single point of contact between advertisers and publishers who sell ad space. Source

Ad tag -- a piece of code on a Web page that communicates a request for advertising that meets preset parameters from a specific URL. Advertisers typically provide the code to a publisher or ad exchange, and it communicates with the ad server to display the ad.Source

CPM -- an abbreviation for cost per thousand impressions, CPM is the standard rate that advertisers pay for views of their ads on websites and mobile applications. Source

Creative -- a piece of advertising content created by a designer following a publisher’s guidelines. Creative may include multiple file formats, including video, graphics and animation, that work together for an interactive experience. Source

Demand-side platform -- a platform that handles the real-time bidding and purchasing of ad space on behalf of another company. The advertiser provides the ad materials, target markets and maximum budget, and the platform identifies the best ad markets.Source

eCPM -- an abbreviation for effective cost per thousand, eCPM is a measurement of how much an Internet or mobile ad earns for every 1,000 views. Source

Programmatic buying -- a data-driven process of buying targeted digital display advertising en masse, using automation tools with pre-defined rules instead of relying on traditionally manual means such as proposals, sales negotiations and insertion orders.Source

Real-time bidding -- a type of programmatic buying that enables website publishers and mobile application publishers and developers to sell ad inventory one impression at a time in auction style as the ad slots become available .Advertisers adjust their bids based on the users’ relevance to their target audiences and adjust their spending based on the effectiveness of the campaigns.Source

Frequently Asked Questions

What is real-time bidding?

Real-time bidding is a method of valuing and bidding on mobile and online advertising one impression at a time. Publishers make their inventory available through a technology infrastructure and management system, and buyers compete for the space in an automated auction process taking place in milliseconds, hence the label “real time.”

How does the RTB auction process work?

When a user visits an app or Web page that includes RTB technology, the system delivers an ad to an ad server. The ad exchange the publisher is working with alerts demand-side platforms used by advertisers that space is available for bidding. The DSPs decide how much to bid based on their clients’ pre-approved parameters. That information then flows back through the ad exchange and to the publisher’s ad server along with the URL of the winning bid. The user then sees the winning ad in his app or Web browser.

How long does the process take?

On average, DSPs respond to bids within 150 milliseconds to ensure that ad opportunities are not lost because of delays in serving ads.

What are device IDs, and what’s their role in mobile RTB?

Device IDs such as identifierForAdvertising (IDFAs) for iOS devices and Android ID for Android devices are similar to cookies. They let advertisers know which apps and mobile websites a specific mobile user accesses and then serve ads targeting that user. Device IDs are a key factor in setting ad rates for real-time bidding, along with user location, the category of the app and the platform on which the app was built.

What can publishers do to maximize profits in their RTB auctions?

Publishers may set floor pricing to keep real-time bids from lowering the cost of their ad inventory. Some ad exchanges also offer dynamic floors, or second-price auctions, that set a hard floor to ensure maximum pricing and a soft floor to create flexibility for clearing more bids. For instance, with a hard floor of 50 cents and a $1 soft floor, a bid of 80 cents would be cleared at 80 cents, but a $2 bid would be cleared at $1 in a more competitive situation.

Do ad exchanges charge for data use?

The majority of exchanges do not charge for data that they have or publishers provide. However, they tend to pass along the cost for third-party data.

What do I need to know about data management partners (DMPs)?

Although DMPs are an important part of the RTB process, those relationships are handled by DSPs and Exchanges. Publishers do not work directly with DMPs, which is why there are not directly discussed in this paper. However, a list of leading DMPs in the mobile RTB space can be found in the infographic in the paper.