What’s the Difference between Programmatic and RTB?

As a newbie, I’m still learning as I go. But one term StudyBreak Media so wisely made sure I was familiar with right away was programmatic. Why? Well, just do an online search for it and you’ll see. It’s a pretty hot topic; many consider it to be the future of digital advertising – that is here, right now.

At first, I had a really hard time understanding the difference between programmatic and real time bidding (RTB), a closely linked term. But as I started to research more and more, I realized I wasn’t alone. Nor was I alone in trying to learn what it all meant for digital advertising. Thank goodness.

So let’s break it down.

What does “programmatic” even mean?
I think it’s worth knowing the definition of programmatic before we get into how it applies to digital advertising.

Source: http://www.siliconloons.com/automate-all-the-things/

Source: http://www.siliconloons.com/automate-all-the-things/

By definition, something that is programmatic is quite simply of or according to a program, schedule or method.  Applying programmatic to digital advertising, we can then reason that programmatic buying is just buying with a methodology.

So, what is programmatic advertising?

Programmatic advertising is a technology that allows advertisers to automatically target consumers based on certain metrics that are obtained through algorithms. In the past, if Dick’s Sporting Goods wanted to advertise to people who are interested in buying their products, they might target sports sites. Now, an advertiser can target consumers on any site by taking information like age, gender, what sites the consumer has visited in the past and if they have shopped for similar products already.

Wait, what is RTB?

Real Time Bidding, or RTB, is exactly what the name implies. The buying and selling of ad impressions is done in an auction that occurs in the time it takes your webpage to load. Usually, this is facilitated by an ad exchange or supply-side platform that helps connect the advertisers to the publishers.

As the impression loads in a web browser, information about the user gets passed on to the advertisers. Advertisers interested in the user will start the bidding process. The highest bidder wins.

Isn’t Programmatic RTB then?

It’s confusing, but thinking about it like this may help. Programmatic is a method to determine if the advertiser wants to purchase the inventory space. RTB is one way to purchase.

Not all advertisers who use programmatic utilize RTB to purchase.  Programmatic Direct is a term used to describe more traditional buying with the use of programmatic technology.

So is this how the big publishers are doing it now?

Actually, publishers and advertisers have been slow to move on programmatic and RTB. A lot of the early hesitation for publishers was the fear of receiving low quality advertising on their site.

The truth is, RTB and the use of programmatic technology does not impact the quality of ads. And now, with advertisers and agencies becoming more and more interested in RTB buying and the increase in programmatic technology budgets, publishers can no longer ignore RTB and the use of programmatic within their own demand stacks.

Another obstacle has been the development of this technology. Both the buy side and the sell side must have the technology and processes in place to connect for the sale.

But this is technology after all, and things can and are changing quickly.

An article published by adage.com exemplifies the shift toward RTB and the use of programmatic technology. According to Ad Age Datacenter, American Express was the ninth-largest online display advertiser in the United States in 2013. Recently, the advertising giant sent out an RFP to some of the biggest ad-tech companies across the globe.

The request? “American Express would like to transform their Display Media Channel to become 100% programmatic,” the RFP stated. While this certainly won’t happen overnight, and American Express admits that, they are aligning themselves to work toward achieving this new target.

Can you sum this up for me?

Publishers should not fear programmatic and RTB, but rather take the time to learn how these different parts of digital advertising can impact the way they sell their inventory to advertisers. It’s important to keep up to-date with the advances in technology – remember this is a tech industry – and to at least start asking questions like, can this increase my ad revenue?

Reading this post is a great start, but if you want more information the Interactive Advertising Bureau (IAB) provides a great overview as well.

Happy learning!