What is Programmatic Advertising? Part 1

Programmatic Advertising on the Rise

Programmatic advertising – a new approach to paid media – has started to change the landscape of digital advertising as a whole. However, because of its newness, many digital marketers are still trying to figure out the best ways to put it in play for companies and clients.

In this series of articles, we take an in-depth look at programmatic advertising and how brands can make the most of it.

We’ll start with the basics: what programmatic advertising is and how it works.

The Definition of Programmatic Advertising
Filled with plenty of jargon, captious results, and constant evolution, programmatic advertising can be a difficult concept to wrap your head around. Simply put, programmatic advertising is the automated transaction of buying and selling media online, which applies to anything from display ads to digital out-of-home, video, connected tv (CTV), mobile apps, and more.

Generally speaking, in the world of paid media, brands and agencies use a demand-side platform (DSP) to figure out which ad impressions to buy and how much to pay for them. On the publishing side, a supply-side platform (SSP) is used to sell advertising space to brands and agencies. These two platforms – DSP and SSP – work together in real-time to give both the publisher and brand or agencies what they need.

In the past, this has been a manual process. The process involves requests for proposals (RFPs) from both brands, agencies, and publishers. It also includes person-to-person negations and manual insertion orders. But with programmatic advertising, the entire transaction occurs within seconds through various platforms, creating a bidding process that allows access to an exponentially broader and more targeted audience than ever before.

So How Does Programmatic Advertising Work?
The primary use of programmatic advertising is to improve ad performance for your brand. But, as we mentioned, a lot of digital marketers are still trying to figure out is how it actually works. Here’s a breakdown to help you fully understand how this form of advertising works. To keep it simple, we have used a website as an example, but keep in mind that this advertising can be anywhere digital content is served, including on your Roku, Connected TV (CTV)/smart TV, digital bus displays – you get the idea.

Step One: Choose the audience
Defining who you target through programmatic is one of the most advanced and fun (from a marketing perspective) aspects of programmatic advertising. You have many choices when it comes to targeting. This ranges from first-party data, third-party data, lookalikes, data partners, and more.

Step Two: The Bidding Process
When someone visits a website engaged in programmatic advertising, the automated bidding process chooses a winner instantaneously, and the website visitor views an ad customized to them.

Step Three: The Publishers’ Listing
Publishers list ad space on their websites on the SSP, which acts as the seller for the publisher. The SSP also informs advertisers on the DSP of the characteristics of the publisher’s site, site visitors, and the ad space itself. Through the DSP, advertisers can make their bid to advertise their product or service on the publisher’s website.

Step Four: SSP Analysis & DSP Review
Once the SSP receives information about the ad space, the SSP automatically analyses the site visitor’s cookie data to determine various modeling factors, such as location, demographics, and interests. The DSP then reviews the information on the visitors provided by the SSP and allows advertisers to choose ad space that aligns with their brand, budget, and target audience. The system then assigns the ad placement based on the website and user characteristics.

Step Five: Making A Bid
The DSP, on behalf of the advertiser, makes a bid on the ad placement. Remember that all of this happens in real-time, meaning that these processes occur within milliseconds.

Step Six: Picking A Winner
Once the SSP has received all the bids from a variety of DSPs, it will pick a winner, and the SSP displays that ad to the user on the publisher’s site.

Now that we’ve detailed what programmatic advertising is and the basics of how it works, move on to part two of this series to learn more about the different types of programmatic advertising and whether or not this revolutionary approach could work for you.

Read Part 2

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