25 Programmatic Advertising Terms You Need to Know

Programmatic advertising has grown steadily over the years, adding new terminology to the marketing world. Below are the 25 most important terms in the world of programmatic advertising.

An illustration depicting programmatic advertising

Ad exchange

An ad exchange is an online marketplace where advertisers, publishers, demand-side platforms, and sell-side platforms can buy and sell ads.

Ad impressions

An ad impression is when a digital ad is fetched from its source. Regardless of whether the ad is clicked or not, it is counted as one impression.

Ad inventory

This is the ad space or the number of advertisements a publisher can sell for advertising.

Ad network

An ad network is an intermediary that connects advertisers to ad publishers. Google Adsense, Propeller Ads, and Media.net are popular ad networks.

Ad server

An ad server is a software that stores and delivers digital ads to web browsers or mobile apps.

Ad tag

An ad tag is a short code on a website that communicates with ad servers to make the correct ad appear on a webpage.

Blacklist

A blacklist is a list of IP addresses that are suspected sources of spam and have been placed on an anti-spam database.

Cost per action (CPA)

Cost per action is defined as the average cost of a single conversion. A conversion can be defined as any desired action a user may take (E.g., requesting a demo, etc.).

Cost per thousand (CPM)

Cost per thousand is the price that an advertiser pays for one thousand ad impressions.

Data management platform (DMP)

A data management platform is a software platform used for collecting and managing data. It is used by agencies, publishers, and marketers to manage and merge data such as cookie IDs.

Dynamic creative optimization (DCO)

Dynamic creative optimization is when marketers create multiple versions of the same ad in real-time to deliver the most relevant ad to users.

Deal ID

A deal ID is a number assigned to an automated ad buy, which helps a buyer and a seller identify each other.

Demand-side platform (DSP)

A demand-side platform is a software that allows buyers of digital ads to manage multiple ad exchange and data exchange accounts through a central interface.

First-party data

First-party data is the data collected by digital publishers about their visitors’ behavior. This includes CRM, subscription, and social media data.

Open Auction

Open Auction is another name for real-time bidding. In an open auction, a publisher offers ad inventory at the minimum price and allows access to all advertisers to bid for the available inventory. The highest bidder wins.

Price floor

Price floor is the lowest price a seller accepts for ad impressions.

Private Marketplace (PMP)

Private Marketplace or PMP is an online marketplace where ad media is bought and sold exclusively between private parties. It is a limited, private auction for a select group of advertisers.

Programmatic A/B testing

This is one of the most important programmatic advertising terms. Programmatic A/B testing refers to the automated testing of slightly different versions of a digital ad to determine the highest performing ads.

Real-time bidding (RTB)

Real-time bidding is the buying and selling of digital ads when a webpage is loading. This is a very short timeframe, usually in milliesconds.

Second price auction

Second price auctions mean the winner of an ad impression pays just slightly more than the next highest bidder. This strategy limits the risk of overpaying for impressions and maintains efficiency in programmatic ad buying.

Supply-side platform (SSP)

A supply-side platform is software that enables publishers to sell ads (display ads, video ads, mobile ads, etc.) and maximize the price they can charge for these.

Targeting

Targeting is the practice of serving ads based on their relevance to a particular audience. Also, advertising can be targeted according to a user’s previous browsing behavior, demography, or geography.

Third-party data

Third-party data is the data that is aggregated from platforms and websites owned by third parties. Sources of third-party data include surveys, cookie-based tracking, digital tracking, public records, registration data, etc.

Whitelist

A white list is a list of approved websites where an advertiser would like his ads to appear.

Win rate

Win rate is a measure of the effectiveness of a bid strategy. You can calculate the win rate by dividing the total number of impressions won by the total number of bids submitted.

Conclusion

This list of the top 25 programmatic advertising terms is comprehensive but not unchanging. Remember that programmatic advertising is on an upward trajectory and it continues to grow due to its efficiency and unmatched scalability.

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