Guide to programmatic advertising: basic concepts

Today online advertising allows us to reach levels of targeting previously unimagined. Programmatic advertising is one of the strongest aspects of today’s digital media. According to AppNexus, this channel was responsible for 80% of US ad space in 2018. Based on user navigation and profiling, programmatic advertising helps advertisers connect with relevant audiences more than ever.  

How does programmatic advertising work? 

Programmatic advertising buys are based on audience buysThe specialised platforms that offer programmatic use big data to connect your target audience with available advertising space online. In general, gone is a direct contact or buy from a Publisher: instead, Programmatic technology is much faster and more efficient when it comes to ad serving, which means that your ad buy takes place in real-time (in milliseconds) when a user visits a website. There are a variety of buy methods that work through digital bidding systems, but the most common one is real time bidding (RTB)Under this model, advertisers pay to have their ads shown to a specific audience profile at the most effective time.  

Types of programmatic online buying 

RTB is not the only programmatic advertising type, there are more: 

  • Programmatic directthis type of buy is usually done with a fixed price rather than an auction, and it guarantees a certain amount of impressions on specified websites.  
  • Private Exchange buying (PMP): under this model, a group of publishers get together and invite a selected number of advertisers to bid on their advertising space within their web properties. This means that certain products or services are displaying ads on just these sites, rather than any web property that might have users that fit the target as is the case in RTB, where the bidding is open.  

What are the advantages of this type of advertising? 

Programmatic buys tend to improve return on investment (ROI) because it generates impressions in the most efficient manner possible, meaning that the ads for products or services are shown to users who potentially have a genuine interest in them.  

Another big advantage is that advertisers can launch multiple versions of the same ad at once, targeting these different ads to users of a particular age, in a concrete location, etc.  

Elements of programmatic advertising 

As we’ve discussed, advertisers, publishers and segmented audiences are the key players of ad Bidding, but there are a couple of other elements we’ll review here:  

  • On the advertiser side, you’ll need a Demand-Side Platform (DSP) connected to a Data Management Platform (DMP). 
  • On the provider or publisher sideSupply-Side Platform (SSP) is what is used to manage the available ad space inventory.  
  • The meeting point between advertisers and providers of ad space is known as an  Ad Exchangewhere a Price is agreed upon virtually, generally through a real-time auction.   

Here is an example: 

A user visits a sport website. While the page is loading, the aexchange (which knows what the available advertising space is thanks to the SSP) asks the DSP if the advertiser has an ad available that fits with the user’s profile and the subject. If there is a match, the DSP sends a signal to place that advertiser into the real-time auction, where they will be bidding against other advertisers. The winner of the auction is the one whose ad will be shown to the user on the sport site.  

Are you interested in adverting your goods or services via programmatic advertising? In All Around we’ll help you to get the best ad space for your business. Contact us and take your online advertising programme to the next level.  

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Managing Director

Andreas is Managing Director at All Around. He worked for years in leading roles and international projects at WPP and Publicis Group agencies. He now leads a multi-disciplinary team of marketing consultants from different disciplines, backgrounds and countries who have joined forces to deliver international digital strategies and measurable results for our clients.