The Difference Between Real-Time Bidding and Programmatic Buying

real-time bidding

If you’re interested in taking your business to the next level, it’s important to understand the differences between real-time bidding and programmatic advertising.

In essence, they are somewhat the same. However, they are still vividly different. One occurs in real-time, the other does not.

In this article, we will cover each of these processes in-depth. As well as cover private marketplace advertising and how it relates to RTB.

Whenever you’re ready to learn more about the potency of advertising in the modern world, read on.

Real-Time Bidding: What Is It?

Real-time bidding is a form of advertising that uses bidding to automatically target ads or content to the right audience. The advertiser will post a bid in an auction-like setting. Then, real-time bidders compete for those ad spots by submitting bids on behalf of their own campaigns.

This process allows advertisers to specify what they’re willing to pay from each bidder to serve up their advertisement. Most commonly, alongside other websites’ advertisements during specific timeframes, known as impressions.

This method can be advantageous. Because it’s able to place relevant ads for users instead of just shopping around indiscriminately through various sites, like most traditional forms of online advertising do today.

However, while Real-Time Bidding seems innovative, its roots go back about 30 years ago, when banner ads were first introduced to the public.

Real-time bidders are often bidding on banner ads. This doesn’t make Real-Time Bidding any more effective than its predecessors.

Real-time bidding is different from programmatic buying. It does not involve a middleman.

It is more of an auction for the ad impression. It relies on technology and not human input, to place ads where they are relevant.

Programmatic buying is still based on the same old methods of online advertising. But it has better targeting.

Some marketers prefer programmatic buying over Real-Time Bidding. It’s less intrusive than presenting banners when users visit websites that don’t interest them.

This type of online advertisement can be found on many sites today and has been around since banner ads were introduced 30 years ago.

While this may seem like Programmatic Buying would be easier to implement, there’s no sense in being lazy about your marketing efforts.

Brief Real-Time Process Overview

Here’s a brief overview of the process of real-time bidding step-by-step:

Bidder offers a bid in real-time to buy an impression for the next ad that will be shown.

Advertisers are ranked by their bids. When they’re high enough on this “bid ladder,” then their ads get served up accordingly.

The auction process happens every second of every day, as long as there is data available to serve impressions for exposure on your site or app.

Bids can change at any moment based on what’s happening with traffic load. Advertisers need constant monitoring to keep track of where they stand about other bidders.

Private Marketplace

It’s also a good idea to mention private marketplace advertising because it stems from RTB. However, instead of being directly available to the public, it’s limited to certain advertisers.

In private marketplace advertising, the auction process is a little different. A private marketplace offers advertisers access to an exclusive inventory. All the bidding happens without involving any of the third-party services or networks that are used for RTB ads.

This kind of advertising can be defined as “private”. Because it’s not available on open exchanges, such as real-time ad bidders (like Google).

There are many benefits to this type of campaign:

  1. less competition between marketers means more bids per impression
  2. there’s no need for constant monitoring from marketers
  3. markets are getting better insights into what each customer wants

To keep costs down, marketers only bid on inventory that is in line with their business goals and target audience.

Analysis Matters

No matter what the campaign goal may be, it’s important to keep a close eye on your analytics when implementing this type of strategy. To do so, you’ll want to define KPIs (key performance indicators) early on to measure success.

For example: “unique visitors” as well as time spent browsing the site are good KPIs. Because they’re not going to change based on outside factors like increased bidding from competitors.

Your analysts will also need access to any identifying information about users who visit your website. This will help them to better understand which pieces of content or offers are the most popular and why.

It’s also important not to become too reliant on your analytics for direction. Because they can’t predict how much competition there’ll be at any given moment.

Instead, you should focus on a few good KPIs to measure success. Use your analytics for guidance on what content or offers you should be bidding on.

Programmatic Buying: What Is It?

Programmatically buying is a much more progressive form of online advertising. It’s able to leverage user data and integrate with other marketing channels. Thus, creating personalized campaigns for individuals at every stage of their journey.

This process continuously evaluates auctions based on real-time performance metrics. Advertisers can see how well an advertisement performs before committing money upfront to it.

Thus, eliminating waste and increasing overall efficiency over time. Due to not spending too many resources on ineffective advertisements.

Programmatic bidding is a technology that automates the process of bid placement on an ad exchange. A user’s personal information, such as location and browsing history, may be used to make this decision for them in real-time.

Programmatic advertising is a marketing trend where advertisements are placed automatically. Primarily based on data analysis without human input or intervention.

The use of programmatic bidding has grown substantially over the last few years. Mostly due to its ability to generate revenue for publishers by enabling automated transactions at scale. This allows advertisers who don’t have enough resources themselves to manage large-scale campaigns with multiple networks simultaneously.

