There have been big shifts in the advertising industry in the past years, including the adoption of ‘programmatic’ to describe the role of technology and automation in optimizing digital ad buying.

After the discovery of programmatic, the most recent development was real-time bidding (RTB), which means the transaction of online media via an auction-based system.

There are still those, however, who understandably interchange the usage of programmatic and RTB despite the shift in attention. Here are some clarifications on the differences between programmatic and real-time bidding and why you should not confuse the two.

What programmatic advertising is

We need to know what the two terms mean in order to understand the differences between them.

Programmatic advertising is the use of machine technology to enhance and optimize ad buying. This is done through various machine-based data gathering, which is then used to create intelligent data that agencies can leverage for their campaigns. Programmatic allows agencies to target audiences based on certain measures. This makes audience targeting much more direct.

Advertisers had to place ads on a particular website to target a specific audiences in the past. Now, programmatic allows the advertisers to target consumers on any site by gathering and analyzing valuable information from the consumers themselves.

The definition of RTB

Real-time bidding is the auctioning off of ad space for agencies to bid on. This usually happens in the time it takes a webpage or mobile app to load.

Certain platforms and exchanges usually facilitate this procedure. As the webpage, mobile app, or other display platforms load, information is sent through these exchanges allowing advertisers to make bids. Whoever wins the bid has their ad campaign displayed on the loading webpage or platform.

RTB is beneficial to agencies as it provides information on ad inventories in real-time. Through this, buyers can purchase ad space knowing beforehand that their ads will be seen directly.

So what’s the difference?

The difference is simple. While programmatic is a certain trend in advertising, RTB is one method to carry out this trend.

Programmatic advertising makes use of RTB to allow agencies to make purchases. This does not mean that programmatic and RTB always come hand-in-hand.

Programmatic can exist without RTB as seen in the idea of programmatic direct. This means buying ads with programmatic technology through more traditional means and not RTB.

RTB can be seen as a subset of programmatic, a part of the bigger picture. While programmatic is the use of artificial intelligence to optimize ad buys, RTB is what some programmatic platforms, such as DSPs, use to make these purchases.

Why the terms should not be confused

Agencies and advertisers can only concentrate on the future of programmatic once they understand its true scale and not constrain it to the smaller notion of RTB.

While RTB is a convenient innovation, simply learning the ropes of RTB and not focusing on the wider scale of programmatic can set an agency behind.

Agencies can only start to build relationships with their consumers once they accept programmatic as it is—not limited as RTB.

Advertisers, if they continue to see RTB in lieu of programmatic, run the risk of seeing their associations with their consumers as lists of purchases and not as relationships and contacts made.