“Programmatic Advertising” is not as complicated as the term might look or sound to be. To put it in simple words, programmatic advertising is a process that involves purchasing and optimizing digital campaigns, instead of buying them directly from the ad publishers.
Programmatic advertising is created using AI technology which can replace any kind of human negotiations with machine learning and AI-optimisation in order to achieve both efficiency and transparency not only for the advertiser but also for the ad publisher.
Programmatic advertising works through real-time bidding where various adverts are bought right at the same as a user loads a website.
So, if need to be defined, programmatic advertising is involving Artificial Intelligence and machine learning to purchase advertisements in real-time, rather than engaging in human negotiations and pre-established prices.
Is Real-Time Bidding A Type Of Programmatic Buying?
Real-time bidding, also commonly referred to as RTB, is a way of purchasing and selling ads through auctions conducted in real-time. In other words, it means transactions that happen in the time it takes to load one webpage, which is about 100 milliseconds.
RTB, therefore, calls for better, easier, and faster targeting allowing ads to be purchased or sold as it is conceivable. This further means that only users or visitors who are present as your target audiences will be able to see the ad.
This leads us to the question, so is programmatic buying a type of Real-Time Bidding?
To keep it short and simple, the answer is yes.
Real-time bidding is definitely a kind of programmatic advertising, however, not all programmatic buying involves real-time bidding.
A simpler way to automated ad-buying can be referred to as programmatic buying and real-time bidding is one way to do it. Other ways of programmatic advertising include:
Programmatic Direct: This way ensures a guaranteed amount of impressions on particular websites and is hence mostly used for large “premium” formats such as full-page takeover ads. However, this type engages a fixed-price agreement instead of an auction really.
Private Exchange Buying (PMP): This is the third type of programmatic buying where there is an invitation-only marketplace where ad publishers specifically invite a few particular advertisers to bid on their inventory space. This method is more of dismissing ad exchanges altogether, where the purchase platform plugs strategically and directly into the publisher’s inventory. This type is usually held through an auction. Nonetheless, the terms and conditions are pre-set and hence is a more manual circumstance, different from a regular RTB.
So, how is Real-Time Bidding Different From Programmatic Buying?
As already mentioned earlier, programmatic buying is the umbrella ecosystem in which RTB is just a part. It is all about auctioning out ad space on a per-case basis instead of a bombing approach where every user sees the same ad. Therefore, for the proper functioning of programmatic buying, there are other key elements that must be factored in.
What is an ad exchange?
To understand programmatic advertising, we also need to get a clearer picture of an ad exchange. An ad exchange is a platform where ad publishers get connected or meet advertisers and come to a conclusion on a set price to display the ads. It functions more like a trading platform or a stock market but only for advertising and specifically for digital advertising. Most of these ad exchanges nowadays occur through real-time auctions where an ad is bought simultaneously when a visitor loads a website.
Programmatic advertising is in trend and its future is immensely bright. It provides accessibility at a whole new level and therefore works excellently for smaller businesses and brands.