RTB vs Programmatic: Similarities, Differences & More
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Pathlabs Marketing |
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October 18, 2023 |
Programmatic advertising broadly refers to the buying and selling of digital ad space using algorithms, technology, and automation.
This intricate landscape has advertisers buying digital ad space and placing ads while publishers sell space. Both parties rely on different technologies, platforms, and technical intermediaries to go about this process and facilitate these transactions, making it ‘programmatic.’
Despite its popularity, programmatic advertising's intricacies, particularly programmatic buying and real-time bidding (RTB), confound many. In this article, we discuss both, outlining their similarities and differences.
RTB Programmatic: Real-Time Bidding Is a Form of Programmatic Buying
Programmatic buying and real-time bidding both fall under the umbrella of programmatic advertising.
Programmatic buying refers to the different processes advertisers use to actually procure ad space and place ads for their programmatic campaigns. Real-time bidding is one of these buying processes they can use.
What Is Real-Time Bidding?
Real-time bidding (RTB) is a programmatic buying process where advertisers buy digital ad space and place ads through a real-time auction format.
Real-time bidding is often associated with open market auctions where many advertisers can participate in bidding on ad impressions.
How Does RTB Work?
The following is a general breakdown of how RTB operates:
Advertisers set up their campaigns within software called demand-side platforms (DSPs). Within the DSP, they build out the campaign, inputting ad creative, campaign objectives, targeting parameters, budget, etc.
Publishers use supply-side platforms (SSP), which put their ad inventory up for sale.
When users click on the publisher’s web page and wait for it to load, the connected SSP notifies a virtual marketplace called an ad exchange.
The ad exchange calls upon multiple DSPs, which analyze the bid request and then place a calculated bid.
The SSP renders the highest bidder’s ad to the user when the page loads.
Advertisers often use DSPs like The Trade Desk, DV360, and Amazon DSP, which can tap into ad exchanges, buy publishers' ad space, and place advertisements.
The Advantages of RTB
Speed and Automation
The entire real-time bidding process occurs within milliseconds while the user waits for the publisher’s website to load. Additionally, the programmatic technology handles everything from real–time bid calculation to placing the ad. This enables rapid advertising campaign deployment.
Targeting and Bid Maximization
In real-time bidding, the DSP analyzes bid requests, in addition to different behavioral, demographic, and contextual factors regarding the user and the ad placement location. Then, it calculates a bid in real-time based on how badly it wants to win the ad impression and serve an ad to that given user.
This ensures the ad appears only in front of users who align with the target audience and campaign goal. The real-time calculation of bids assists in effectively spending the budget, striking a balance between competitive spending and fund maximization.
Reach Multiple Publishers
DSPs can tap into desirable ad exchanges that connect with many publishers. This means teams can explore different ad space locations they normally wouldn’t reach.
What Is Programmatic Buying?
How Does Programmatic Buying Work?
Advertisers can go about procuring ad space and placing ads by using one of the following programmatic buying processes:
Real-Time bidding (RTB)
As discussed, RTB is an auction-based model where advertisers use DSPs to set up their campaigns; then, the DSP technology autonomously accesses open ad exchanges, bidding on ad impressions and placing ads online in front of relevant users. In general, real-time bidding auctions are open to multiple advertisers who can participate in bidding.
Private Marketplaces (PMP Deals)
Private marketplaces use the same real-time bidding model; however, these auctions limit which advertisers can participate. To buy ad space and place ads using a private marketplace, advertisers will either work with publishers or use their DSP to attain a deal ID, enabling them access to private auctions and bidding.
Programmatic Direct
Programmatic direct doesn’t use an auction. Instead, advertisers directly contact publishers to discuss a buy deal, securing a specific CPM rate. Then, the parties will use advertising technology to place the ads.
“Although real-time bidding, private marketplaces, and programmatic direct have different features and steps, each adheres to the concept of ‘programmatic,’ relying on technology and automation, working through the same pipes of the programmatic advertising ecosystem, and using the OpenRTB spec, all to allow advertisers to buy ad space and publishers to sell it.”
What are OpenRTB Specifications?
While real-time bidding refers to a programmatic buying process, OpenRTB denotes a standardized set of specifications that the varied systems and technologies in real-time bidding (DSPs, SSPs, ad exchanges) adhere to.
Developed by the Interactive Advertising Bureau (IAB), the OpenRTB protocol defines how these different systems should communicate regarding elements of the impression up for sale, like the bid floor, bid price, ad format, IP address, targeting criteria, etc.
By adopting a consistent set of standards, all stakeholders and technologies in the space can effectively communicate, paving the way for smoother interactions. This standardization is crucial given the scale and volume of data the programmatic ecosystem has to process within milliseconds.
Although OpenRTB was initially crafted for real-time bidding auctions, its principles apply to private marketplaces, even programmatic direct buying.
“With OpenRTB, we have more security and transparency in programmatic advertising. This protocol keeps everyone on the same page and helps advertisers better understand the outcomes of RTB auctions. ”
The Advantages of Programmatic Buying
The core advantage of programmatic buying is that it replaces traditional advertising processes where teams had a formal media buyer who manually negotiated with publishers for ad placements.
Instead, with programmatic advertising and buying, advertising teams can rely on technology and automation to find publishers, purchase space, and place ads. Of course, with programmatic direct, there are remnant attributes of this traditional model, but given the additional technical aspects, we consider it programmatic.
RTB vs Programmatic: How Are They Similar?
RTB and programmatic buying are similar, as RTB is a subset process of programmatic buying. If an advertiser or media team runs a campaign using a DSP and real-time bidding, they are performing programmatic buying.
In the context of RTB, compared to other programmatic processes like programmatic direct, programmatic guaranteed, and private marketplaces, they share the following similarities:
Data-Use
In these processes, teams use data to assess campaign performance, build out their audiences, and optimize.
Elasticity
These processes are elastic to innovations and regulations within digital advertising, as the different technologies that help make programmatic advertising happen often merge or iterate into new versions. So, teams must be on top of updates and comply with all guidelines, especially around tracking and data.
Programmatic Buying vs RTB: What Are the Differences?
RTB and programmatic buying are different because RTB, albeit effective, is only one type of programmatic buying process, meaning teams can buy ad space and place ads without using it.
Compared to other programmatic buying processes, RTB shares the following differences:
Negotiation Level
RTB minimizes negotiation, as advertisers just need to use their DSP to handle the ad buying and placement. In contrast, private marketplaces and programmatic direct still require extents of direct outreach and deal negotiation.
Types of Inventory
According to Clear Code, methods like private marketplaces and programmatic direct can offer more premium ad inventory, while RTB generally provides access to open auctions with more affordable yet competitive prices.
“The pricing for open RTB auctions versus private marketplaces and programmatic direct is quite different; these latter options will have higher pricing points and be for premium inventory. Open RTB auctions often have lower prices and are for remnant inventory. Some advertisers are biased, seeing this kind of inventory as lower quality. However, many teams can use these impressions to enhance reach, especially when testing for optimization.”
In Conclusion…
In summary, programmatic advertising is a multifaceted approach to digital ad buying, utilizing automation and technology to streamline processes. Programmatic buying encompasses various methods within this framework, including real-time bidding (RTB), private marketplaces, and more.
Understanding the distinction between programmatic buying and RTB is pivotal in effectively navigating the intricate realm of digital advertising, enabling advertisers to make informed decisions and execute their campaigns accordingly.
