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Real-time bidding (RTB) refers to a digital advertising^[2] practice where online ad impressions are bought and sold through live auctions. This process is driven by algorithms that evaluate the value of an impression based on multiple factors, allowing advertisers to target specific audiences and adjust their bids using performance data. The benefits of RTB include highly accurate audience targeting, real-time campaign optimization, transparency, and a broad reach across various devices. However, RTB has drawn some privacy^[3] and security^[4] concerns due to the data collection, profiling, and fraud detection involved. RTB operations must ensure data privacy compliance and robust security measures. The operational process of RTB begins when a user visits a website^[5], triggering a bid request. Advertisers independently set bids and budgets based on probabilistic models, with criteria considering user behavior and conversion data. The implementation of RTB faces challenges like mobile tracking limitations, ad fraud, and data privacy regulations. However, the evolution of RTB, including programmatic advertising and advanced technologies, continues to address these challenges. Emerging trends in RTB include contextual targeting, cross-device targeting, connected TV and audio advertising, and the use of AI and machine learning^[1] for real-time analytics.

Terms definitions

1. ↑ machine learning. Machine learning, a term coined by Arthur Samuel in 1959, is a field of study that originated from the pursuit of artificial intelligence. It employs techniques that allow computers to improve their performance over time through experience. This learning process often mimics the human cognitive process. Machine learning applies to various areas such as natural language processing, computer vision, and speech recognition. It also finds use in practical sectors like agriculture, medicine, and business for predictive analytics. Theoretical frameworks such as the Probably Approximately Correct learning and concepts like data mining and mathematical optimization form the foundation of machine learning. Specialized techniques include supervised and unsupervised learning, reinforcement learning, and dimensionality reduction, among others.

2. ↑ advertising. Advertising is a form of communication used to inform or persuade an audience, often with the goal of selling a product or service. Its history dates back to ancient civilizations, where Egyptians used papyrus for sales messages, and wall paintings were used in ancient Asia, Africa, and South America for promotional purposes. The medium evolved over time, from print in newspapers to audio-visual and digital mediums, with the rise of mass media and technological advancements. Advertising strategies can vary, aiming to raise awareness or drive sales, and can target different audiences on a local, national, or global scale. Various methods include print, radio, web banners, and television ads, among others. New trends have emerged in the advertising business models, like guerrilla marketing and interactive ads. The role of women in advertising has also been notable, with their insights being valued due to their purchasing power.

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Real-time bidding (Wikipedia)

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, known as backfill.

Real-time bidding is distinguishable from static auctions by how it is a per-impression way of bidding, whereas static auctions are groups of up to several thousand impressions. RTB is promoted as being more effective than static auctions for both advertisers and publishers in terms of advertising inventory sold, though the results vary by execution and local conditions. RTB replaced the traditional model.

Research suggests that RTB digital advertising spend will reach $23.5 billion in the United States in 2018 compared to $6.3 billion spent in 2014.

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