What Is Programmatic Advertising? Definition and Examples

Programmatic advertising is a process where online ads are sold, purchased, and placed in real-time through software. The entire process is automated and happens in milliseconds.

What is Programmatic Advertising?

Programmatic advertising is the automated buying and selling of ads. In simple words, it can be defined as the use of software to purchase digital advertising.

How Does Programmatic Ad Buying Work?

Programmatic advertising works in five steps.

Step 1: It starts with a viewer visiting a website. The programmatic ad starts bidding to serve an ad. The SSP collects the user’s data and uses it to choose the right advert to show.

Step 2: It involves the publisher listing the ad space for viewers on the supply side platform. Then, SSP starts analyzing the visitor based on cookies, interests, demographics, location, etc.

Step 3: Demand-side platform receives information from the supply-side platform. After that, it makes a bid for ad placement.

Step 4: In step 4, the supply-side platform receives the bids and picks the highest bidder.

Step 5: Lastly, the supply-side platform displays the highest bidder’s ad to the user on the publisher’s website. The whole process takes milliseconds when the publisher’s website is loading.

What Is Real-Time Bidding?

Real-time bidding (RTB) is a form of programmatic advertisement where the buying and selling of ad slots happen instantly. In just milliseconds, advertisers analyze users’ information and place their bids. If you choose to go for a real-time bidding approach, you are there to bid for the slot fast.

Here is a breakdown of the RTB process. Here, the ad space’s buying and selling operation happens upfront when a publisher’s website is loading. Within 100 milliseconds, a publisher sends a bid request to an ad exchange platform with information about the visitor in it. The ad exchange platform will then pass this request to buyers (advertisers) who are available to bid in real-time. Immediately, an advertiser places an offer to buy the slot. Lastly, the highest bid wins the ad slot.

So, what is the difference between real-time bidding and programmatic advertising? In real-time bidding, ad auction occurs on a case-by-case basis by picking individual advertisers and sending bid requests to them. On the other hand, the approach of programmatic advertising is slightly different. It allows advertisers to select their target audience automatically. This “selection” takes place based on the metrics taken through specific algorithms.

Types of Programmatic Advertising

In the past, you didn’t have much to choose when it comes to advertising. You can now do so in programmatic advertising by selecting the right type of programmatic deal for your ad delivery. The following are the types available.

1. Real-time bidding

Real-time bidding is an open auction type of ad placement. When the publisher collects user information, they send it to the ad exchange platform. Even though it is an open auction, the ad exchange platform sends a bid request to available advertisers. Then, the advertiser places the bid in real-time.

2. Programmatic direct

Here, one on one interaction takes place. Like the standard advertising strategies, both the advertiser and publisher negotiate and agree on a specific budget. They set the goal, payment plan, and the ad type to place. This type eliminates the need for the bidding process.

3. Preferred deals

This type goes farther than the programmatic direct. Both the advertiser and publisher discuss the details in the agreement. Moreover, they talk about pricing, targetting, volume, and much more. Here, the publisher provides a deal ID to advertisers to buy the ad inventory directly.

4. Private marketplaces

Advertisers can get exclusive access to the ad inventory via private marketplaces. Many demand-side platforms have their private marketplaces. The best thing about private marketplaces is that they run invitation-only auctions. So, publishers can invite select buyers to place bids for an ad inventory.

Benefits of Programmatic Advertising

Artificial Intelligence-based advertising proves to be the future of advertising. That’s because an advertiser gains more in this mode of ad placement than the normal ones. Though many are using programmatic advertising, it is new to some. Here are some of the primary benefits of programmatic advertising.

1. More efficient

In many fields, automation of work operations speeds up the process. The same case applies to programmatic advertising. The buying and selling operation of ad slots occurs immediately when the user visits the publisher’s site. Also, the ads reach the target audience hence proving to be efficient.

2. Better reach

It is satisfying to know that an ad you place will reach more people. That way, you spend less while gaining more exposure. Programmatic advertising supports various ad networks and ad exchanges. In traditional marketing, advertisers had limits in the past. Now, they can reach a mass audience using specific data that SSP collects.

3. Transparency

Though the whole process is automated, the advertiser sees the interaction, data about the user, buying habits, and other information. That brings in trust and assurance that the method is serving the purpose. Moreover, this transparency helps you optimize ad campaigns accordingly.

4. Relevancy

Advertisers get access to a wide range of ad inventory available in multiple ad networks and ad exchanges. They can even access private marketplaces and premium inventory that have high-quality, relevant traffic. In short, programmatic advertising helps maximize the relevancy of ads. It also allows advertisers to improve their ROAS (Return on Advertising Spend.)

5. Real-time measurement and reporting

Do you remember we mentioned earlier that Google ad isn’t programmatic? That’s because they don’t report in real-time. However, in programmatic advertising, the advertiser gets to see real-time information. Thus, they can make changes and adjustments to their ad campaigns, depending on the real-time data. A quick reporting of ad performance is highly beneficial in any ad campaign.

Types of Programmatic Advertising Platforms

Programmatic advertising involves a series of platforms. All these platforms work together to assist both advertisers and publishers, ensuring both parties get the best benefit. Below are the four main types of platforms you should know.

