The Difference Between Programmatic Advertising And RTB

January 12, 2024
7 minutes

Are you guilty of not knowing the difference between programmatic and RTB (real-time bidding)? Well, you’re not alone.

Even though programmatic and real-time bidding may look identical to you, they are quite different.

In this article, we’ll take a look at the key features of programmatic and RTB so that you can draw a line between these (admittedly) perplexing terms.

What’s programmatic advertising?

By definition, programmatic advertising is defined as something that’s automatic and executes as per a program, set of rules, or agenda. In terms of online marketing, programmatic ad buying is just a way to purchase media through machine technology to improve and optimize media purchasing.

Programmatic is the data-focused method of buying online advertising space on a bigger scale by using automated tools based on multifaceted algorithms. It facilitates hyper-personalized targeting with agile communication across all paid advertising channels.

Moreover, programmatic uses tech-based solutions that substitute the manual practice of media purchasing, removing the potential risks caused by human error.

Here’s a look at how a usual programmatic media buying process could be implemented:

Advertiser -> Website visitor -> Publisher | Eskimi
Source: ClearCode

Key features of programmatic media buying

Here are some of the key features of programmatic: Use of AI, ML, and Deep Learning.

The real strength of programmatic is the usage of artificial intelligence (AI) technologies, such as machine learning (ML) and deep learning.

ML utilizes algorithms to examine data, acquire from it, and make a forecast or a decision based on the learning, like predicting the effectiveness of a marketing campaign or assessing return on investment or customer engagement.

Over time, the machine learns and advances, improving the campaign performance and responding promptly to fluctuating marketplace dynamics. The AI-based algorithms identify inclinations in discrete users and fine-tune their advertisements and digital experience consequently.

The execution of deep learning algorithms has enabled machines to learn from their slipups, monitor everything, and make inferences and judgements that people may not have even thought about. It also becomes easier to build more precise online user profiles with deep learning and make reliable forecasts based on real usage instead of projected consumption.

Consequently, programmatic media buying not only offers valuable information but also provides significant insights. Marketers get feedback on the way the users interact with the advertisement and the features which influence the advertisement’s effectiveness.

For example, with programmatic ad buying, marketers can recognize the age group their advertisement gave the best results for and at what time of the day or the day of the week. Therefore, marketers can continuously modify their targeting approach and guarantee reliable ad delivery.

Accurate targeting

Another exceptional technology provided by programmatic is accurate targeting. Your target users are now accessible depending on specific metrics acquired via algorithms.

In comparison with the Mad Man period when marketing was more about ingenuity and less about knowing the customers, programmatic media buying is more about putting the advertisement in the right perspective to the right individuals irrespective of the location.

Drawing the data about prospective consumers from 1st and 3rd party sources, marketers can show their advertisements to a particular user segment on any site. These targeting possibilities like gender, demographics, household income, and relationship status facilitate hyper-personalized advertising strategy.

What’s RTB?

RTB is a technology protocol or mechanism for automatic bidding, purchasing, and selling display impressions through an auction arrangement. It is characteristically programmatic.

Although many people now think that programmatic and RTB are the same, it is not true. Programmatic is merely a characteristic of the RTB mechanism.

Even though real-time bidding constitutes over 90% of all programmatic ad buying, not all marketers use it for buying. Instead, marketers may utilize direct or fixed-price programmatic – a more conventional type of purchasing advertising space with programmatic technology and doesn’t include real-time bidding at all.

In this case, marketers purchase online ad inventory directly without bidding but with some previous negotiation with a publisher. So, the programmatic approach immeasurably exceeds the restrictions of real-time bidding.

You can perceive RTB as a subsection of programmatic, a smaller slice of a much bigger pie.

Key features of RTB

RTB is a digital auction market for real-time purchasing and selling impressions. This auction happens in milliseconds – about the same time a website normally takes to load.

Real-time bidding is advantageous for publishers and marketers. Advertisers accomplish greater effectiveness by displaying their advertisements to the right users and reduce lost impressions. At the same time, publishers improve the value of their advertising space and enhance direct sales approach and pricing.

As a multi-layered ecosystem, RTB consists of numerous constituents including:

a) Demand-side Platform (DSP) – It allows online media inventory buyers to handle several advertisement and data exchanges via one interface.
b) Supply-side Platform (SSP) – It enables publishers to manage their ad inventory, fill it with advertisements, and generate revenue.
c) Ad Exchange – It is an online market that connects publishers and marketers and simplifies dealings.
d) Data Management Platform (DMP) –It supports publishers and marketers in managing proprietary data.
e) Ad Network – It’s a corporation that syndicates advertising space supply from publishers, categorizes it, and resells it to marketers in large quantities.
f) Dynamic Creative Optimization Tool – It helps marketers approximate and optimize creative elements instantaneously to recognize the most effective combinations for their marketing campaigns.
g) Agency Trading Desk (ATD) – It involves a purchaser and reseller that handles programmatic ads and serves as an autonomous operational unit.
h) Ad Verification and Brand Safety Platform – It examines users, media targets, and marketers to ensure that the advertisements are served correctly.

Programmatic is larger than RTB

RTB was the “programmatic” of 2010 as it was a disruptive force in the display advertisement industry, which enabled the first big wave of programmatic purchasing.

So, many individuals have come to think of real-time bidding as the only way to purchase display advertisements programmatically, confusing the terminologies. However, things have changed now.

As discussed, there’s now programmatic direct in display advertising, which has nothing to do with real-time bidding. And when we look beyond the display channel, we also have search, social, and email – all of which are mainly implemented programmatically but aren’t real-time bidding.

When using the term RTB, keep in mind that you’re talking about the RTB protocol or mechanism, which encompasses the open auction market and private marketplaces. Programmatic is a much bigger concept. It covers RTB and “programmatic direct” within the display, but also other central channels in online advertising generally.

In a nutshell, real-time bidding is just a type of larger technology known as programmatic. Consider the example of sweet fruit. Sweetness is a characteristic that shows the taste of the fruit. Yet, not everything sweet is a fruit, right? In the same way, real-time bidding is programmatic, but not everything programmatic is real-time bidding.

Embrace the latest AdTech with Eskimi

Eskimi brings programmatic, big data, insights, and digital media together in a robust platform to create and reach unique user segments for several industries.

Our Eskimi DSP is a proprietary technology platform that allows brands and agencies to run programmatic campaigns using display, native, video, or rich media formats. You can seamlessly optimise towards your advertising goals via automated tools powered by machine learning and algorithms. You can learn more about our DSP here.

If you are still unsure about programmatic and RTB, get in touch with our experts. We’ll be happy to help.

Philip is the CMO of Eskimi. When he’s not busy growing the Eskimi brand, he spends his time with family and playing ping pong.
Philip is the CMO of Eskimi. When he’s not busy growing the Eskimi brand, he spends his time with family and playing ping pong.
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