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