What is the mechanism of real-time bidding (RTB) in online advertising?

The mechanism of real-time bidding (RTB) in online advertising is best described as pricing online inventory via an auction. In RTB, ad impressions are bought and sold in real time, allowing advertisers to bid for inventory based on the value they assign to specific audiences or impressions at that moment. This auction-based model ensures that the highest bidder wins the opportunity to display their advertisement to the user, facilitating a dynamic and competitive marketplace for ad space.

RTB is efficient because it allows for immediate transactions, meaning advertisers do not need to negotiate fixed prices beforehand. Instead, they can adjust their bids based on various factors such as audience targeting, time of day, or the specific content being viewed, optimizing their advertising spend in real time. Thus, the auction mechanism that underpins RTB is essential for maximizing the relevance and effectiveness of digital advertising campaigns.