An Introduction to Programmatic Buying and Real-Time Bidding

Just like native advertising, which we’ll be releasing a whitepaper on soon, the two terms ‘programmatic buying’ and ‘real-time bidding’ are getting a lot of column inches.

It’s often the case that these buzzwords sound impressive, but don’t stand up to any level of scrutiny. These fluffy terms are bandied about by businesses desperate to be part of the zeitgeist. So, let’s take a look at what they both mean for advertisers, and find out whether they are a radical game-changer or just a flash in the pan.

What are they?

Programmatic buying

“Programmatic buying involves computerized, algorithm-driven trading that allows for quick buying of ad impressions according to pre-set parameters.” (As defined by Business Insider)

It enables an advertiser to match ads to audiences on an individual, impression by impression basis. Traditional display ads work like outdoor posters, you pay your money and you get residency in that spot for a certain amount of time. Whether your target audience sees the ad really depends on the quality of publisher placement you've agreed, it's a rough science.

Programmatic buying means that when a user loads a webpage, this automated system checks who they are, then serves an ad from an advertiser who has specified that audience. Inventory for programmatic buying can be anything from display ads to in-content video or, more commonly at the moment, pre-roll video placements.

Real-Time Bidding (RTB)

“Real-time bidding or RTB is a style of programmatic buying in which digital advertising opportunities are auctioned off in real-time.” (Business Insider)

RTB is a variation of programmatic buying, letting advertisers bid for the right to serve an ad to a particular person on the impression by impression basis programmatic buying enables.

IAB programmatic buying and real time bidding in digital advertising

Why should I care?

Together, programmatic buying and RTB are an effective way to get the right ad in front of the right person at the right time. 

Another benefit is transparency. With ad space brokered automatically via a third-party, rather than direct with publishers, delivery of an advertiser's content is completely auditable.

However, where these highly-targeted advertising techniques could really shake things up is on mobile devices. It’s well documented that people are spending an ever-increasing share of their internet time on their smartphones and tablets, and they’re doing it on the move.  

Google takes home more than half of mobile ad revenue globally at the moment, and the vast majority of that is from search (an RTB format). Search puts advertisers in front of people actively looking for their products or services, it makes sense for everyone involved.

What RTB and programmatic can do is take that logic to the rest of the marketplace. As we explored the other week, mobile users are unforgiving of advertising that intrudes on their experience, so advertisers and publishers need a way of giving them more of what they already want, of giving them value. RTB and programmatic buying are a way to make sure that advertising becomes relevant, that it becomes personal, and therefore becomes more effective.

Get it right and it is a radical game-changer.

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