How Does Real Time Bidding Differ from Direct Ad Buys?

Image Credit Dressformer, CC BY-SA 3.0

When looking to post your advertisement on a website, as a marketing profession you have two basic choices. One can either buy the ad spaces and ad inventory directly from the respective owners or to opt for real time bidding. Despite of what you choose the end result is the same. Nevertheless, there are several differences between real time bidding and direct ad buys. The process that results in the advertisement getting displayed in the front of the target audience is very different and each of the methods has their advantages and disadvantages. For the new marketing professionals and business owners it is essentially important to understand the basic differences between the two. Listed below are the various ways how RTB differs from direct ad buys.

1. Target Audience

The first and foremost difference between RTB and direct buys is, in direct buys you directly buy ad impressions in a bulk and in RTB you bid for each individual impression, and the winning ad with the highest bid gets displayed before the internet user. Direct ad buys serves majorly to the brand advertisers who want to target the audience on specific websites. With direct buys your primary goal is not to target people but to target the websites that serve a specific type of clientele. Direct ad buys are definitely a more expensive procedure and would work for you only if you are planning to pay premium prices for your ad placements.

RTB on the other hand is an open market just like stock exchange which is used by marketing professionals who are looking to target a wider audience than just one or two websites. The auction happens for each individual impression and the ad space goes to the highest bidder. If you want to target a larger number of internet users than simply the ones who visit a specific website, then you simple have to auction for that individual impression which will make your ad get displayed on a number of websites that correspond to that particular impression.

2. Manual Vs Programmed Workflow

The workflow followed in both the types of online ad campaigns is a major difference once again. When it comes to direct ad buys, the workflow is manual. As the whole process of direct ad buys involves countless hours of planning and negotiating with the publishers, the work cannot be automated or programmed as the two parties need to talk and negotiate on several terms and only then the sale and purchase of ad inventory shall take place. The publishers usually are in control of the campaign’s flow and delay due to the human element is present. Direct ad buys are similar to cracking a business deal as the advertiser and the publish need to make several complex business decisions and agree to each other’s terms and conditions before any sale or purchase can be made. Only renowned advertisers and brand owners choose the manual method as they do not want to share their advertisement to a wider audience.

When it comes to RTB there are several automation tools that both the publisher and the advertisers can use for smooth and less time consuming buying and selling of the ad inventory. The whole process is driven by several charts and algorithms that must be properly analyzed by the advertisers before choosing what type of impressions must be bought to suit the scalability of the ad campaign. There are several manual elements but the basic workflow of buying and selling happens through an automated process. Although there are several publishers that use an automated process of selling ad inventory even when it comes to direct buys.

3. Difference in Pricing

One of the major differences in direct ad buys and RTB is the major price difference at which the ad inventory or impressions are bought and sold. In direct buy, you pay for a bulk of impressions and with RTB you bid for a single impression. Direct buys have a fixed CPM price and the inventory is sold in bulk and all the impressions have the same price. This sort of pricing model has been the same since the very inception of online advertisements and hasn’t changed. Most likely this will remain the same in the future and the buyers and publishers will have to adhere to the same set of rules.

RTB involves the auctioning of each impression and each inventory is awarded to the highest bidder. The cost per impression is essentially different and the advertisers can choose according to their advertising budget what impressions to buy or not. You might buy the same number of impressions as one would with direct ad buys but since the cost of the individual impressions is different so the overall cost would certainly be lower than the bunch of impressions bought through direct buy.

4. Guaranteed Supply and Non-Guaranteed Supply

Another major difference between direct ad buys and RTB is the surety of supply of ad inventory. When you buy a bulk of impressions with direct buy at a fixed CPM rate that the published will continue to supply till your stock lasts. In this way you have a guaranteed supply of ad space which is reserved for you till the number of impressions bought will last. Brand advertisers frequently use this method as they know what audience they need to promote their products to and maintain the brand image by not displaying advertisements on low authority websites.

RTB however, doesn’t guarantee the supply of ad inventory and advertisers will have to be the highest bidder each time they want their ads displayed. The bidding happens in real time and which means that there will be several other advertisers bidding for the same impression you’re bidding for. This makes a non-guaranteed supply of ad inventory and advertisers have to bid each time they want their ads displayed. This is useful for the new advertisers when they are looking to target a wider number of audiences but cannot afford to pay a premium price for the various direct ad buys.

5. Entry Barriers and Accessibility

There are several entry barriers for the newer advertisers and business owners when it comes to direct buys. The high authority websites certainly want the best for the ad space they provide hence have a high price for each bunch of impressions. Additionally, publishers would also keep a close check on the quality of advertisements and would not sell its premium ad space to starters. You are also required to pay a higher price for all the guaranteed impressions as compared to RTB. The minimum spend is clearly too high for newer advertisers with smaller budgets to afford.

Buying impressions via RTB is a much easier and affordable process even though there is not a guarantee of inventory supply. With RTB you also save money on the ad servers as the DSPs provide the servers and also work as an interface between the advertisers and publishers. As it essentially an open market, there is far less control of the publisher and there are no time delays.

Depending on the nature of use there are several differences between RTB and Direct Ad buy, even though the result is more or less the same. For more information about ad buying and online advertising you can also visit mediagroupperformance.com and similar websites. The above points have now certainly helped you know the basic differences between RTB and direct ad buying.

Author: Richard Casteel

268 stories / Browse all stories
Richard is the chief author of this blog. He worked as a financial advisor in money market form last 10 yrs. His financial sense in Share trading and any other trading is just outstanding. He just shares his knowledge and experience through this blog. You can contact him directly though CFD-Providers.com.

Related Stories »