What Is Programmatic Advertising?

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From mobile devices to desktops to outdoor billboards, digital advertising is everywhere. With all of the different options available, how do you find the best advertiser[6] for your online space? 

By offering an efficient way of managing digital advertising efforts, programmatic advertising[1] helps make that happen. This automated, data-driven option produces real results — but only with the correct investment of time and resources. Let’s break down what programmatic advertising is and how it can help you make the most revenue from your digital platform.

Programmatic Advertising: Definition and Benefits

Although the online ad buying process is nothing new, the complete automation of it is. Known as programmatic advertising, the process uses computerized auctions rather than the traditional method involving requests for proposals, tenders, quotes, and human negotiation. 

In today’s digital ecosystem, programmatic advertising provides a straightforward way to advertise effectively on websites, applications, and digital properties. This advertising method represents most ad spaces on all types of screens. It brings together advertisers, who purchase ad space on the internet, and publishers, who have digital ad space to sell on websites. By creating an efficient way of connecting buyers and sellers, there’s quick access to inventories across multiple devices and platforms.

The process incorporates traffic data and online targeting[13] to deliver more sophisticated and relevant campaigns. Selling and buying advertisements while navigating various ad networks, partners, channels, and geographical locations, becomes easier to maneuver. Publishers have the opportunity to experience far less frustration when trying to source the proper advertisers for their ad space. Plus, advertisers don’t have to wonder if their ads are reaching their target audience. 

Programmatic advertising creates huge time savings, too. By removing a lot of the human element, campaigns can be up and running in no time at all. Since it can be managed from one comprehensive Ad Ops[7] platform, ad management is efficient, and campaign[14] management requires minimal time and effort. 

Being data-driven, viewable ad impressions are more accurate than served impressions, and the overall process is more effective, leading to maximum ROI for both advertisers and publishers.

How Does Programmatic Advertising Work?

Many different steps are involved in the programmatic advertising process, yet the entire process happens in real-time, taking only a fraction of a second. 

When a user clicks to open a website, the publisher[15]’s head tag requests several ad networks to bid on the ad slot to fill the available impression[8]. The ad networks place their bids. The winning bid[9] is passed to the publisher’s ad server. The publisher’s ad server connects the user to the advertiser’s server, which shows the winning ad creative[16]

Different Formats Available

When choosing a programmatic advertising format, the options are almost endless — with new ones continuously being added.

Display

Years ago, display was the only programmatic advertising format available. The format continues to evolve, offering technological advances such as mobile optimization and dynamic ads rather than static. There are many strategies to use when using display advertising[10], including geo-targeting campaigns and demographic targeting[2]

Native and Social

Websites, social networks, or other digital applications use this type of format to blend programmatic ads into content seamlessly. Purchasing ads across major social networks is possible, with social video being one of the most popular.

Video

Programmatic video consists of two main types: instream, a video that plays before, during, or after a video, and outstream, a video that plays with non-video content (such as when reading an article). Programmatic video ad spend on mobile is more popular than desktop and is predicted to continue to increase.

Voice

A relatively new format, voice offers both contextual and user-focused targeting. Amazon’s Alexa, Spotify, and Google are examples of platforms that use programmatic audio ads.

Digital Out-of-home (DOOH)

Long gone are the days of inefficient out-of-home advertising. DOOH is traditional outdoor advertising that includes billboards, bus shelters, and on-car ads. Real-time digital signage makes ad optimization[11] and reactivity possible and enables integration across existing programmatic platforms. Ads are typically fully viewable to customers and are 2.5 times more powerful than static out-of-home ads. 

Out-of-home networks continue to expand digital signage options and more brands are now using the technology in-store.

Television

Because the format requires more development, television is one of the least popular programmatic advertising formats. However, large industry players, including Google, SKY, and Netflix, are working quickly to expand programmatic advertising’s role in buying, selling, and fulfilling TV ads.

Different Types of Programmatic Advertising 

Programmatic advertising is also known as real-time bidding[3] (RTB) since the entire process happens in real-time. Compared to bulk ad buying, RTB is more focused and enables bidding for individual ad impressions. 

But RTB isn’t the only form of programmatic advertising. Another type, programmatic direct[4], occurs when publishers have control over ad placement. Together, the advertiser and publisher negotiate the deal terms. Advertisers receive a guarantee of ad space on specific websites or from select publishers; however, they cannot fine-tune audience targeting. 

Preferred, or direct, deals is a type of programmatic advertising that negotiates a deal before the ad spot is available in a private marketplace[5] or auction. Both advertiser and publisher decide on fixed pricing, targeting, and other details in advance. 

Yet another option is private marketplace (PMP), also known as exclusive auctions. Available on an invite-only basis, an auction occurs for a publisher’s premium ad inventory[17][12]. Publishers with mass reach typically use this type of programmatic advertising. 

Wrapping Up

If you want to monetize your online space successfully, programmatic advertising is the best way to do it. Finding the best-suited advertiser is quick, using a comprehensive system of computers, algorithms, and real-time data. Depending on how much control you want over finding a suitable advertiser, you can choose which type works best for you.

Most importantly, programmatic advertising helps generate maximum ROI for your digital space. Although a relatively new tool, the popularity of programmatic advertising will only continue to increase. Start getting more from your website with this efficient tool!

Terms
1. programmatic advertising. Programmatic advertising entails using machine learning and technology suites to buy and sell ad inventory with a data-driven process.
2. demographic targeting. Demographic categories like age and gender provide marketers categories that directly align to measurements in the US census.
3. real-time bidding. Real-time bidding is a technology-driven auction process where ad impressions are bought and sold almost instantaneously. Once an advertiser wins a bid for an ad impression, their ad is shown on a website. Real-time bidding plays a crucial part in the digital advertising ecosystem together with other players such as ad exchanges and supply side platforms.
4. programmatic direct. Programmatic direct is where specified buyers get access to specified inventory that’s not necessarily available from an open marketplace or a supply-side platform (SSP).
5. private marketplace. Private Marketplace deals or PMP is a direct deal made between a publisher and buyer for programmatic ad inventory. A PMP can also be called Preferred Deals. This practice contains much more human interaction unlike the alternative of selling ad inventory through an ad exchange. Often higher rates for ad inventory can be negotiated through this method.

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