Amazon Programmatic

Amazon (AMZN) uses programmatic ads through Amazon Media Group. It enables marketers from small businesses all up into Fortune 500 companies alike. For example, Nike and Nestle can monetize their advertising by buying ads from Amazon.

Programmatic media is often characterized as a performance-based marketing model. Advertisers are paying for the number of impressions, clicks, or other engagements that they receive, rather than on traditional CPM rates.

The most common ad format used in the programmatic display is banner ads. It takes up entire real estate on web pages.

The next popular type of programmatic advertisement is video advertisements. These can be especially helpful because it’s more difficult to skip past an advert while watching content online.

Programmatic bidding not only helps automate tasks like setting prices. But it also automates some other aspects of campaigns. Such as frequency capping, audience targeting, and cross-device tracking.

Banners and video ads have been some of the most popular types of advertisements used in this form due to their ability to take up more space on web pages.

Brief Programmatic Process Overview

Here’s a brief overview of the process of programmatic buying step-by-step:

Create a programmatic campaign using Google AdWords or other advertising platforms. Try out AppNexus, DoubleClick Bid Manager, and PlaceIQ.

Select which platform you will use to manage your ads.

Go through each step of setting up the campaign. This includes targeting keywords, demographics, geography, bids per keyword/ad group.

Target desired bid rates based on competition and relevance for specific campaigns, if applicable.

Google recommends setting up automated rules to keep your ads running smoothly.

You must also track the performance of campaigns and adjust bids accordingly to improve results. As an advertiser, make sure that you are aware of the terminology for each type of campaign. As to not mix them up when managing your account (e.g., RTB vs PPC).

The Differences Between Real-Time Bidding & Programmatic Buying

The differences between real-time bidding and programmatic bidding are largely rooted in their respective business models. Real-time bidding involves an offering of space to an advertiser that bids the most for it.

This can happen either instantaneously or at timed intervals, like every few minutes. This type of advertising model was created with cost-per-click (CPC) and cost-per-thousand impressions (CPM) rates in mind. When advertisers are paying only for what they see, then publishers have an incentive to keep them engaged with ads by ensuring that those ads are relevant.

Programmatic advertising isn’t limited solely to digital advertisements, though. Infomercials, billboards, and traditional print media all use programmatic buying methods, too. Primarily, due to their ability to track and predict consumer trends.

However, real-time bidding is simply another process of programmatic buying. It’s one that is more in tune with the fluctuations and peaks of a digital advertising market.

It allows advertisers to target ads to users who are most likely interested. But they also target ads at a specific period of time, such as when they’re browsing Facebook at work.

Marketing managers can set up rules for where their ad appears. If they want it on every site possible, then maximum exposure is the goal. But if there’s only one particular site that will provide them with ROI (return on investment), then targeting solely within that website would be preferable instead.

This new form of programmatic buying also ensures that marketers never leave money on the table again by bidding too much or not enough for an ad spot. Real-time bidding means always getting what they want for the best price.

So even though programmatic bidding and real-time bidding are somewhat the same. The outcomes from either advertising model are drastically different.

Tips for Real-Time Bidding & Programmatic Buying

To ensure that you get the most out of your campaigns, you need to optimize them. Without optimization on your campaigns, you are left to the devices of your own imagination. It takes time to build effective ad campaigns; it takes even more time to make a return on your investment.

Don’t waste time. Here’s a list of tips for your real-time bidding campaigns:

  1. Determine what you want to accomplish with your campaign
  2. Set a budget for the goal that will be achieved and set bids accordingly
  3. Start off small and scale up as necessary if needed
  4. Don’t forget about mobile! Pay attention to ad frequency, placement, size, etc. on phones
  5. Don’t use your bid to set a cost-per-conversion
  6. Use the “bid adjustment” feature in Google Adwords for maximum efficiency and effectiveness

Here’s a list of tips for optimizing your programmatic bidding campaigns:

  1. Determine what you want to accomplish with your campaign and plan accordingly, keeping analytics in mind
  2. Begin with the base CPM and set bids
  3. Use tiered pricing for more control over your campaign
  4. Consider targeting specific audiences. For instance, people who work at certain companies or in certain industries

Of course, there’s much more that goes into advertising, but that is the gist of it. As long as you learn how to use analytics, how to develop impeccable ads, and how to use your marketing budget, you will be off to the races with your future campaigns.

Full-Scale Advertising Assistance for You

Now that you understand the potency of real-time bidding and programmatic advertising, as well as how they differ. You are that much closer to deciding which is best for you. In any case, even if you do decide, you might come across the challenge of executing these ad strategies.

If you’re interested in a full-scale advertising and marketing service for your brand, get in touch with us and we will happily accommodate your needs.

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