Real-time bidding and programmatic – what’s the difference?

For many marketers, programmatic ad buying is still a mystery – and that makes it hard to figure out how they can use the automated buying method to their advantage.

During November’s Mesh Marketing conference, caught up with Darby Sieben, president at Mediative, a Montreal-based marketing agency and subsidiary of Yellow Pages Group. He gave us his thoughts on programmatic ad buying, where it’s headed in Canada, and whether marketers should start getting involved with it.

This interview has been edited and condensed.

Darby Sieben, Mediative
Darby Sieben, president of Mediative. (Image: Mediative). Programmatic is really interesting for a number of reasons, and one of them is that not every marketer knows about it yet. We’ve also heard Canada is slower to adopt programmatic than the U.S. Why do you think that is?

Darby Sieben: I think Canada typically, when it comes to the advertiser side … we tend to be a couple years behind the U.S. … which is actually great for Canadian marketers, because we get a proxy of what’s going to come our way by getting in tune with what’s happening in the U.S. market.

That’s just a pure byproduct of the number of sales forces in Canada, and the number of major publishers in Canada. It’s just much smaller in proportion than the U.S. Most of the big players in Canada are national. We only have a couple of big guys in that context, where in the U.S., there are very few actually big national players, but you have these massive regional players. A regional player in California can be bigger than a national player in Canada.

ITB: One thing we’ve heard about programmatic as well is that it’s seen as the “bottom of the barrel” sometimes. You’ve already spent your advertising budget on other stuff, and now it’s time to buy some impressions because we have money left over. And then fraud comes into play, when marketers buy impressions from sketchy places accidentally … Do you think programmatic deserves that reputation?

Sieben: It doesn’t deserve it, but I absolutely know why it’s getting it. I think real-time bidding is the culprit, in terms of buying these really, really low, cheap impressions. And real-time bidding is a segment of programmatic.

But if you look at programmatic in its entirety, programmatic is about the efficiency to buy, the efficiency to deliver, efficiency to report – it’s about making the supply chain between the marketer and the publisher much shorter.

One of the big problems we have in digital right now is that one of the most tracked measurable media, but absolutely one of the most inefficient to buy. Try to spend $50 million on digital, and you need a team of a hundred people, it’s ridiculous. $50 million on TV, and a couple of individuals can complete that buy in 30 to 45 minutes. So we need to solve the inefficiencies to buy the media.

Within that, you have real-time bidding, and it became this race to the bottom, where you had not as many controls, you had a lot of players getting in there. I think it’s starting to get cleaned up now, but fraud is a very big issue that needs to be addressed, because it’s giving the entire industry a bad name.


ITB: Can you explain more about the distinction between programmatic and real-time bidding?

Sieben: So the method of real-time bidding is programmatic in the concept of, I’m buying an impression at that exact moment. So the difference would be, if I want to buy the homepage of CTV, I would buy the homepage of CTV and then say turn it on in this state, and turn it off in this state.

Real-time bidding is saying, I’m not going to buy the site, but I want to buy that particular user, and that particular impression in time. And in order to do that, it needs to be programmatic, because you couldn’t have a human sitting there. By the time a human would figure out what to buy, the impression would be gone. So that has to be done programmatically.

But programmatically, as a broader term, is everything related to taking an order, fulfilling an order, in which real-time bidding is one segment of that … Think of programmatic in the notion of, how do we automate as much as we possibly can.


ITB: Recently we spoke to a company that is trying to bring programmatic to small, regional TV stations in the U.S., and local advertisers. They’ve given them the chance to connect with TV stations and advertise using programmatic. Do you see an opportunity for smaller marketers and smaller firms to get involved with this in any way?

Sieben: So the answer is yes, they could. I think the biggest challenge for small businesses is, do they have the expertise to do it, because you could burn a lot of dollars very quickly. Google Search is a great example of this as well. If you don’t do it well, you can burn a lot of money very, very quickly. So if a small business owner doesn’t have the expertise, then yes, you will spend some of your media dollars to somebody else to manage that, but that actually be OK.

ITB: Let’s talk a bit about fraud [in programmatic]. You mentioned we need to be working on that, and the Interactive Advertising Bureau recently released guidelines for publishers and what they need to do to prevent fraud. Whose responsibility is it to safeguard against it?

Sieben: I think it’s everybody’s job. I think if you start with the supply side, with the exchanges, I think it’s the exchanges’ responsibility to be much more restrictive about who they let in, and the inventory that they have.

But if you go to the other side of the spectrum, marketers are responsible too. Because if your criteria to measure is, I just want the cheapest cost per click or cost per impression, then you’re feeding into that.

And then you have the agencies, in the last couple of years, that are selling this notion of really, really cheap conversions because the margins were getting squeezed … Everybody collectively needs to work together, and marketers need to demand better metrics, and the supply side needs to demand more transparency with the exchanges.


ITB: So we’re seeing more interest in programmatic now. A CBC spokesperson was at a BrightRoll event, and she said, if she could tomorrow, she would move all her ad inventory into programmatic, if the industry was ready. Where do you see programmatic in the next year in Canada?

Sieben: I think as marketers demand more of their dollars to be spent on actual marketing, as opposed to all the service fees in the middle, it’s going to force publishers and agencies to be much more efficient in the way that they buy – which is actually going to be good for everybody.

And because of that, more of the big publishers are going to push that, more of the large advertisers are going to push that, and eventually this is going to become very common – that you’ve got to make things easy to buy.

And it’s not just going to be real-time bidding, it’s also going to be programmatic premium. It’s going to be all these ways to make it more efficient, and the biggest beneficiary is going to be the premium publishers, because now there’s going to be more money coming into their sites as opposed to all these service fees to manage all these little pieces in between.

In that case, it’s in everybody’s best interest, except for the agencies and intermediaries, for the world to go programmatic. But I think the cat’s out of the bag – we’re going down that path.

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Candice So
Candice So
Candice is a graduate of Carleton University and has worked in several newsrooms as a freelance reporter and intern, including the Edmonton Journal, the Ottawa Citizen, the Globe and Mail, and the Windsor Star. Candice is a dog lover and a coffee drinker.

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