Programmatic – Real-time vs Direct what’s the difference?

Paid Media Strategies series #2: Programmatic Display. In the second in this paid media series, we take a look at Programmatic Display, explain what it is and why you should be considering it for your next digital marketing campaign.

Programmatic Display is best defined as the automated purchase of ad space, or impressions, on a web page, either through a bidding process, or buying direct.

To some extent, it has revolutionised the relationships between advertisers and purchasers. From the outset, programmatic display has the potential to dramatically reduce the amount of time and resources needed in successfully marketing to web users. But beyond that, the process delivers a vast array of benefits to all parties:

• Helping brands establish stronger, more relevant connections with their audiences, increasing the CTR
• Capable of real-time responsiveness, ensuring every impression counts and improving campaign performance
• Optimising the use of video advertising, the biggest trend in content
• Allowing for greater audience insights and more targeted marketing
• Helping brands take advantage of an extremely complex purchase funnel that can encompass multiple devices and stages

There are two types of programmatic display, Programmatic Real-Time Bidding (RTB) and Programmatic Direct, both of which we’ll run through below.

Programmatic RTB

How it works:

Assuming that a web page has ad space available on it for purchase, advertisers can bid for it in the moments before it loads for the user.

An ad exchange platform transmits information to the advertiser about the page content and the user, accessed from a supply-side platform (SSP), and the ad space, or ‘impression’, goes to the highest bidder.

It’s important to remember that if the SSP takes what’s known as a ‘Round Robin’ approach to offering the website’s request for ads, then prospective advertisers need to be working with a well-ranked ad exchange to have the best chance of bidding, otherwise they may find themselves at the back of the queue and missing out on the best impressions. Alternatively, the SSP may send the request to every exchange simultaneously, making the process a lot more equitable.

Demand-side platforms automate the bidding process to save advertisers time and human resource, and effectively make it easier to target relevant ads to people over a period of time. They use complex algorithms to determine if the ad they want to place will be relevant to this individual user. If they consider it will be, then they issue a bid, the price of which has been pre-agreed.

Now, if the bid wins, the publisher retrieves the ad data, and up it goes onto the page. And remember that this entire process takes just fractions of a second. In fact, thousands of RTB auctions have been completed in the time it took you to read this very sentence.

Benefits of RTB

• Removes the need for purchasing ad space on a web page for a set time period, which is akin to having a virtual billboard – costly and not necessarily guaranteed to boost traffic.
• Far more efficient than the traditional process of media buying, as the advertiser has no need to negotiate with the publisher over every impression.
• Enhanced targeting means the wastage of impressions on users to whom the content is irrelevant is dramatically reduced.
• Greater reach and faster speeds have the capacity to highly optimise every campaign.
• Benefits the publisher, who saves time, as they have a better chance of selling their full ad inventory, and earning the maximum money for the space by selling to the highest bidder.
• Evens the playing field so small-medium size publishers have a chance against premium sites.

That’s not to say that RTB doesn’t have its downsides.

Negatives of RTB

• You’re taking part in a public auction, so there’s no guarantee you will be able to get the ad space you want – you may be outbid.
• While RTB adds transparency, there is no direct contact between advertiser and publisher – everything is done through an exchange. So the publisher doesn’t know who the advertiser is or why they’re interested in their ad inventory, and the advertiser will usually not know exactly what site its ads are appearing on, only the category, for instance, automotive sales.
• The focus is now strongly on the user rather than the web page, so premium publishers are losing revenue and market share. Additionally, retargeting by embedding cookies through third-party platforms means that advertisers can track the users they want across the web, reducing their bid costs as the users migrate to long tail sites.
• The publisher doesn’t know as much about the user as the advertiser does, so can’t always be certain how much its ad space is worth. It’s weighted in favour of the buyer, forcing many publishers to accept below market rates. Consequently some are reluctant to release their premium space to RTB.

Many advertisers still prefer to buy ad space with publishers directly, or combine it with RTB, so they have some control over where their ads are going. This can be an elongated, complex process though, which is where Programmatic Direct comes in.

Programmatic Direct

Automating the process of buying a bundled package of ad space is again an immense time and resource saver. With this method, the advertisers usually pay more, but they know they are guaranteed the impressions they want.

The advertiser provides the publisher with data about the type of user it wants to target, young fathers for instance, and the publisher then displays those impressions only to visitors who fall into those categories. That data will usually come from the advertiser’s partner DMP (data management platform) which collects, sorts, analyses and stores a wealth of web activity and user data.

Ad space on quality websites is premium. Larger brands want to be there, and so RTB is not always the process they prefer. Additionally, while big name global brands want to follow their users around the web with retargeting, there are naturally a few areas where they may prefer not to go. It’s all about being seen in the right places.

Benefits of Programmatic Direct

• Advertisers know exactly where and when their ads will be displayed, and how much it will cost.
• Enables the publisher to know exactly why the advertiser is targeting its ad space, so they can aim for relevant advertisers and create attractive packages.
• Publishers can sell their ad inventory for more than they might get through RTB.

Programmatic Display Best Practise

The buy-in to programmatic display has been intense, and there has been an explosion in growth which shows no signs of slowing up. Brands not currently invested in either or both methods should be looking into it, if only for the potential cost-savings involved.

Collaboration is key. Creative departments need to be involved at every stage of the process, and crucially be data-driven, so they can craft ads tailored to specific types of user. That data might include type of device; location; time; browsing history and many other useful factors. Aggregate data sources for a clear view across devices and channels, and consider an integrated tech partner for tighter execution of campaigns and to unify your brand message.

Ensure content works across all screens and channels. With responsive technology such as this, there has never been better potential to forge meaningful connections with audiences, but simultaneously the competition has never been so intense either. Successful engagement with consumers requires consideration for the medium.

Choose the platforms you work with carefully. Publishers should consider the nature of their inventory before selecting a partner, and advertisers whether their partners can help them place their ads where they will be most effective – are their algorithms sophisticated enough?

Decide which process is best for your brand – lower costs but no guarantee of the impressions you want; paying more for guaranteed impressions on premium web pages, or a mix of the two.

One of the first rules of marketing is that context is everything. The significance of advertisers being able to display the right content to the right person, at the right time, cannot be overstated.

At its essence, programmatic needn’t be problematic – it is after all simply automating a process that already existed.

True, it’s still a fairly young technology with many wrinkles to be ironed out, particularly around transparency and giving publishers the confidence to release their premium ad inventory to RTB.

But the potential benefits it offers to both advertisers and publishers ensure that take-up is only going to move in one direction, and any brand not yet considering it as part of its marketing arsenal is likely wasting resources it needn’t, at the same time missing out on substantial benefits.