What is Bid?

A bid is the amount advertisers are willing to pay to an advertising platform in order to reach a certain group of users. It is the factor that decides which ad is going to be placed on the desired ad space.

Bidding is the process that is best explained as auctioning, where advertisers set the price they are willing to pay for getting their ads served to a user. The advertiser with the highest bid for certain ad space is the one that gets it for the promotion of their products.

Buyers and sellers in the ad ecosystem are advertisers and publishers. Publishers provide ad space for purchase, while advertisers want to purchase a place where they can promote their products. These two parties normally come together at advertising platforms or DSPs to make this exchange.

The bid is mostly going to depend on the targeting that advertisers choose. The bids are influenced by many factors, from geographical location, OS, and device type, to the time that has passed since the user has subscribed to receive notifications.

Nowadays, the whole process is done in a split second through an open marketplace programmatic auction called real-time bidding (RTB). The whole process of bidding occurs in a short period while a web page is loaded by a user.

An RTB auction is effective for advertisers because it can buy ad impressions in real-time. It also saves a lot of time that would be spent on manual price bidding.

The automatic bidding process has many advantages, but it comes with potential danger to the advertising budget. That is why, after the advertiser decides on the bid they want to go with, it is important to put a daily cap on their campaigns so that the spending is kept under control. This is especially useful for advertisers that are not in the situation to monitor the campaigns constantly. The rule of thumb is always to start small and then scale.

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