Definition:
Real-Time Bidding (RTB) is an automated digital advertising process where ad impressions are bought and sold through instant auctions that occur in the time it takes a webpage to load — typically under 100 milliseconds. Every time a user visits a webpage, advertisers automatically compete in a live auction to show their ad to that specific user, with the highest bidder winning the ad slot.
An impression is simply one instance of an ad being displayed to a user on a webpage or app.
💡 Simple Analogy Imagine a lightning-fast stock exchange, but instead of trading company shares, you’re trading eyeballs on a screen. The moment someone visits a webpage, thousands of advertisers instantly bid for the right to show that specific person their ad — all before the page even finishes loading.
Example:
Scenario: Nike Targeting a Runner Sarah is a 28-year-old marathon runner. She visits ESPN.com to check scores.
What happens behind the scenes in 100ms:
1️⃣ ESPN's SSP fires a Bid Request:
┌─────────────────────────────────────────┐
│ User ID: #XJ-4829 │
│ Age: 28 │
│ Interests: Running, Fitness, Sports │
│ Location: Chicago, IL │
│ Device: iPhone 15 │
│ Page: ESPN.com/scores │
│ Ad Slot: 300x250 banner, above fold│
└─────────────────────────────────────────┘
2️⃣ Ad Exchange broadcasts to all DSPs
3️⃣ DSPs evaluate and bid:
Nike DSP → $4.20 ✅ (Sarah matches runner profile)
Adidas DSP → $3.80
Netflix DSP → $1.20 (not their target)
Booking.com → $2.50
4️⃣ Nike WINS at $4.20
5️⃣ Nike's "Spring Running Shoes" ad appears
on Sarah's ESPN page instantly 🏃♀️👟