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Discover programmatic advertising – how does it work, its pros and cons, and best practices when using this technology.
Advertisers worldwide continuously turn to programmatic advertising for their digital campaigns. In 2020, programmatically sold advertising reached a value of US$129.1 billion, with the United States, China, and Europe being the top three markets. The industry was reported to be at US$155 billion in 2021.
Learn more about programmatic advertising and why advertisers prefer it over traditional ad publishers.
What is Programmatic Advertising?
The programmatic ad uses automated technology in buying media space. The entire process is based on algorithms in serving the ads at the right time to the right people. Programmatic direct platforms have gradually evolved with an expanded inventory and database, allowing different ad formats to be compatible with desktop, tablet, TV, and mobile. The AI-assisted digital advertising strategy will enable ads to appear on social media platforms and other possible sites.
What Makes Up a Programmatic Advertising Platform?
Most programmatic technology for buying and selling ecosystems are composed of ad exchanges, ad platforms, marketers, and advertisers. However, three major aspects of the ecosystem mainly facilitate ad buying and selling activities.
Ad Exchanger
The ad exchanger is a pool of ad inventory that advertisers buy from different publishers. The ad exchanger runs real-time auctions via real-time bidding (RTB). Once the winning bidder is defined, the ad exchanger prompts the servers to store the ad content and release it in advertising platforms once the URL load is requested.
Demand Side Platform (DSP)
The DSP is a software that allows advertisers to purchase search, video, and mobile ads in a marketplace that offers listing inventory. These platforms also let you manage advertisements within real-time bidding networks. DSP can be integrated with data management platforms to evaluate and collect information so that marketers can better view targeting.
Supply-side platforms
The SSP is an advertising technology (AdTech) platform that allows publishers to optimise, sell and manage an advertising space or inventory.
Looking at the illustration above, this is how programmatic advertising media buying is supposed to happen:
- First, companies planning to promote their brand would tap the assistance of agencies.
- The agencies will set the campaign parameters, creatives, and other collaterals for the campaign. The agencies will then analyse and submit their bids to the ad exchanger.
- The ad exchanger sends the ads to the publisher through the SSP. The SSP will then serve the ads to the users through websites or apps.
- As the users visit the website or social media platform, user data like browser, location, age, gadget, behaviour, and operating system are collected by the website then sent to the ad exchanger through the SSP.
What are the Types of Programmatic Advertising?
Programmatic advertising may or may not require advertisers and publishers to work one-on-one. This is because programmatic ad buying deals set the rules for ad delivery.
Real-Time Bidding
RTB refers to buying and selling advertisements based on per-impression in real-time. Multiple advertisers can bid on a publisher’s ad spaces through SSPs and ad exchangers. RTB allows advertisers to focus on the most relevant inventory and specific targeting, leading to help users see more relevant ads.
Although RTB is more focused on targeting and optimised than other types of programmatic media buying, it does not allow advertisers to know which website or app published their ads.
| Pro Tip: Manually managing your ad spend can be taxing. Use Spenmo's virtual cards are customisable – allowing you to set advertising budgets and preventing you from overspending on marketing campaigns. |
Programmatic Guaranteed
Programmatic guaranteed implements direct-reservation strategy. Programmatic guaranteed media buying is a one-on-one deal between the advertiser and the publisher. The buyer agrees to purchase a number of ad impressions. In return, the publisher promises to deliver the number of ad impressions required at an agreed price.
Programmatic guaranteed provides the advertisers with access to premium inventory and ad spaces. Instead of bidding on impressions, programmatic guaranteed advertising ensures you already have the impressions you paid for. Advertisers don’t need to guess where their ads are coming out to ensure brand safety and transparency of the deal.
Preferred Deals
Preferred deals or spot buying process allows advertisers to buy an ad inventory at a fixed price before these spaces are offered in the private marketplace. Preferred deals take a refined approach in terms of purchase as the advertiser and publisher already agreed on pricing, terms, and other aspects of the bid early on.
Initial stages of preferred deals on ad placements let advertisers look at an inventory without being locked in to make a purchase. Through DSPs, the advertisers can analyse and understand the audience, which would help decide whether to buy the ad space.
