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Posted 4 months ago

The Confusion over Programmatic Advertising and Real-Time Bidding

Although programmatic advertising and real-time bidding are trendy terms related to digital advertising today, many continue to mistake them as synonymous to each other. It is, therefore, essential to understanding the key features of why programmatic advertising is different from real-time bidding. In this article, let us take a close look into how both differ in terms of functionality and how, in that case, both are interrelated.

What is Programmatic Advertising?

To simply put it, programmatic advertising is technology-driven workflow automation. In a programmatic scenario, a person will define the campaign parameters and based on which the ad tags are automatically transmitted to the destination ad server. This eliminates the need for any human intervention, thereby streamlining the entire operation. Programmatic advertising is undertaken by many players — trading desks, ad servers, ad networks, data supplier, DMPs, aggregators, etc. Of these, the three key players that form the heart of programmatic advertising are —

  • Supply-Side Platform or SSP
  • Demand-Side Platform or DSP
  • Ad Exchange

Publishers use ssps for selling their ad impressions, while advertisers use the DSP to decide which ad impressions to purchase. Both the buying and the selling are done via an ad exchange.

There are different types of programmatic advertising. Such as —

  • Programmatic Direct
  • It is a form of an agreement made between an advertiser and a publisher to purchase a pre-determined number of clicks or impressions at a fixed price on the publisher site. Programmatic direct can be considered as a subset of direct media buying and can be a highly effective form of advertising especially when you know that a site performs well and you will need to acquire the maximum possible impressions.

  • Programmatic Guaranteed / Reserved
  • It is a type of agreement between the advertiser and the publisher, where the publisher to the advertiser guarantees a fixed number of impressions or clicks. The inventory prices are generally very high in such type of agreements.

  • Private Marketplace or PMP
  • It is a type of private environment programmatic buying that can be categorized between programmatic direct and open auction RTB. Such type of advertising deals is only made available to a selected number of advertisers by publishers.

  • Real-Time Bidding or Open Exchange
  • RTB is a type of programmatic advertising where advertisers are required to compete in an auction type environment, where they can purchase an ad inventory on a per-impression basis. For instance, as soon as a visitor enters a webpage, the page gets loaded. Meanwhile, the publisher will try connecting to an SSP. The SSP will analyze the visitor’s data before an ad request is sent to the ad exchange. The ad exchange will start by setting a price for the opportunist ad space. DSPs willing to place their bid for the ad space will place their bid, and the ad exchange will select a winning bid. The entire operation takes place within 10 milliseconds. The winning DSP will pass the ad details to the ad exchange, which is then passed back to the SSP followed by the website publisher before an ad is rendered on the website page.

    RTB is the most preferred type of agreement made by advertisers as they can get to purchase only the impressions that receive prospective viewers.

    Real-Time Bidding or RTB can, therefore, be identified as a type programmatic advertising, which is conducted on remaining ad inventory reaching the open auction environment. Programmatic advertising, on the other hand, includes every form of media buying.

    Both are therefore not synonymous terms. While programmatic advertising can offer you different forms of digital advertising agreement to choose from, RTB offers you only one type of advertising agreement form. Publishers need to first investigate the benefits of programmatic and RTB as a means of selling their ad inventory to advertisers. The ultimate goal is to ensure that no matter what technology or advertising process you choose to go with, it should help you to increase your ad revenue.

Are you new to digital advertising? Here’s how Genisys can help

It all begins with an effective workflow, driven by the right processes and the right target channels. Shifting from traditional to new digital workflow might seem to be a challenging task for newcomers. However, Genisys Group can help to reduce this business complexity by guiding you through choosing the right digital technologies that will help to reshape the industry, provide effective media planning through advanced data analytics, and targeted customer experience with personalized content.

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