Programmatic and Real Time Bidding Are Not the Same

If the recent IAB Leadership Meeting is any indication, online publishers appear to be moving full speed ahead into Real Time Bidding. The problem  is that they sometimes can’t predict how much they will get for their ads, and they are fearful that display advertising is falling victim to the negative side of economies of scale. They don’t seem to understand that there can be a difference between programmatic buying and Real Time Bidding (RTM). You don’t have to create a race to the bottom when you automate your buying and selling.

Programmatic buying is a work flow solution that automates the process involved in buying ads. It’s like computerized trading on Wall Street; an algorithm can look for available inventory against a set of specific parameters, and it can buy many ads quickly on a global scale. Programmatic buying in and of itself does not drive CPMs down. If publishers declare their inventory as premium, and have the chops to prove it, such as high impact formats or viewable impressions, programmatic buying can even boost CPMs because it enables buyers to find the right sellers.

So far so good. But then Real Time Bidding (RTB) enters the room. RTB adds an auction marketplace to the programmatic buying. If you deliver all your inventory to RTB, you can expect to see your CPMs go down, because advertisers still see RTB markets as a bucket for remnant. Thus, it’s to a publisher’s advantage to withhold part of the inventory — the best part — and sell it directly.

Which does not mean you can’t sell it programmatically. You can — through a direct pipe between ad agency and publisher. A direct pipe is like a private exchange between a single agency or media buyer and several premium publishers. As a publisher, you are better off keeping your premium inventory off the RTB marketplace and thereby creating a scarcity. That drives up your prices.

SO as a publisher, your goal shifts from getting rid of all your inventory by dumping it on the RTB market to delineating percentage of that inventory as premium and selling it as high impact, non-traditional display, using the new viewability metrics as a rationale.