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RTB Or Programmatic - What's The Difference?

Okay, this question is drawn from the many digital industry conversations I have had in the last four years, yet even more so in the last four weeks. What is the difference between Programmatic Advertising and Real Time Bidding?

Let’s take a few steps back. When I launched a Real Time Network in 2010, we bought brand safe across Right Media with a dynamic CPM but a fixed margin. 

We were positioned as ‘Specialist Media Buying from Ad Exchanges’. Those were the days when buying across exchanges had this idealistic promise to be more transparent and efficient. Publishers should have made more money from their remnant inventory, and advertisers could buy cheaper performance-optimised inventory that was contextually and behaviourally targeted. 

At that point, there wasn’t much momentum in the industry. Rubicon was working off spreadsheets, Invite was a simplified Right Media dashboard, Appnexus was still emerging, and there was some noise from players like Adscale, Admeld, Adjug and Switch. Specific Media was still going strong, Criteo was getting popular by driving ROI from personalized re-targeting. Things were about to change. 

A few months later, we had a choice of Demand Side Platforms (DSP’s) coming to Europe from the US, some of them programmed in Russia. Google started aggressively buying the best-in-class technologies and we as an industry started classifying what we did as Real Time Bidding (RTB). Soon after, perhaps by American influence, we started to throw the term programmatic marketing into the mix. I have often wondered about the difference between all those synonyms.

Programmatic is defined as following a plan or program and having an automated schedule. Real Time Bidding refers to decision-making about whether to buy an impression or not.

Now let’s fast forward to 2013. I can see two things. 

1. The situation is not currently ideal for publishers. Instead of networks taking 50% or more as the only middlemen, their margins are under even more pressure form technology providers. If they are making a better margin, it is only, well marginal.

2. The situation isn’t entirely ideal for advertisers, either. They may pay slightly less, have an idea of where their ad turns up, and they are at the mercy of vague media costs or concealed commission with a stack of providers.

How is this the way forward? Well, it is. 

I believe that all media moving forward, including TV, online, mobile, tablet and outdoor will be traded programmatically. This will be executed via programmatic platforms and Real Time Technology. Premium and direct will have fixed prices and be executed via those platforms. RTB will solely be the performance buy, probably 30% of all programmatic trading —basically, audience buys on remnant less premium inventory and optimised to a CPA. 

So, we will probably see this split in the industry: 

  • Media plans on programmatic deal IDs instead of IO’s. 
  • Line items of both direct private deals and RTB performance or remnant buys.

What has changed? Nothing really. Only that networks, the margin-hungry middlemen, are now working programmatically.

Tags: programmatic, rtb
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7 comments about "RTB Or Programmatic - What's The Difference?".
  1. Steve Roach from isocket , November 25, 2013 at 12:59 p.m.
    Sales automation and programmatic direct are changing the way that buyers and sellers work together on guaranteed campaigns. This is fundamentally different than RTB based mechanisms. The IAB in NA has outlined the market here - http://www.iab.net/media/file/IAB_Digital_Simplified_Programmatic_Sept_2013.pdf
  2. Anni Paul from BoscoSystems , November 26, 2013 at 3:19 a.m.
    I guess its a just a good sign that this discussion is happening in the first place. Mobile RTB keeps getting labeled as something that's going to be important in the future, when I think that's absurd. Mobile RTB's time is now... http://www.airpush.com/what-is-mobile-rtb-and-why-should-i-care/
  3. Volker Ballueder from cb consulting , November 26, 2013 at 4:19 p.m.
    Hi Steve, couldn't agree more. Glad there are guidelines. People still get confuse about RTB vs programmatic. Thanks, Volker Hi Anni, Again, very good point. Mobile is on the rise. There is no doubt about it. Cheers, Volker
  4. Lionel Tepper from ScreenMedia Daily , November 27, 2013 at 10:58 a.m.
    I think the bigger debate everyone should be talking about is not the differences between RTB and programmatic buying methods, but whether the entire online advertising ecosystem will crash and burn. Consider all the news about click fraud and diminishing ROI for advertisers, I think it's a real possibility. There's a new report out that everyone should take the time to read: "Peak Advertising and the Future of the Web". http://peakads.org I agree with this report's findings and I'm sure a lot of advertisers will to. So, RTB or Programmatic? It may not really matter in the end.
  5. Volker Ballueder from cb consulting , November 27, 2013 at 11:09 a.m.
    Hello Lionel, Now that's a bit gloomy, isn't it? There are lots of people suggesting that there is a dot.com 2 bubble, or that banner advertising doesn't survive. I believe banners and videos are still there to fill the upper funnel, brand awareness and that the move to trade it programmatically makes a lot of sense. Fingers crossed!
  6. Lionel Tepper from ScreenMedia Daily , November 27, 2013 at 11:19 a.m.
    Yes, I'm pessimistic about the state of online advertising, and if you take time to read the report I can't imagine anyone coming away with any other conclusion. I do believe that video-based advertising will be the path forward in the near-term. However, video will hit a tipping point in the near future just as display has.
  7. Barbara Armour from EarthLink, Inc , April 4, 2014 at 1:45 p.m.
    THANK YOU- this was awesome and easy to understand,