Programmatic Advertising 101: A beginner’s guide

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Programmatic advertising, where do we see it in daily life? Read on to find out
Programmatic advertising, where do we see it in daily life? Read on to find out

Every advertisement put out in the world will always trigger someone.

Recent data shows that 38% of global digital consumers are likely to block an ad and 61% of them think there are way too many ads on the screen while 54% of them think these ads get in their way.

But on the other hand, we can see constant growth in the budget for digital ad spend. This is so because if you get a digital ad right it gets undeniable results.

Hence if you have been in conversations in an ad tech space and the topic of programmatic advertising has come up and you have nodded your head agreeing to arguments saying that it’s important but were clueless on the inside, then don’t worry, this programmatic advertising guide will get you up to speed.

In this guide, we will explore everything from what is programmatic advertising to how it works and why it’s important. Let’s dive in!

Note: Already familiar? Click here for more informative articles on programmatic advertising

What is programmatic advertising?

Let’s take a step back and try to understand this concept from a consumer point of view.
On a normal day of digital consumption just think about the number of advertisements you see, the truth is you see hundreds of digital ads while you scroll through content and information on your phones, laptop, and even your connected TV. You see them when you open a YouTube video and you notice the ad displayed before the video is different on your phone and different on let’s say your friend’s phone. These ads are meticulously curated to aim and target one single person, that is the consumer, a.k.a, you. Hence the answer to the question- How do these organizations target thousands of ads across different platforms while aligning them to your interests and needs is the concept of programmatic advertising.

Although there are many definitions on the internet, Marketing Week simmered it down to the basics:

“Put simply, brands or agencies use a demand-side platform (DSP) to decide which impressions to buy and how much to pay for them, while publishers use a supply-side platform (SSP) to sell ad space to brands. These two platforms are then matched up in real-time.”


Types of Programmatic Advertising

Programmatic advertising unlike traditional ad buying doesn’t require one on one communication between publishers and advertisers. 

Let’s look at the types of advertising deals that make up how and where an advertisement is displayed.

 1. Real-Time Bidding (RTB)

Real-time bidding is when the buying and selling of ads and ad spaces happen in real-time on a per-impression basis in an instant auction. These auctions are usually orchestrated by a supply-side platform (also known as SSP) or an ad exchange.

Note: For further context, an SSP is an automated software that helps publishers sell ad display, video, and mobile ad impressions to potential buyers in real-time.

2. Private Marketplace (PMP)

Private marketplaces are similar to RTB in functionality but advertisers will have access to the marketplace only on privileged invitation only. In Private Marketplace auctions, publishers auction out their premium ad inventory to specific advertisers in accordance with the invitees’ list.

The ad spaces sold here are usually high-demand website pages that get high traffic which means more attention for potential buyers, hence why these auctions are done based on exclusivity.

3. Guaranteed Private Marketplace

This is more like how a traditional trade-off would work. The advertisers and publishers establish one on one contact and negotiate the terms of the deal and reach an agreement. Hence advertisers have more choices in their process to purchase ads, choosing the target audience, and discussing prices.

 

How does Programmatic Advertising work?

Now we know that programmatic advertising works through ad exchanges where publishers auction out and sell their digital ad space and buyers intervene with bids to buy the said ad spaces according to their needs.

An automated algorithm is put into use that uses gathered data to procure advanced analytics determining the correct placement of these ads on the respective publishing sites. This placement is usually based on factors like location, demographic, and the type of industry in which is to be catered hence giving the publishers the best possible result. All of these processes are usually fast and happen in terms of seconds where buyers are able to find relevant ad spaces almost instantly.

Advantages of Programmatic Advertising

 1. Real-time reports

Ask any marketer, real-time report of a campaign is one of their ideal dream scenarios. Programmatic advertising does just that, it gives real-time updates about the campaign performance for a better understanding of audience response unlike other modes of ads like billboards or print advertisements where you have to wait until the course of the campaign is run to get the performance results.

2. Better Reach

This is one of the most undeniable advantages of programmatic advertising, on a daily basis there are millions of users on the internet consuming content and information and programmatic advertising makes all of them a potential market. Yes, it’s always good to filter those millions down to a niche but it’s undeniable that it provides a variety of audiences to choose your niche audience from.

3. Better targeting of the audience

When talking about programmatic advertising you might have heard the word “targeting” in the same sentence. As discussed, with the plethora of options of audiences to choose from, advertisers can choose a very niche demographic to whom their product or service would make sense to. Hence increasing the odds of the law of averages.

4. Optimizing and efficiency

Now given that we’ve understood that the real-time data and feedback of an ad is available it makes the campaign that much more efficient, as marketers can now make the necessary tweaks and optimize the campaign based on real-time response to the ad, hence increasing the overall efficiency of the ad.

5. Better transparency

Programmatic advertising offers such hand-holding in terms of see-through transparency when compared to traditional advertising methods. Here you can see what digital sites, where, and how are your ads displayed, and how is the market responding to the ad which allows the marketers to make any necessary changes almost instantly.

These are just a few obvious advantages of programmatic advertising we saw. Now that you know its power and how the global stance on the subject stands, you can now make a more informed opinion and have an informed mind while digging deeper into the subject.

Keep reading iTMunch for more exciting informative content.

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