Have real-time bidding and programmatic become a part of your everyday vocabulary? We marketers are quick to adopt the latest industry jargon and rapidly insert it into our everyday work lives (optimization, KPIs, demand generation, and the like). Despite often being used interchangeably, however, real-time bidding and programmatic do not mean the same thing.
Will Doherty with NetMining explains,
The failure to distinguish the two could result in advertisers missing out on one of the biggest technological leaps in decades.
Lets define real-time bidding and programmatic and clear up any existing confusion. Heres what you need to know:
Real-Time Bidding Defined
Real-time bidding is essentially an auction for the buying and selling of ad impressions in real time, similar to the stock market. Heres how it works: sellers (publishers) make their inventory available for buyers (advertisers) to bid on. The advertisers set their parameters, such as bid price, network reach, and even the type of user theyre trying to reach, and then optimize at the impression level, using RTB.
“Real-Time Bidding means that every online ad impression can be evaluated, bought, and sold, all individually, and all instantaneously. It is the future of all online advertising and enables exchanges and buyers to work together to programmatically sell and place bids on ads. It allows every impression to be cost effective, and to be placed in front of the right person, at the right time. When using RTB, it is the buyers challenge to score every user on a variety of attributes, and place the right CPM bid and right creative in front of that user. RTB eliminates broad placement of ads and systemically allows each ad to be presented with intent behind it, based on available data to the buyer.
Why RTB Matters
As explained in Jeff Greens definition above, RTB affords both publishers and advertisers with numerous benefits. In short, advertisers are able to access inventory in an efficient and streamlined manner with transparent pricing that is subject to the laws of supply and demand. These reasons have resulted in advertisers quickly adopting the practice of RTB. According to the IDC, real-time bidded display advertising will accelerate at a 59% compound annual growth rate through 2016 with global spending to reach an estimated $13.9 billion.
Publishers, on the other hand, have been slower to adopt RTB, but are quickly realizing it is a lucrative option. In short, publishers who release their inventory to RTB are afforded automation that can decrease the cost of doing business and allows their sales teams to focus on higher-priority, custom solutions for their most valuable brand partners. Without sales resources, RFPs, or IOs, publishers overhead is minimal. With RTB, publishers can easily monetize their inventory. Instead of spending time working on classifying inventory and working with multiple partners, publishers can efficiently reach qualified advertisers without the strain on sales and ad ops teams. Furthermore, publishers can select a subset of their inventory for RTB that has gone unsold, resulting in revenue they may not have otherwise received. Publishers with fears of being associated with remnant inventory, however, can set price floors, ensuring advertisers arent undercutting their valuable inventory and that quality remains high.
Though far from a perfect system, RTB has enabled vast developments for advertisers and publishers alike. With access to automation, buyers and sellers are experiencing greater rewards with smaller investments.
Programmatic vs. RTB
Real-time bidding is a programmatic tool, but programmatic can and does encompass more than just RTB. Programmatic is large-scale automation that extends far beyond the buying and selling of online display inventory. RTB has been an immense development within the realm of programmatic for online advertisers and marketers, but there is an opportunity for even greater programmatic progress.
Programmatic also implies the use of multi sourced data signals to inform targeting and optimization decisions. An increasing share of online display advertising is moving towards programmatic due to its inherent efficiency (both workflow and performance). The majority of inventory available via programmatic is non-guaranteed, auction traded during the ad call although we expect to see more guaranteed reserved ‘premium’ inventory available in the future. Although ‘Programmatic’ suggests little or no human intervention, algorithmic optimisation can only do so much. Smart macro optimization by analytical ‘traders’ can amplify programmatic performance significantly.”
The increased sophisticated of programmatic buying solutions will bring publishers and advertisers improved streamlined processes across channels, optimized interactions and relationships, and perhaps most importantly, more comprehensive and actionable data. The flow of data through automation via programmatic platforms can lead to even more real-time experiences that are uniquely tailored to the consumer. Marketers, advertisers, and publishers are all looking to RTB as a model for programmatic progress, but we will all be best served by not limiting ourselves to RTB and expecting even more out of programmatic solutions.