The Nuts and Bolts of Real-Time Bidding: How RTB Programmatic Advertising Works and What Makes It So Special

Keep reading or watch Dmitry Chebatkov, Product Owner at Epom DSP, break down RTB bidding and explain the technology behind it, with definitions, charts, and examples.

"Real-time bidding" or "RTB" became a catch-all term. We use it to identify different concepts in ad tech: the way we buy ad impressions, the online auction where the impressions are sold, the protocol behind the auction.

We call it all just “RTB” to keep things simple. However, such a simplification has a downside; it results in an ocean of misconceptions and uncertainty. You’re probably here because of confusing RTB definitions, too, aren’t you? Now is the time to cross your t’s and dot your i’s. Together, we’ll learn what RTB means, how it works, and how you can take advantage of it.

What Is Real Time Bidding?

The "real-time bidding" (RTB) definition often describes automatic media buying with ad inventory sold per impression. The impressions are auctioned in real time right before the winning ads appear on a website, in an app, on CTV, or anywhere else. This method of buying media as RTB programmatic.

If we go deeper into RTB meaning, we find that RTB is actually a protocol that makes the programmatic auction possible. What does RTB stand for in practice? It stands for speed, automation, and impression-level bidding at a scale no human team could manage manually.

The first RTB-enabled programmatic ad exchanges emerged around 2009. Google was the pioneer with its DoubleClick Ad Exchange. By 2010, the benefits of RTB advertising were obvious to most advertisers, and demand for programmatic skyrocketed. Ad tech is notoriously slow to adopt new software. That time, it moved fast.

Ad tech and martech are very slow to change and adopt new software, but rare exceptions do occur. And so, by 2010, the benefits of RTB advertising had become obvious to most advertisers, and demand for programmatic skyrocketed.

As of 2026, real-time bidding is the dominant force in online advertising. It drives open exchange buying, powers private marketplaces, and increasingly shapes the world of digital out-of-home. Programmatic advertising leverages artificial intelligence to refine targeting and optimize visibility among potential customers, and RTB is the auction infrastructure that makes it all possible.

Several RTB-Related Terms You Should Know

In RTB programmatic, the RTB auction is the core process. It ensures that the highest bidder wins an ad impression on the publisher’s media. It's also called an open auction since any publisher and advertiser can participate in it.

The platform that hosts open auctions is called RTB exchange or ad exchange. It communicates with supply-side platforms (SSPs) — software used by publishers, and demand-side platforms (DSPs) — software used by advertisers.

From SSPs, ad exchanges collect data about impressions available for sale in the form of bid requests. From DSPs they solicit bid responses showing how much companies are willing to pay for their banner or video to appear on the suggested ad space.

All the requests and responses are managed automatically by the RTB algorithms running under the hood of SSPs, DSPs, and ad exchanges. Those algorithms send and receive RTB advertising data, complete transactions, and deliver the ads to be shown on ad spaces.

The ‘common language’ that SSPs, DSPs, and ad exchanges use to talk to each other is called RTB protocol. It’s a standard communication protocol that defines how bid requests and responses should be written and what data they should contain.

RTB Doesn’t Equal Programmatic Advertising

To dispel the most widespread misconception, we should emphasize that programmatic ad serving (or advertising) is a much broader concept than real-time bidding.

In other words, yes, open programmatic auctions are conducted exclusively through real-time bidding. And no, you don’t need real time bidding for every programmatic auction type.

