Digital advertising: What is programmatic buying and real-time bidding? [video]

By Richard Burns on 09-Nov-2015 12:31:53

Do you know the difference between programmatic buying (PB) and real-time bidding (RTB)? To succeed in digital advertising, both terms are essential understanding.

In this five-minute video, Chris Perks discusses the key components of programmatic buying and real-time bidding, how they are growing in importance, and clarifies what much of the confusing language used to refer to digital advertising actually means.

This video introduction of what programmatic buying and real-time bidding are is Chris' opening talk from the ADBL's Dot Native Programmatic Cube, one of many cubes hosted within the learning platform.

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Programmatic buying and real-time bidding: Pretentious jargon?

To set the scene, Chris quotes David Ogilvy: "Our business is infested  with idiots who try to impress by using pretentious jargon.

"The buying process for advertising is no different: often represented by complexity heaped upon complexity until we can't see the wood for the trees.

"Oftentimes it's difficult to comprehend the varied types of traditional advertising, let alone the pseudo language of real-time bidding (RTB), programmatic buying (PB), demand-side platforms (DSPs). Or the various shapes and sizes of data management platforms (DMPs) that are kicking around these days.

"The terms programmatic automation and RTB evoke a lot of confusion in the marketplace meaning different things to different people and this is further compounded by how quickly the marketplace evolves and changes, often redefining the rules of war."

Defining programmatic buying and real-time bidding

"There are a few descriptions of programmatic that you're likely to hear.

"First, it's where ads are bought, just like products are bought on Amazon. It's the method by which all advertising will come to be bought and sold, like search ads on Google: auction based, with the buyer paying whatever price that it's worth at a given moment in time.

"It's buying specific audiences using lots of data to figure out the right ad, the right person and the right time.

"Or it's the idea that machines will simply handle all the processes involved in buying media: the insertion orders, the paperwork, the trafficking, the spreadsheet.

"A few mouse clicks and you can go home.

"Or the answer could be all of the above. The IAB (Interactive Advertising Bureau) after all defines it as: Programmatic trading is the use of automated systems and processes to buy and sell inventory. This includes, but is not limited to, trading that uses real-time bidding auctions.

"So, programmatic includes real-time bidding."

Programmatic buying and RTB: A rapidly evolving landscape

But as Chris discusses, programmatic buying and real-time bidding is only set to evolve further, while clarity surrounding the subject is hampered by confusing terminology, a lack of technical standards, and a low level of transparency.

"Regardless of which particular position you take on the debate, programmatic buying and selling of advertising, real-time bidding, automation, and the buying and selling of digital media is changing rapidly.

"In fact, approximately 20 percent of all digital advertising is sold by one machine talking to another machine, and that number is growing rapidly in the UK and beyond.

"This creates significant opportunities for the digital marketer, the media planner, advertisers, et cetera. And it continues to drive advertising pounds into the digital marketplace.Chris Perks discusses what programmatic buying and real time bidding mean in digital advertising

"However, it also raises potential implications and concerns for both the buy and the sell side in the digital advertising ecosystem, including that there is significant confusion in the marketplace over terminology regarding programmatic, RTB, programmatic direct, programmatic premium, and other terms being used interchangeably.

"Many emerging technologies are creating significant value, but there is also a lack of clear technical standards to ensure compatibility across different platforms.

"Buyers and sellers are concerned with the limited transparency and proliferation of vendors involved in the programmatic transaction. And lastly, programmatic raises internal organisational challenges for publishers, agencies, and brands alike."

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Topics: Digital Marketing

Richard Burns

Written by Richard Burns

Richard is an experienced writer and content creator in the executive education space, having contributed to a wide range of international publications including Businessweek, Times of India, and many more.

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