Written by Oshin Anand and Kulbhushan Singhal


In the ever-evolving digital advertising landscape, Real-Time Bidding (RTB) is a cornerstone of modern ad placement strategies. The integration of Large Language Models (LLMs) such as GPT-4, Bing Chat, and Gemini promises to revolutionize this process. This blog post explores the potential of LLMs to enhance the RTB value chain and both the opportunities and challenges that come with this technological advancement.

Understanding the RTB Value Chain

The integration of Large Language Models (LLMs) into the RTB process marks a significant evolution in the realm of digital advertising. With RTB, advertisers bid for ad space in real-time. RTB is a rapidly changing field requiring constant innovation. These AI models offer the potential to revolutionize ad targeting and placement by providing deeper insights into user preferences and behaviors. However, integrating these sophisticated tools into the existing RTB value chain is not without challenges. It involves navigating complex issues related to computational demands, real-time data processing, privacy, and regulatory compliance. In this section, we delve into the unique role of LLMs within the RTB framework, explore the challenges inherent in their integration, and discuss potential solutions to leverage their full potential effectively.

Aggregated Context Information from User Interactions

Contextual information access from user interaction can enhance the overall utility and variety of information for ad targeting. Currently, there is a significant analysis that is done on data captured from cookies on user behavior. This can be further facilitated with data from LLM-powered applications as data sources, wherein in-depth analysis of user interactions with direct textual responses and contextual cues, inquiries, and behavioral patterns. Further contextual analysis of this data using LLMs would allow us to understand user sentiments, intentions, and underlying interests more deeply. For instance, a discussion about eco-friendly practices or vegan lifestyles on a chat platform could indicate an inclination towards sustainability. Such analysis of the data can be possibly achieved through a task-specific chain of thought prompting (https://arxiv.org/pdf/2201.11903.pdf), template customization on general LLM (ex. GPTs) or hierarchical prompt definition for information mining.

LLMs can also be leveraged for analyzing content on the web. There is a vast amount of information gathered from both first and third-party cookies, which are combined with demographic data, to help optimize ad targeting and placement. However, additional context information from the content analysis can act as an additional parameter to the current state of art methods. This enriched data leads to a more sophisticated understanding of audience segments, enabling advertisers to target their campaigns more effectively. LLM’s comprehension capability can also be leveraged for data aggregation and analysis.

This sector is expecting a major shift in this pattern analysis with possible deprecation of third-party cookies. Many might explore alternate AI approaches. Content to ad mapping, creative appropriateness, and ad category comparison to avoid a competitive clash in placement are some of the examples where text and multi-modal LLMs mine task-specific information and aid in decision making. Data comprehension can be extended to both text and visual content on web pages with multi-modal models (Gemini, PaLM 2 etc). This involves analyzing the content users engage with, including articles, blogs, social media posts, and images, to glean insights into user interests and behaviors.

Real-Time Bid Prediction:

The capability to contextualize and comprehend data by large generative AI can also help improve predictive explainability in real-time bidding. Utilizing the context vectors generated from user data, LLMs can assist DSPs in predicting the potential success of different ads. A possible approach can be LLM used to add information to the existing models in the form of additional parameters and thus increase the explainability and deductive capacity of it. By improving these predictive insights, LLMs enable DSPs to make more informed bidding decisions.

LLMs for Dynamic Content Optimization (DCO)

An improved understanding of the user’s persona can also be leveraged for ad customization and personalization. LLMs can significantly contribute to DCO by generating ad content that is not just tailored to, but personalized for user personas. This includes the creation of both text and images that resonate more deeply with specific user interests and preferences.

The ability of LLMs to generate a variety of content based on the same underlying theme allows for more dynamic and engaging ad campaigns. This could mean creating different versions of an ad that appeal to various segments of the target audience, enhancing the overall effectiveness of the campaign.

Sample Case Study Example:

Sample 1. Consider a scenario where a content creator has a video and there is a possibility to place ads at various points in the video. The content metadata and the viewer’s persona will give some information on mapping the video type to the target user. Multimodal LLMs, with their capability to explain the content of video frames, can give us insight into ad targeting and also position ads better during the flow of the video.

In summary, LLMs bring a sophisticated level of contextual and multi-data-type intelligence to the RTB process. However, the challenges in processing speed, data complexity, and the dynamic nature of web content require ongoing advancements in LLM technology and application strategies.