What the hell are we talking about? Well, you see, among the 4 types of programmatic auctions, only 2 rely on RTB. Let’s break it down:

• Open Auction – this is the type of auction that automatically comes to mind when someone mentions programmatic advertising. It allows independent advertisers to participate in it, and the bids are placed in real time.
• Thus, the real-time bidding is the bread & butter in this case. The highest bidder wins the ad impression, usually using a second-price auction (the winner-bidder pays the second-highest price).
• Private auction/PMP – this is a programmatic auction only for the invited VIPs. The process is technically the same as with an open auction.
• The major difference, however, is that only invited advertisers can compete for the ad placement with their DSPs. The RTB meaning is still very high.
• Fixed price auction/programmatic guaranteed – in this case, there is no auction, so there is no need for real time bidding.
• Publishers and advertisers negotiate a fixed price one-on-one for a guaranteed number of impressions. They still buy them through a DSP, but the traffic is reserved for a specific client.
• Preferred deal/programmatic non-guaranteed – once again, there is no RTB advertising here. Both of these programmatic types are very similar.
• The difference is that in non-guaranteed deals (as the name suggests), there are no obligations. The inventory is not reserved for the one and only buyer, and the latter doesn’t even have to purchase the ad placement.

Let’s cement it.

RTB-based programmatic deals: open auctions, private auctions.

Non-RTB-based programmatic deals: fixed price auctions, preferred deals.

Now, let’s move on to its meaning in marketing.

How Real-Time Bidding Works

The RTB programmatic process starts the moment a user visits a publisher's website. The entire chain happens in under 100 milliseconds. Here is what fires:

1. The publisher's site sends an ad request to an SSP when there is an opportunity to show an ad to a user.
2. The SSP collects data about the user (cookies, location, browsing history, online behavior) and the available ad space, then passes it to an ad exchange.
3. The ad exchange broadcasts this ad opportunity to multiple DSPs simultaneously, opening the real-time auction.
4. Based on targeting parameters set by advertisers, their DSPs bid on the potential impression. Precise targeting in RTB allows marketers to tailor bids for specific users using granular data such as demographics and browsing behavior.
5. The ad exchange receives all bid responses and determines the winning bid.
6. The user sees the highest bidder's ad in the available ad space.

The winning ad is served before the page finishes loading. The winning bid sets the price for that ad impression. That is impression-level bidding in practice: every single impression treated as its own micro-auction.

RTB delivers this process thousands of times per second across millions of publisher websites and apps. It is all about communication between separate pieces of software operating at machine speed.

What’s Inside the RTB Protocol?

The backbone of the RTB programmatic protocol is a taxonomy. Real-time bidding analyzes its ecosystem and classifies each participant into a structured hierarchy.

At the root: RTB. First branches cover primary components like participants, auctions, data and targeting. Second branches break these down further: participants split into advertisers, publishers, DSPs, SSPs, and ad exchanges.

This matters because it helps DSPs and SSPs name and interpret data in the same way. Beyond structure, the protocol contains rules about what data can be shared and how, keeping RTB programmatic advertising compliant with data privacy regulations like GDPR and CCPA.

As programmatic platforms continue to evolve, the protocol is also adapting. The elimination of third-party cookies is pushing advertisers toward first-party data strategies and contextual targeting to maintain targeting accuracy without relying on cross-site tracking.

All of this is super-useful since it helps DSPs and SSPs to name and interpret pieces of data in the same way. In addition, the protocol contains rules for what data can be shared and how it can be used to make realtime bidding advertising compliant with data protection laws.

What Are RTB Protocols?

Fun Fact: There are several RTB advertising protocols available.

OpenRTB

The hood classic and the cornerstone of most programmatic auctions is, of course, OpenRTB. Developed by IAB, its primary purpose is “to standardize communication between DSPs and SSPs.”

IAB names these as OpenRTB’s distinctive features:

• Usage of JSON for its messaging format, making RTB advertising lightweight and easy to work with.
• Support of complex bidding, targeting, and data sharing specifications.
• Continuous updates that include new features such as support for native ads, video, and advanced fraud prevention mechanisms.

Overall, there are several versions of the RTB marketing protocol. The latest is OpenRTB 3.0. Right now, IAB is working on improving security.

