The field of digital advertising is constantly changing as new technologies are introduced. With these new technologies, companies alter the ways they deploy digital ads to reach their audiences more effectively. When it comes to digital advertising, programmatic advertising and real-time bidding (RTB) are at the forefront of the discussion. While these terms are often used interchangeably, they are not actually the same thing. Marketers can use both programmatic advertising and RTB to efficiently and effectively target ads to their specific audience.

So what exactly are programmatic advertising and real-time bidding? What are the key features and differences between these two terms? Let’s dive in.

Programmatic Advertising

Simply put, programmatic advertising is the process of purchasing digital ad space (display ads, banners, video) automatically, with the assistance of dedicated software and algorithms that automate the process. With programmatic buying, technology is used to efficiently and effectively send ads to a target audience across a variety of websites. Within the umbrella term of programmatic advertising, there are different ways to buy and sell ads.

Types of Programmatic Advertising

Programmatic direct works on a one-to-one basis, similarly to the way advertising was purchased in the early days of the Internet, but with the added help of software. Advertisers and publishers agree on the terms of the media campaign, and then use AdTech platforms to automate the delivery and reporting of the campaigns.

Real-time bidding (RTB) allows advertisers to purchase ad inventory on an impression-by-impression basis via auctions on the open market, meaning any advertiser can bid for and purchase ad space on a publisher’s website. See below for more information about how RTB works. Because RTB is generally the most comment programmatic method, this is why many marketers confuse the terms and use them interchangeably.

Private marketplaces (PMP) offer inventory in a private setting, only available to selected advertisers, rather than on the open market. This exclusive type of media buying is usually reserved for premium sites, such as Forbes or the NY Times, for publishers who want more control over the types of ads that appear on their sites.

Programmatic Channels

While programmatic advertising started out as banner or display ads, programmatic platforms have increased their inventory and database such that any format and any channel can be accessed programmatically today, including mobile, desktop, audio, digital outdoor and connected TV.

  • Display: Programmatic display ads, otherwise known as banner ads, were the original channel for programmatic advertising. Today this channel has expanded to include static ads as well as interactive ads, featuring animation or other movement that catches the eye to increase the click-through rate.
  • Video: Programmatic advertising can allow marketers to capture their audience’s attention with in-stream video ads, out-stream video ads and in-display video ads.
  • Mobile: Display has also grown to include mobile ads, and often mobile is wrapped up into display as one channel. As more consumers browse the Internet from their mobile devices, advertisers are more keen to deploy mobile ads. High-impact mobile ads have grown in significance in recent years, as designers and marketers work together to create impactful designs that catch the attention of viewers.
  • CTV: Connected TV combines the broad reach of TV with the targeting capabilities of programmatic advertising for highly targeted ads on OTT and CTV devices
  • Native Audience targeting and relevance combine in native ads. Programmatic advertising offers marketers the ability to maximize the relevancy of their ads to their target audience.
  • Audio: Programmatic audio allows marketers to reach engaged listeners of digital radio and podcasts.

Real-Time Advertising

As mentioned above, real-time bidding (RTB) is one form of programmatic advertising that refers to the auction advertisers use to buy ad space on the basis of impressions. Real-time bidding makes up the majority of programmatic buying, but not all advertisers use this method for buying. The other two types of programmatic advertising that are not RTB are programmatic direct and PMPs, which both rely on a more direct 1:1 communication between the companies that are buying and selling the ads.

Through real-time bidding, when a user clicks on a web page, the publisher of the page will put up the ad impression for auction. At this point, several advertisers can compete for the impression. This auction process occurs within milliseconds. The highest-bidding advertiser wins the space to display their ad, and the ad is then displayed to the user who can click on the ad and give the advertiser a sale.

Rather than buying banner ads on Forbes to reach an audience of people with an interest in personal finance, programmatic allows marketers and agencies to reach an audience of users who have exhibited an interest in finance across a variety of sites at once.

Targeting tactics are used to build these audiences and deliver ads and impressions only to those most likely to click or convert. Computers and algorithms streamline the ad buying, media placement, and optimization process smooth and painless, to cut down the time it takes for ad campaigns to go live.

In addition to saving time, marketers can save money by using programmatic advertising to narrow down the recipients of their advertising campaign and decrease ad waste. Programmatic buying ensures that advertisers can make targeting highly personalized and also eliminates the possibility of human error.

Technology Used in Real-Time Buying

Once you get into the automated world of RTB, technology becomes more and more important to help manage your audience data, execute the buys, and optimize your campaign flights. Here are some of the AdTech platforms used most frequently in programmatic advertising.

