A Guide to Programmatic Advertising and Buying

A Guide to Programmatic Advertising and Buying

What is Programmatic Advertising & Buying?

Programmatic explainedThere is no clear cut definition of Programmatic. Members of the Online Advertising industry have tried to pin down an exact definition of Programmatic but it has proved a daunting task. In previous attempts at explaining Programmatic, experts have described it as:

  • The buying and selling of digital advertising using technology.
  • The use of data to make ad purchasing decisions in real time.
  • The implementation of machine to machine interaction.
  • The automation of media buying.

While these definitions seem to differ in certain aspects of Programmatic Advertising & Buying, one thing they all agree on is that in the broadest sense, Programmatic is the use of machines and data to buy and sell digital ads.

How Does Programmatic Work?

Programmatic allows buyers and sellers to engage in transactions through the programming, or automation, of complex algorithms in an online marketplace or exchange. It works very similar to the stock market yet instead of stocks being traded, it is ad impressions.

The Programmatic Process:

The Programmatic process works as a type of tiered auction. For example, if Jane Doe clicks on a website url, the publishers content will begin to load on her browser. As the content loads, the publisher site will search for any information it has on Jane Doe in its Data Management Platform (DMP). If it has the information, the publisher will send this information to its Ad Server which will then send an available and relevant ad campaign back to target Jane Doe.

What if there is No Campaign Available?

If there is no campaign available in the Ad Server, the publisher then seeks to match the impression by programmatically requesting a response from selected traders, Ad Networks and Side Supply Platforms (SSP) who can provide an appropriate ad to Jane Doe on the publisher’s site.

Private Marketplaces or Private Exchanges

Programmatic-auctionIf the impression is still not cleared, the Ad Server could then turn to clear the impression in a Programmatic Direct way via Private Exchanges. Private Exchanges allow a select group of Ad Buyers within the Exchange to view and bid for the impression in a matter of milliseconds. Private Exchanges help both Programmatic Advertisers and Buyers deal with common issues such as Ad Fraud and irrelevant ads.

Open Ad Exchange

If the request is still not cleared then the Ad Server will send out a request to an Open Ad Exchange. The Open Ad Exchange will then send out an open bid request containing information about Jane Doe’s browser, url and ad type to multiple bidders including Traders, Ad Networks and Demand Side Platforms (DSPs). The Open Ad Exchange works as an auction with each bidder’s algorithm evaluating the request and providing a relevant creative attached to a bid price based on the restrictions set by the marketer. The Ad Exchange will then pick out the winning bid and send it to the Publisher Ad Server which will in turn tell Jane Doe’s browser which ad to display. Finally the winning bids Ad Server receives Ad Tag Data on Jane Doe’s initial interaction experience with the ad.

Check out this video for a visual experience of the Lifecycle of an RTB Ad Impression.

What are the Main Benefits of Programmatic?

Relevant Ads: Traditional Advertising is sometimes inefficient and can lead to extraneous amounts of Targeted-Adsmoney being spent serving irrelevant ads to the wrong audience. Programmatic Advertising and Buying allows advertisers to identify online consumers through a combination of real-time, first and third-party data that reveals information including demographic, gender, geography, interests, behaviours and previously visited websites.  This information then allows advertisers to target the best and most relevant audience with more impactful ads.

Efficiency: The automation of Ad Buying also means the Programmatic Advertising and Buying is far more efficient than traditional advertising as it speeds up the buying process and reduces transaction costs. The necessary but menial tasks such as negotiating, insertion orders and independent data analysis are a thing of the past thanks to the automated process of Programmatic which performs these tasks in milliseconds.

The Future for Programmatic

Programmatic has had a meteoric rise in the Advertising industry with reports showing Programmatic Ad spend has grown by 250% in Europe over the last two years and an estimated $15 Billion to be spent on Programmatic Advertising in the US in 2015.

Leaders in the advertising industry agree that Programmatic looks set to continue its unstoppable rise to the top of the Digital Marketing Industry with Appnexus President, Michael Rubenstein, arguing that upwards of 80% of all Online Ads will be bought and sold programmatically in 2015. Programmatic has also gradually made its way into other mediums including TV and Radio with experts projecting that $84 million will be spent by 2018.  Programmatic looks set to bring in a new era of Online and Offline Advertising and experts have predicted that Programmatic will drive Ad Tech Revenue to over $100 Billion by 2020.

 

If you want to learn more about Programmatic Advertising & Buying, contact us now to start your first Programmatic campaign!


 

Further Reading:

6 Digital Marketing Professionals Define Programmatic Advertising

http://www.cio.com/article/2839392/advertising/6-digital-marketing-pros-define-programmatic-advertising.html

What You Should Know About Programmatic Advertising

http://www.inc.com/john-boitnott/what-you-should-know-about-programmatic-advertising.html

200ms: The Life of a Programmatic RTB Ad Impression

https://www.youtube.com/watch?v=rTg9l4d8MU4

How Programmatic Advertising Works

http://acuityads.com/programmatic-buying/

THE PROGRAMMATIC-ADVERTISING REPORT: Mobile, video, and real-time bidding drive growth in programmatic

http://uk.businessinsider.com/buyers-and-sellers-have-overwhelmingly-adopted-programmatic-with-mobile-leading-growth-2015-3?r=US

Programmatic Ad Spend In Europe Jumped 250% In 2014

http://www.mediapost.com/publications/article/246623/programmatic-ad-spend-in-europe-jumped-250-in-201.html

The Rise and Rise Of Programmatic Advertising

http://www.theguardian.com/media-network/2015/mar/25/programmatic-advertising-appnexus-michael-rubenstein

Fueled by Programmatic, ad tech revenue to hit $100 billion by 2020

http://www.ad-tech.com/sf/page.cfm/action=Press/libID=1/libEntryID=39/listID=2

Evolution of TV: The Promise of Programmatic TV

https://www.thinkwithgoogle.com/articles/evolution-of-tv-programmatic-tv.html

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