Programmatic vs. RTB

By October 21, 2013clypd, Product, Technology

There has been a lot of back and forth lately about why Real-time Bidding (RTB) will or won’t work in Television. This is an interesting debate, but it’s not about why it may or may not work, it’s simply a question of when, and what are the first steps we must take on our path to RTB in TV?

So, what is the difference between RTB and programmatic buying and selling? Programmatic buying and selling is a technique used to trade media using business logic to acquire individual impressions for the delivery of a marketing campaign. RTB is a timeline laid on top of programmatic. To further understand this, let’s first dissect how RTB works in a digital world.

RTB in a Digital World

Digital ad inventory is sent from a publisher to a marketplace and it is then forwarded on to a number of bidding partners in real-time. Those partners, including Agency Trading Desks and Demand Side Platforms use computer-based algorithms alongside data and historical performance signals to determine that impression’s likelihood of driving results for the advertiser.

Performance may be measured in terms of conversion rate, targeted reach or some engagement metric with the ad. The partner in turn assigns a value for that impression and sends back an offer in the form of a bid (or no bid) to the marketplace. The marketplace picks a winner out of all the bids they received and delivers the winner’s ad response for display on the publisher’s inventory. Once the impression is served, pixels fire and the impression is confirmed — a nice, fast return path.

How long does all of that take? Hopefully about 100 milliseconds. Yup – it’s fast. And that is what puts the “Real-time” in RTB.

Programmatic Buying and Selling in a Television World

So what is programmatic buying and selling then? Let’s look at the way this same model may manifest itself in television.

For this discussion we will focus on inventory that is not sold at the Upfronts but is intended to run in a traditional television experience as a 30 second commercial. This inventory sits in the publisher’s system and they release it to a marketplace well before it is intended to run. The television, cable and satellite systems have inherent latency resulting in this inventory being available 3 months or 3 days in advance but it isn’t in real-time.

What are these inherent latencies? In some instances like addressable TV, ads need to be sent to the set top box, which only connects when it is turned on. In other cases the ad insertion systems need to be set up to distribute the commercial into the stream. Manual processes like copy approval could also delay the airing of the ad. All of these delays require significant lead time. Some of these will go away with advances in platforms and technology, but these limitations are here today.

Given these delay-causing requirements, in advance of being run, the inventory is sent in batch to the marketplace, which forwards it to various bidders who apply their algorithms and return their bids similar to how it operates in real-time digital auctions. The marketplace picks a winner. After all available inventory has been auctioned, the resulting orders are sent to the publisher for them to run through their trafficking system whenever the impressions are airing – 3 days to 3 months from the close of the auction. Once they air, set top box log data is sent back to a reporting company like Rentrak for processing. The sanitized data is delivered to the publisher and marketplace for reporting and billing several weeks later.

As you can see, this process is definitely not real-time. But it is programmatic and allows buyers to acquire the inventory and audiences for their marketing goals. And that is the first step to making the market move.

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Programmatic Exists Independent of RTB

RTB just adds a real-time aspect to the valuation and pricing by bidders and the clearing by the marketplace. Whether the flow happens far in advance of when the ad slot is available or whether it happens just-in-time, programmatic buying includes the same decisioning and algorithms used by the demand side in the RTB world.

Whether you’re home hunting for a McMansion, shopping for a Jaguar or haggling for a sweater at a flea market in Venice, buyers want to negotiate on price and each buyer will set a price commensurate with their personal value of the item for sale. The distribution channel for the desired product shouldn’t drive whether RTB is appropriate. As players in the ad technology space, we need to put tools and platforms in place to make this possible in television. But in the end, no matter when that bidding happens, programmatic buying of television – arguably the most exciting branding channel — is being made possible.

So what should we call this migration to digital buying models in television? Now that we agree it isn’t RTB, how about Programmatic Access to Television Supply for Data Driven Decisioning? We probably need another name since PATSDDD doesn’t exactly roll off the tongue.

As clypd’s CEO, Joshua is an expert at uncovering ways to make the impossible possible…especially on the TV screen.

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