Authorized Digital Sellers

De facto, ads.txt is not a real-time bidding protocol, but it’s an initiative that we can’t simply ignore. Ads.txt is an addition to OpenRTB created to “reduce fraud in buying and selling of advertisements.”

It’s a simple, flat text file used by publishers on their web ad servers that lists all the companies authorized to sell their digital inventory. This way, ads.txt prevents deals with unauthorized placements.

Google’s Authorized Buyer’s Proprietary Protocol

Google was the pioneer of ad exchanges, so it’s only natural that they have their own version of RTB advertising. ABPP is an integral part of the company’s ads ecosystem, and it does its job well.

This version of RTB works flawlessly with Google Ad Manager and is quite safe.

Why is Real-Time Bidding Important?

According to Statista, global programmatic ad spend reached $642 billion in 2025 and is forecast to approach $800 billion by 2028. The majority of those transactions happen on RTB auctions.

And according to eMarketer, programmatic will account for nearly 9 in 10 digital display ad dollars worldwide in 2025, driving 96.8% of all new display ad spending growth. RTB is not a feature of the digital advertising landscape. It is the infrastructure.

The global significance of RTB programmatic buying keeps growing because it delivers measurable advantages to both sides of the market. Programmatic platforms provide robust analytics tools that enable companies to measure the performance of their ads comprehensively, turning every campaign into a feedback loop.

Based on Epom observations, advertisers who implement impression-level bidding with well-structured DSP targeting consistently see lower CPMs and higher campaign performance compared to bulk-buying approaches, especially when layering first-party data on top of behavioral targeting.

How Do Publishers Take Advantage of RTB?

In the early 2010s, publishers worried that RTB platforms would let brands lowball their inventory. What actually happened was the opposite. By selling impressions to the most relevant and motivated advertisers, the RTB auction helped publishers earn a higher price per impression than they could negotiate manually.

With RTB programmatic buying, publishers can:

• Trade with virtually unlimited advertisers to minimize unsold inventory and maximize fill rates.
• Monetize small media with low traffic or narrow audiences that traditional buyers would ignore.
• Set floor prices to define the minimum acceptable price for their advertising inventory.
• Earn the highest price per impression by making each one available across multiple ad exchanges simultaneously.

RTB programmatic makes publisher revenue streams more stable and predictable. It also gives smaller publishers access to demand they could never reach through direct sales alone.

The Pros and Cons of RTB for Advertisers

With RTB programmatic advertising, brands automatically place ads in relevant spaces without the overhead of manual media buying. Advertisers set up their targeting in a DSP. The DSP selects suitable impressions from open auctions across multiple ad exchanges, bids on them, and completes the purchase.

Beyond saving time, RTB makes paid advertising campaigns more productive and cost-efficient by allowing advertisers to:

• Minimize manual labor and run leaner teams without sacrificing reach or precision.
• Access the largest selection of digital ad inventory across display, video advertising, native, and audio formats on the open web.
• Set precise audience targeting using demographics, browsing history, online behavior, third-party data, and first-party data to buy only high-value impressions.
• Save money through auction mechanics, paying only marginally more than the second-highest bid in second-price auctions.
• Adjust, pause, or scale campaigns based on real-time performance data without waiting for insertion order renegotiations.

Companies that leverage RTB programmatic buying do not buy ad inventory in bulk. They evaluate every impression before paying for it. That is auction-based buying at its best.

The risks are real too. RTB carries risks of ad fraud, where bots simulate human traffic to inflate ad impressions. Brand safety can be compromised if strict monitoring and blocklists are not maintained, potentially placing ads on inappropriate sites. Transparency concerns in the programmatic supply chain can also make it difficult to track exactly where ads appear.

The solutions: verified supply partners, ads.txt compliance, brand safety tools, and working with DSPs that offer full visibility on ad placements. RTB delivers outsized value when you manage it properly. When you do not, wasted ad spend adds up fast.