Sample 2: Consider an online retail brand that utilizes an LLM for DCO. The LLM analyzes user behavior on the website and social media interactions to create targeted ad campaigns. For instance, There are two user users, belonging to the category of art/ painting enthusiast. User 1 text content consumption shows interest in acrylic medium and cityscapes versus user 2 who seems to be an oil paint artist exploring nature. A retail brand for art supplies can create an ad for user 1 containing acrylic supplies on the backdrop of cityscape vs oil paint and nature inspiration for user 2.

Challenges and Potential Solutions

  • Time Sensitivity, Dynamicity of Content and Computational Demand:

The RTB process is incredibly time-sensitive, requiring decisions to be made in milliseconds. LLMs, particularly advanced models like GPT-4 and Gemini, are resource-intensive and may not be fully suited for at-scale processing of real-time data streams like in RTB systems. They face limitations in processing large-scale real-time data, a challenge for applications requiring quick, contextually aware decisions. (https://blog.gdeltproject.org/large-language-models-llms-planetary-scale-realtime-data-current-limitations/). Furthermore, the constantly changing nature of web content adds another layer of complexity. LLMs need to be adaptable and continuously learning to stay relevant to the latest trends and user interests.

Implementing strategies to preprocess the data before it’s fed into the LLM can reduce computational demands. Additionally, caching frequently accessed data can speed up response times.

Using lighter models with fewer parameters ( for ex 7 billion parameters vs the 70 billion parameter version of the same model) or customizing models to the specific needs of the RTB process can help balance performance and computational demands. Model compression (https://medium.com/@sasirekharameshkumar/understanding-compression-of-large-language-models-2ee3b8a350a2), quantization (https://arxiv.org/pdf/2305.14314.pdf) and distillation are some techniques that can be vital for reducing the resource intensity of LLMs without significantly compromising their performance. (https://www.unite.ai/bridging-large-language-models-and-business-llmops/)

Integrating user feedback loops where the LLM can learn from user interactions and preferences in real-time. This includes analyzing user responses to ads, click-through rates, and other engagement metrics to refine content targeting and personalization.

Employing advanced ML techniques such as transfer learning, where an LLM pre-trained on a vast corpus of data is fine-tuned with specific, up-to-date content relevant to current web trends. Robust Data engineering pipelines backing the AI model can facilitate model updates through web crawlers or APIs that provide up-to-date content from diverse web sources.

  • Real-Time Delivery and Integration Challenges:

It is challenging to integrate LLMs with existing RTB systems and ensure that they can deliver customized content in real-time. This involves not only technological integration but also ensuring that the system can handle the computational load without delays. Failure to properly integrate can result in a disjointed system that fails to capitalize on the potential benefits of LLMs, such as enhanced user targeting and improved return on ad spend.

Integrating large-scale real-time data with historical user data while maintaining model efficiency and effectiveness is a complex task. It requires careful balancing of data inputs and computational resources.

Ensuring the right infrastructure is in place is crucial for this issue. Running validation tests and evaluating the effectiveness of the LLM from various angles is essential for successful integration​.

(https://deepsense.ai/how-to-efficiently-implement-llms-in-your-business-operations/). Again robust backend data engineering infrastructure can appreciate scalability and efficiency.

  • Privacy and Regulatory Compliance:

Using LLMs for ad targeting raises concerns about user privacy and regulatory compliance. These models often process vast amounts of personal data, which must be handled by privacy laws like GDPR.

Implementing stringent data anonymization techniques and ensuring secure handling of user data can help maintain privacy and comply with regulations. This can be achieved through task-specific PII(Personally Identifiable Information) handling LLMs, that are custom trained for geographical policy compliance. Regular audits and compliance checks can help in maintaining adherence to legal standards. Awareness and updation of the same can be reelected in the custom model’s fine-tuning too.


Integrating LLMs into the RTB value chain offers promising opportunities but presents significant challenges. Addressing these challenges requires a careful balance between technological innovation and practical constraints. By employing strategic solutions such as preprocessing, model optimization, continuous refinement, and stringent privacy measures, businesses can harness the full potential of LLMs in enhancing the RTB process, leading to more effective and user-centric advertising strategies.