Private Marketplace
A private marketplace applies to websites and other advertising platforms with massive reach. Because they have a broad audience reach, these websites can set a special private marketplace for valued advertisers. Private marketplace gets rid of the mystery in ad placements, letting you know where your ads will appear after winning the real-time bidding.
| Fast Fact: Private marketplace is done on an invite-only basis before bidding on an ad server. Publishers reserve their ad slots for their select advertisers. |
What are the Top Programmatic Advertising Channels?
Programmatic marketing can come in different formats or channels as they are published on a website or an app.
Display Ads
In general, display ads may refer to all banner ads or visual ads usually found on a web page. However, in the case of programmatic advertising, digital display ads are those banner ads appearing at the sidebars, header, and footer of a page. Display ads have different sizes and formats depending on the parameters set for the ad space.
| Pro Tip: Ad spend automation eases the process of paying your advertising expenses on time. Schedule and track your digital ad campaign payments through Spenmo. |
Native Ads
Native ads are also a type of online advertising but may appear differently as banners because they are published the same way as the website’s organic content. Native ads aim to reduce distraction and ad fatigue which the audience usually experiences with traditional display ads.
Native Google ads can be formatted as in-feed units, paid search units, promoted listings, recommendation widgets, in-article ads, sponsored content, and rewarded video ads.
Read more about native ads here to improve your marketing strategy.
Social Ads
Programmatic online ads leverage user data collected by social media platforms. These user data are analysed, which will become the basis for more focused ad targeting, improving chances to land on the right target audience. Programmatic advertising on social media also recognises the right influencer and automates their campaign management.
Audio Ads
BBC, Pandora, Google, Soundcloud, and Rubicon Project are just a few of the sites or ad networks where you can publish audio ads. Programmatic audio ads use a system that connects brands to publisher websites in audio content like podcasts, digital radio, and music streaming services.
Video Ads
Programmatic ad in video format is showcasing an advertisement in the form of videos. Advertisers can choose from these three types of video ads:
- In-stream ads - These are advertisements that appear within the video player. They can appear before (pre-roll), in the middle of the content (mid-roll), and after the video (post-roll).
- Out-stream ads - These video ads appear as pop-up windows or in between online content.
- In-display ads - These video ads don’t appear in a video player but can be found in recommended video listings.
| Fast Fact: According to Forbes, the US ad market is expected to be over $300 billion and the global ad market more than $700 billion. |
Digital Out-of-Home (DOOH)
Digital out-of-home programmatic advertising refers to digitised display advertising in public spaces like networked screens, outdoor signages, and billboards.
Why Does Programmatic Advertising Work?
Better Budget Utilization
Since programmatic advertising improves targeting and reveals ad performance in real-time, advertisers can make more intelligent decisions when investing their marketing budgets.
Optimized Targeting Efforts
Programmatic advertising lets you generate user data to improve the audience profile and reach the right audience more accurately. Advertisers can also use demographics, geo-targeting, remarketing, and IP address targeting to refine their targets.
| Pro Tip: Before launching a digital campaign, make sure you set your goal. Aim to increase brand recognition, leads, sales, phone calls, website visits, and conversions so you will know which programmatic channel to use and what audience to target. |
Increased Revenue for Publisher Websites
One of the benefits of programmatic advertising is increased revenues for the publishers. Publishers who use programmatic advertising experience a rise in revenue because of the guaranteed deals. Programmatic advertising makes ad spaces more visible to premium advertisers looking for high ad inventory volumes.
Easy Access to Prime Inventories
Advertisers can access elite advertising spaces and inventories, ensuring that there will be fewer wasted impressions and fewer ads being viewed by the wrong audience.
Final Thoughts:
Although programmatic advertising is still in its infancy, it is certain how this artificial intelligence tool can improve the future of digital marketing. Automating the buying and selling of ad inventories can be beneficial for both advertisers and publishers. Making sure your online ads appear at the right place, at the right time, and to the right audience makes all your campaign efforts worth the try.