  • Demand-side platform:A DSP system gives buyers the opportunity to manage several ad and data exchanges via one interface. With AUDIENCEX, you can determine which DSP is right for your campaign goals. Trading desks: A trading desk works with multiple DSPs in one system, offering advertisers and agencies access to numerous platforms to reach more potential customers and scale campaigns. AUDIENCEX is an independent trading desk offering access to 18+ DSPs, search, and social platforms in one place.
  • Data management platform: Also known as DMP, this system provides advertisers and publishers a way to manage audience data from any source and build audiences to target your advertisements against. Supply-side platform: Also known as SSP, this platform allows publishers to price and manage their inventory. This automation of sales removes the need for big sales teams.
  • Ad network: Ad networks match ad space supplied publishers, bundles the ad space and sells it in bulk to advertisers. This prevents publishers from having to sell ad space directly to advertisers.
  • Ad exchanges: To put it simply, an ad exchange represents an online marketplace that gives advertisers and publishers a chance to buy and sell ad inventory.
    Though many misinterpret real-time buying as being the definition of programmatic advertising, real-time buying is just one form of programmatic advertising. Think of programmatic advertising versus real-time bidding as rectangles and squares. While all squares are rectangles, not all rectangles are squares. Real-time bidding is programmatic advertising, but not all programmatic advertising is real-time bidding.

    The Main Features of Programmatic Media Buying

    Programmatic buying makes ad purchasing effective and efficient. The features of programmatic buying that make this method of advertising so appealing to marketers include:

    1. Machine Learning Algorithms

    Technology and machine learning are a key feature of programmatic advertising. Rather than a media buyer having to review the data and find out which platform or website is best to reach their audience, the algorithms do this on their behalf. This makes the process quicker and more accurate.

    2. Audience Insights

    Programmatic media buying gives advertisers feedback about how their audience engaged with an ad. What factors contributed to the success or failure of the ad? Programmatic advertising can tell advertisers what time of day or week was most relevant for users and what age group responded best to an ad. It can also shed more light on who is actually clicking on or engaging with a particular campaign. These insights can then be fed back to the marketer and agency to adjust the accuracy of their targeting the next time around.

    3. Precise Audience Targeting

    The main difference between programmatic and traditional advertising is the availability of precise audience targeting, which relies on building an “audience” based on a variety of traits.Advertisers can target their digital ads across all channels to audiences based on past exhibited behaviors and interests, actions, demographics, purchase intent, location, relationship status and household income.

    Any combination of first, second and third-party data can be used to build an audience. First-party data is information advertisers own about their customers, while second-party data is essentially first-party data owned by someone else and third-party data is purchased from a data provider. Advertisers can use all of these to build their audience.

    Once the audience has been built, advertisers can choose a variety of targeting strategies, such as retargeting, prospecting, lookalike targeting or contextual targeting to reach those consumers.

  • Retargeting refers to adjusting advertising approaches based on consumer behavior.
  • Prospecting refers to developing a pool of likely customers who have never visited your site.
  • Lookalike targeting takes first-party data and uses it to model potential customers so advertisers will have a larger pool of targetable consumers.
  • Contextual targeting can help advertisers build an audience by leveraging their existing campaigns based on keyword searches.

4. Bid Management

Programmatic media buying is also useful for setting your bid or budget, as this is another way the technology is used to automate the process. The marketer typically sets their budget and a goal in terms of impressions, and that bid goes up against other marketers vying for the same impressions. As with most auctions, how much you bid impacts whether or not you “win” the auction. If your price is too low, your ads won’t be seen by your audience.

5. Campaign Reporting and Optimization

Campaign reporting tools monitor and quantify campaign performance data. Because programmatic ads can be bought and adjusted in a small amount of time, optimizations to include the efficiency of your campaign and drive more leads or sales can also be made quickly and efficiently. These reports and optimizations don’t necessarily happen in real time, but they are automated to make the process more seamless.

Elevate Your Advertising With AUDIENCEX

At AUDIENCEX, we work with agencies and marketers worldwide to simplify and enhance their digital marketing, offering unified access to 18 DSPs, search and social platforms. Advertisers receive the highest value from each DSP without the hefty cost.

No matter where your target audience likes to spend their time online, AUDIENCEX can help you reach and engage with them. If you’re interested in elevating your advertising, contact AUDIENCEX today with your questions about programmatic ad buying.