Programmatic is the future of digital advertising; understanding how it works is essential for anyone serious about the industry. Equally as important, Real Time Bidding or RTB as its known in the world of ad operations, is a closely linked term, but one that warrants individual attention. Grasping the difference between the two terms is a distinction worth making. Here is a visual of the programmatic landscape

Let’s start with programmatic

To understand programmatic, one must first recognize that anything that is programmatic adheres to a schedule, method, or program. So programmatic buying is buying using a specific methodology. We all know that in ad ops, advertisers are the ones doing the buying. So programmatic advertising is a tool that enables advertisers to systematically target consumers based on certain metrics obtained through algorithms. Sound complicated? Well, to an extent it is. But its complexities are not problematical for advertisers or publishers. The technology does the work for advertisers. We have moved way beyond simply targeting sports enthusiasts for a publisher selling sporting goods. With programmatic advertising, an advertiser can target consumers who have visited any site using variables such as age, gender, sites visited or frequented, and shopping history.

What about RTB – Real Time Bidding?

Programmatic advertising sounds like a slam-dunk for advertisers. And then Real Time Bidding came along. RTB is the buying and selling of ad impressions at a virtual auction in the time it takes your web page to load. It is facilitated by an ad exchange or supply platform that connects the advertisers to the publishers. While the impression loads in a web browser, information about the user get passed on to advertisers. Advertisers interested in the user start the bidding process marking the start of the auction and like any other auction, the highest bidder wins!

The Difference Between Programmatic and RTB

At this point, you might be thinking that RTB and Programmatic are one in the same. Not exactly. Programmatic is an informational tool that helps advertisers decide if they are interested in purchasing inventory space. RTB is one way to purchase. So is it possible for an advertiser to use programmatic without using RTB? Absolutely. Programmatic Direct is a term that applies to more traditional buying with the use of programmatic technology; it does not utilize RTB.

Believe it or not, publishers and advertisers were slow to move on programmatic and RTB as their preferred methods of buying ad space. Early on, they feared these systems would compromise the quality of advertising on their site. But neither impacts the quality of the ads. Once more and more advertisers got on board with programmatic and RTB, publishers followed suit and increased their budgets to accommodate this new technology.

One minor obstacle. Like all new technology, it has to be tweaked along the way. Because programmatic and RTB is a partnership between publisher and advertiser, the buy side and the sell side, the technology has to be in place in order for the exchanges to go smoothly. But to testify to the efficiency of programmatic and RTB, big-name companies vow they will go 100% programmatic in the near future.

Publishers looking to stay up to speed in this tech industry should investigate the benefits of programmatic and RTB as a means of selling their ad inventory to advertisers. The goal of every publisher is to increase ad revenue and these two technologies will definitely take you there.