It’s time to think beyond RTB

Industry is wrongly confusing ‘programmatic’ with ‘real time bidding’, says Videology’s Jana Eisenstein – and the misuse of the terms is needlessly driving business away.

Tune into any conversation about video advertising and you’ll be sure to hear talk of ‘programmatic’ and ‘real-time bidding (RTB)’. Although the two concepts are often used interchangeably, they are quite different. This misunderstanding needs to be resolved, especially with programmatic buying now representing the future of media allocation (check out the numbers if you need convincing).

Flicking through the recent “The State of Online Video Advertising In Europe” report from Forrester a few days ago, I was surprised by some of the quite worrying comments around the current state of programmatic in Europe.

When viewed through the RTB lens, it may appear that Europe is still pending full scale adoption, however when rightly viewed through the wider lens of programmatic, it’s a very different picture.

Operating 100% programmatically, we understand that far from being a pending phenomenon, the reality is that Europe is already a programmatic space. Publishers of video content and advertisers alike have already recognised its benefits, and made significant investments. It’s only the continual misuse of the term and confusion with RTB that’s driving reticent broadcasters and quality content publishers to engage in conversations about trading programmatically.

As we’ve spoken about on many, many, many, occasions previously, it’s important for our industry to provide clarity on the definition of programmatic, which can only be achieved through a unified approach to education around the subject. RTB is just one buying model within the larger context of ‘programmatic’ ad technology.

To understand the different components, it’s useful to first define it. Simply put, ‘programmatic’ is the use of technology to automate the buying process. It can refer to the data-driven automation of media buying, pricing, or inventory-selection – but ultimately it means using data, algorithms, technology and machines to optimise for smarter ad decisions and better results.

Thinking beyond RTB

As we begin 2014, we can expect growing recognition from our industry that real-time bidding is just one element of programmatic buying – that ‘programmatic’ is bigger and broader than our industry has been talking about to date. About time, right? But if real-time bidding is just one commercial model that can be applied to programmatic buying, what are the other options, and what are their relative merits?

Programmatic models include variations for either reservation-based or real-time biddable inventory:

– Reservation-based buying model: similar to the way that linear television is bought and sold, this buying method allows a brand to purchase a set volume of impressions at a given price over a specific time period. This is used for delivering campaigns within specified time-periods, commonly known as flighting in the television world.

In some instances, this may be for specific inventory loads on specific media properties (i.e. fixed volume/fixed price). In other instances, this may include specific environments, but allow for more flexibility based the profile associated with a given impression (i.e. open volume/fixed price).

For instance, based on a demand or technology partner’s relationship with a given publisher, that publisher may allow a given number of ‘first look’ impressions that can be evaluated based on specified criteria, then accepted at the agreed upon price, or ‘passed back’ to the publisher.

– Real-time bidding model: this offers maximum flexibility, assumed price-efficiency, and is typically more performance-related with no guarantees on price or volume (open volume/bidded price). This method is ideal for buyers looking for results on the back-end, where cost is a driver, but where the location of ads placed or guaranteed volume within a given time frame is not as important.

This distinction within the two programmatic buying models begs the inevitable question: What is the best way to use programmatic technology to reach audiences?

Finding the optimal mix

Undoubtedly there’s value in each of the different media buying models, but the best campaigns will be driven through a mixture of methodologies. Inventory should be distributed based on what’s important to an advertiser. For instance, for a brand launch, the primary strategy may be to secure premium context and deliver everything within a specified time-period, with supplemental RTB to build incremental reach.

For an ongoing awareness campaign by an established brand, the strategy may allow for more flexibility within a given cost structure, achieved, for instance, by allocating a larger share of the budget to RTB.

Ultimately, a buyer will be using two main metrics to measure the effectiveness of their strategy: performance and cost. Based on these criteria, the best way to optimize ROI may very well include a mix of buying methods.

The exciting news for buyers is that adding a programmatic element to a traditional media buy improves performance significantly, across a number of metrics. Our campaign data in 2013 showed that optimising ads via a programmatic platform lifted performance across all models, compared to using traditional buying strategies alone: fixed volume/fixed price model (by 33 per cent); open volume/fixed price (by 20 per cent); and open volume/bidded price (by 31 per cent).

The future of programmatic

As the consumption of VOD rises, and as more consumers watch content across a growing array of devices, finding audiences will be more important than ever. That’s why programmatic buying, as a facilitator for reaching audiences efficiently, at scale, will play a growing role in strategic media planning.

It’s worth noting, however, that just as real-time buying is one piece of the ‘programmatic’ puzzle, programmatic itself is just one part of the VOD puzzle. There are other viable options for communicating to consumers using video, including, for example, sponsored content and social seeding via viral content – each with their own respective benefits.

Ultimately, the winners in this arena, will be those who take an agnostic approach to media buying – those who use a variety of buying methods to find the optimal mix.

Jana Eisenstein is the senior vice president, global accounts, Videology.