As an Epom ad tech specialist puts it:

"RTB is not plug-and-play. The targeting setup, the SSP selection, and the bid strategy all matter. But once you have those dialed in, the efficiency gains over traditional advertising methods are not subtle."

What RTB Software Can Buy Traffic via RTB?

To participate in open auctions, a business should use a demand-side platform. They can use a self-serve DSP. In this case, a media buyer creates a free-of-charge, self-serve account in a third-party DSP and quickly learns how to get started with programmatic advertising.

For self-serve DSP campaigns, ad spend includes the money paid per impression to publishers, plus hidden bid markups. Businesses with small paid marketing budgets still benefit from this model, though. For low-volume campaigns, the vendor’s 10-50% markup on the per-impression price doesn’t translate into significant expenses.

Still, companies with big budgets might be willing to use a proprietary DSP to save money with real-time bidding. In this case, the company owns the platform and doesn’t have to pay any extra on top of their bids.

To have your own DSP, you don’t necessarily need to build it from scratch — in-house advertising is a long and costly adventure. You’ll need to hire an engineering team and allocate hundreds of thousands of dollars to the development. Afterward, you’ll need to cover software maintenance expenses, such as bug fixes and improvements. The result will depend on your team’s skills and experience. There’s no guarantee you’ll be fully satisfied with the software you get.

Alternatively, you can buy a white-label solution and launch it in a couple of weeks. When opting for a white-label solution, you’ll get dependable software from experts for a much lower price. Plus, you can test it before buying to know what you’re getting.

Building a DSP from scratch is a long, costly adventure. You hire an engineering team, commit hundreds of thousands of dollars to development, and then spend ongoing budget on maintenance and updates. There is no guarantee the result meets expectations.

FAQs

• What is the difference between an ad exchange and RTB?

  An ad exchange is a technology platform that hosts open auctions for programmatic media buying. The platform uses real-time bidding to process bid requests from SSPs and bid responses from DSPs participating in those auctions. Put simply: the ad exchange is the marketplace, RTB is the auction mechanism running inside it.

• Is it difficult to build a real-time bidder?

  If you intend to build your own RTB protocol from scratch, do not. That is a waste of time and money, and the competition is too strong. If you want RTB software such as a DSP, buy a tried-and-tested white-label solution, customize it, and start running programmatic campaigns within weeks.

• How are bidding conflicts avoided in RTB programmatic?

  Running campaigns across multiple self-serve DSPs creates a real risk of competing with yourself, since those platforms may share common SSP partners. If you use your own white-label DSP connected directly to a defined list of SSPs, you control your supply path and eliminate self-competition entirely.

• How is the final price per impression set in RTB advertising?

  Three parameters determine the final price: the publisher's floor price, the highest bids from competing advertisers, and the auction type. In a second-price auction, the winner pays the second-highest bid plus a small increment. In a first-price auction, the winner pays their maximum bid. The floor price defines the minimum acceptable amount either way.

• Are there bottlenecks in the RTB programmatic auction?

  Yes. Your DSP might not bid on impressions even when campaigns are active. Common causes: incorrect SSP Endpoint configuration, a mismatch between your targeting and the SSP's traffic type or geography, DSP response times that exceed the auction window, bids that are too low to win, or impression tracking issues. Each one is diagnosable and fixable.

• Does Google use RTB?

  Yes. Google uses RTB technology to auction ad inventory from publishers using Google Ad Manager, AdMob, and AdSense. Google's ad exchange supports two oRTB implementations (JSON and Protobuf) plus the Authorized Buyers proprietary protocol, which handles most RTB programmatic transactions in Google's ecosystem.

• What is the difference between RTB and programmatic direct?

  RTB is an auction-based buying method where advertisers bid against each other for individual ad impressions in real time. Programmatic direct skips the auction entirely: the advertiser and publisher agree on a fixed price for a guaranteed number of impressions. RTB gives you flexibility and efficiency. Programmatic direct gives you certainty and inventory control.