AdTech can be a minefield of jargon and buzzwords; and that’s doubly true for programmatic ad buying, which is still growing and struggling to standardize.
In September 2013 the Interactive Advertising Bureau made a commitment in this area of automation. IAB is expanding its work around programmatic with a discussion about the future of automation and standard protocols this week in NYC and will continue the conversation June 9 with “IAB Advertising Technology Marketplace, Spotlight: Programmatic.”
Here is a brief review of the different kinds of programmatic ad buys and the IAB-approved terminology for them. Given how fast things are changing, the IAB is reviewing these definitions with a group of more than 30 companies from across the industry to ensure they keep pace with industry developments.
As the IAB explains, the types of programmatic ad buys are distinguished by whether prices are fixed or not and whether inventory is reserved or not; but all four categories of ad buys are now being handled largely by software, with many types of transactions completed in milliseconds without the involvement of humans.
Real-time bidding (RTB) is often used synonymously with open auctioning, but RTB is the mechanism by which both open and invitation-only auctions take place. As the ad impressions on a Web page load, information about the user is sent to the ad exchange. The buyer’s software decides how much to bid on that user and the winner’s ad is loaded on the Web pages.
The huge benefit in this is allowing advertisers to target specific users, instead of buying reserved space on Web pages they hope those users will visit (for that, see Automated Guaranteed, below). However, RTB does create unpredictability for all parties.
Open Auction (aka: Open exchange, Real-time bidding, open marketplace)
Open auctions are, in a sense, the Wild West of the programmatic ad buying world. As the name suggests, publishers offer their ad impressions to any and all buyers. This kind of exchange offers efficiency, transparency and convenience but more risk. Buyers often get undisclosed inventory, like in much of Google’s Double Click ad exchange; and publishers do not know exactly who will be buying space, which could negatively affect brand image.
Invitation-Only Auction (aka: Private marketplace, private auction, closed auction, private access)
In the invitation-only auction, publishers offer ad impressions to a select group of preferred advertisers, usually at higher rates. This model trades some flexibility and transparency for increased control with both parties. Many large, traditional media companies, like Hearst Publications, NewsCorp and NBCUniversal, have offered private exchanges.
Many companies offer a combination of open and invitation-only auctions. The better ad impressions can be withheld for the invitation-only, while less desirable inventory may fetch a higher price in the open.
There’s still a place in the world for guaranteed ad buys. For both premium and unsold inventory, publishers and advertisers can gain stability for their planning.
Automated Guaranteed (aka: Programmatic guaranteed, programmatic premium, programmatic direct, programmatic reserved)
These are the most like traditional direct ad buys but are now handled automatically. Prices are negotiated between just the two parties of publisher and advertiser, and the space is reserved. Publishers can command higher rates for their premium inventory, and advertisers can lock down these large parts of their marketing plans and budgets.
Unreserved Fixed Rate (aka: Preferred deals, private access, first right of refusal)
In these buys, advertisers pay a fixed rate for the kind of unreserved impressions that usually go to auctions. They might be used to get rid of any inventory still unsold after an auction and/or to provide advertisers a more stable pricing option in exchanges.
Why is this important?
What’s the big deal about standardized terminology and programmatic ad buying in general? First of all, despite all of the hype and hyperbole, automation is a powerful and growing practice: eMarketer anticipated a 73 percent growth in spending on just part of programmatic ad buying over the last year.
But as the IAB explains elsewhere, this technology could become an obstacle to productivity if companies don’t work together:
“Agencies and their clients have a lot to lose if programmatic isn’t implemented coherently: a set of technologies that aim to create market efficiencies could, instead, create a fragmented, illiquid marketplace if each media agency insists on creatingits own proprietary marketplace with its own standards and its own technologies.” (Emphasis added.)
Language is important, and here, it is a first step to standardization. By literally speaking the same language, both publishers and advertisers can better understand the importance of working together.