For many in the digital advertising world, the term “programmatic” is synonymous with “Real-Time Bidding,” or “RTB.” But as the industry has evolved, it becomes increasingly important to make the distinction between the two. Simply put, RTB does not equal programmatic. RTB is a technology protocol, and just one of many approaches to programmatic.
We are witnessing an explosion of new buying channels that better connect buyers and sellers, all with the aim of moving ad inventory higher up the value chain and replicating the traditional direct buying process without the legacy inefficiencies that go along with it.
There are six major types of programmatic deal types, although we have yet to see industry-wide consensus on how each is defined or the appropriate goals and strategies that accompany them. Here’s a short cheat sheet of each of the six major deal types that hopefully decodes some of the complexity around the many flavors or programmatic.
Open Marketplace RTB
Real-time bidding (RTB) is a technology that enables the buying and selling of digital ad impressions through instantaneous auctions, facilitated by ad exchanges or demand- and sell-side platforms. In the open marketplace, RTB impressions are available to all bidders.
Private Marketplace (PMP)
These are customized, invitation-only marketplaces that provide publishers with the ability to set aside certain ad inventory packages and sell it to a select buyer or group of buyers with an emphasis on margin management for the seller. Unlike a direct buy, which can be quite labor-intensive, buyers in a Private Marketplace use programmatic methods to purchase from publishers.
Private Marketplace Guaranteed (PMPG)
Similar to Private Marketplaces, a PMP Guaranteed deal is also a customized, invitation-only marketplace, however it is one in which a single premium publisher makes inventory and audiences available to a single buyer, thus guaranteeing a total spend and audience. This effectively guarantees the delivery of the impressions to the buyer.
Automated Guaranteed (AG)
The automation of traditional digital direct sales often of publishers’ most highly valued (e.g. premium) inventory. In Automated Guaranteed deals, the RFP and campaign trafficking processes are automated, inventory and pricing are guaranteed, deals are negotiated directly between sellers and buyers and facilitated by a technology platform. Direct integration with publishers’ ad servers allow for real-time availability of impressions and direct line item insertion for trafficking.
Automated Performance (AP)
This is workflow automation, similar to Automated Guaranteed, but for these deals campaign performance is guaranteed, rather than impressions. The two main performance metrics for these deals are cost-per-click (CPC) or cost-per-install (CPI).
Spot Buying transactions exist within an exchange environment with pre-negotiated, fixed pricing (on things like CPM or CPC). Typically, these are given a higher priority in the ad server than open marketplace or PMP transactions. These types of deals are the result of advertiser demand for a more predictable offering within the exchange space.
This post is adapted from an essay found in PubMatic’s 2015 Programmatic Outlook Report. Download your copy.