1. Demand-side platform

The demand side belongs to the advertiser’s side in the process. When the advertiser makes a bid, the demand-side platform forwards it to the ad exchange. DSP also stores all information regarding the visitor, such as the user’s profile and other third-party information. After that, DSP analyzes the user data and decides which ad to serve.

2. Supply-side platform

The supply-side platform belongs to the supplier’s side. In simple words, it is a technology-based platform that publishers use to manage the supply and allocation of ad inventories. The website owner has to submit the webpage as a source for digital advertisements. After dealing with the ad exchange, SSP puts a pixel code on the webpage. This code tracks the visitor’s behavior on the webpage.

3. Data management platforms

Data is vital when it comes to programmatic advertising. The process involves a lot of data collection and analysis. For that reason, the independent platform collects, maintains, reviews, and activates the data of the users. These third-party platforms are DMPs, i.e., data management platforms. This data, including comprehensive user profiles, is highly helpful for conversions.

4. Ad exchanges

This platform is a virtual marketplace, acting as the central point in programmatic advertising. It is where the demand-side platform and supply-side platform meet. It is also where the auctioning takes place. Many systems provide all DMP, DSP, and SSP functions in a single ad exchange.

How to Get Started With Programmatic Advertising?

Are you all set to run your first-ever programmatic ad? It’s the right time to get into action. Maybe, you are worried about success or even don’t understand how to take the first step. So, here is a quick rundown of the whole process to help you get started with it.

1. Identify your goals

In any marketing campaign, you have to identify your goal. What do you want to achieve by the end of the ad campaign? The good thing about programmatic advertising is that it allows you to gain more. So, identify whether you want to grow brand awareness, increase sales, or get email signing up. Set your goals before you go ahead with the advertising process.

2. Set an agile budget

What are you willing to spend on the ad campaign? Programmatic advertising allows managing your budget throughout the process. All it becomes possible because of the real-time functioning. For that reason, you can afford to have an agile budget depending on the quality and relevancy of the traffic.

3. Choose your ad platform/media channel

Do you have an ad tech vendor in mind? It is advisable to go with a reliable platform. Choose one that is well-equipped to fulfill your campaign goals and can deliver the best results within your budget. Many demand-side platforms now offer a complete set of digital advertising channels like video, web, social, and email.

4. Choose the right ad/creative format

In the AI-based advertising platform, the creative possibilities are endless. You can be creative and come up with exceptional ad designs for your campaign. Since you place ads across all kinds of digital platforms, you can go for any format, such as HTML5, reach media pages, or do dynamic social, web, and video ads.

5. Map your customer journey

That is every online entrepreneur’s goal, to connect with customers by knowing what they are doing, their interests, etc. The SSP collects the user’s data and sends it to the advertiser. Based on this information, the advertiser can send the right ad to the right visitor using the right channel at the right time. For this to happen, you must map the customer’s journey correctly.

Frequently Asked Questions (FAQs)

If you are thinking about advancing your advertising strategy to programmatic, the following questions may cross your mind.

1. How does programmatic ad buying work?


Programmatic advertising uses a program or software to purchase ad slots on publishers’ websites, depending on the programmatic type. The software uses an AI-powered algorithm to evaluate users according to various factors to determine which ad to serve.


2. What is real-time bidding?


Real-Time Bidding is a form of programmatic advertisement bidding that happens in real-time. The publisher sells ad slots to advertisers upfront using an auction system. Then, the publisher chooses to sell the ad space to the highest bidder. The process takes place very fast in around 100 milliseconds.


3. What is programmatic?


Programmatic is a combination of two words – program and automatic. It is the process of automating ad management using the software in this case. It uses a computerized program or software to buy or sell ad slots on an ad exchange platform.


4. What is programmatic direct advertising?


Programmatic direct advertising is when an advertiser buys an ad slot in advance, depending on the audience and user’s reactions. Here, negotiations take place between the publisher and the advertiser. After that, the publisher decides to sell the ad inventory to the advertiser directly. This process doesn’t follow the usual bidding process.


5. Are Google Ads programmatic?


Google ads are not programmatic. That is because they only occur in the Google platform, and the report is not instant. They report statistics on the current ad campaign that may become available within a few hours or even the next day.


6. Is Facebook programmatic advertising?


Yes, Facebook is a form of programmatic advertisement. The adverts that especially fall in the newsfeed are native adverts. These ads usually appear on the main screen, mingling with likes, shares, and organic posts from your family and friends.


7. How do I run programmatic ads?


There are a few steps you can take to get started. Firstly, you plan on the budget and goals to achieve. Secondly, you choose a programmatic ad campaign to use and sign up for a suitable demand-side platform. It is the tool that you use to create online adverts. You then follow your customers and learn more to know what to show to them.


8. How do I get programmatic ads?


Just as advertisers sign up on a demand-side platform, publishers have a supply-side platform to manage and optimize inventories. The SSP is where publishers sell the website’s or app’s ad spaces. You can present ads in the video, display, and other suitable formats to users.

Conclusion

Programmatic advertising provides a simple way of buying and selling ad inventories in auction-based software. Many businesses are venturing into this type of online advertising for many reasons. It proves to be efficient, transparent, relevant, and also reaches the target audience more directly. If you are planning to go the programmatic way, make sure to have an agile budget and flexible mindset while implementing programmatic advertising.

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