Programmatic Advertising Explained In Under 5 Minutes - An Overview

In this article, I am going to offer a brief introduction to programmatic advertising, why it's important, and what's going on with it today - it's come a long way in the last 15 years!

Let's get into it.

Programmatic As A Process

The first step to learning about ad tech is laying out the key terminology. I'll dig into these ideas more, but for easy reference.

• Programmatic Advertising: The process behind buying and selling ads, how it is carried out using algorithms and automation. The overarching term.
• Ad Tech: The actual software that is being used to price ad space, purchase it, sell it, and measure digital advertising efforts.
• SSP vs. DSP: SSP's, sell-side platforms, allow publishers to sell ads to advertisers that can be bought, versus DSP's, demand-side platforms, allow advertisers to purchase ad space from multiple platforms simultaneously.
• Ad Exchange: Demand-side platforms connect to the ad exchange, to find ad inventory from sell-side platforms selling at fluctuating, dynamic prices.

The best way I've found to understand this at a rudimentary level is just learning the process. Allow me to attempt to connect the dots (particularly with distinguishing between DSP's and SSP's).

Programmatic solves the issue of needing to buy ad space directly from publishers. Automation and real-time auctions allow for ads to be bought at the exact same time a user visits a site, known as real-time bidding, RTB.

So, you're looking to purchase ad space from a publisher - this is done in an ad exchange. The ad exchange is the hub for DSP's and SSP's, kind of like this image below depicts.

An ad exchange will check to see if the DSP has an advertiser with ads fitting the ad placement, and those that meet the criteria will bid in real-time, with the winning bidder then being able to display the ad on their website.

SSP's are utilized by publishers to display their inventory in ad spaces on the exchange, whereas DSP's are the programmatic tool for advertisers. The SSP selects the highest auction bid from DSP's to then provide them the ad to publish. It is on the DSP to determine ads that will resonate most with the intended audience.

This advent of real-time-bidding has been huge for publishers in this online advertising space. Being able to place an ad in front of the right person at the right time, on demand, is huge. Placement can happen instantaneously, helping to eliminate the need for negotiation and dealmaking over placing ads.

Also, marketing automation benefits publishers within ad tech. User relevance is better than it's ever been, due to the targeting capabilities within programmatic. And to further improve work, the metrics and analytics available through using programmatic are much deeper and more insightful than the archaic "counts" from old school data capturing.

The industry is evolving quickly - publishers not embracing programmatic are going to find themselves falling behind quickly. Publishers have never been as empowered as they are now to create greatness, maximize advertising potential, and capture leads in the blink of an eye.

Programmatic Advertising - What Makes It Challenging?

Advertisers will succumb to some hardships when using programmatic that are worth acknowledging:

1. Bots - It's hard to know if your ad is being seen by a real person - think about all that advertising budget that gets blown with nothing to really show for it. That's bots receiving your ads. Watch for high fraud rates & make sure the website you're using is reputable, such as Xandr.
2. High-Quality Inventory - The amount of sheer ad inventory available to advertisers today isn't an issue, it's the quality of this inventory. Programmatic works best when content put in front of users is valuable and relevant and that the users seeing it demonstrate interests in it. There's ways to optimize this, such as premium level ad tech - they're worth looking into.
3. Negative Framing - Advertisers never want their ad's shown near any negative or brand damaging content. If you are Mercedes-AMG and trying to sell the G65 AMG with a V12 and 700 lb-ft of torque..probably don't want an ad for that G being placed near any communications from the US EPA.
4. Ad Blockers - This seems simple, but think about it..users who don't want to receive ads won't be captured through programmatic.

Programmatic is not a simple concept to grasp - learning about it is essential to understanding the digital ad space, it's the way of the future and when utilized effectively, can provide benefits that exponentially surmount the techniques of ten years ago. I myself am still trying to really feel comfortable with all it entails - if you feel well versed, feel free to reach out to discuss further! Or if you're looking to learn more - I am always happy to collaborate to gain knowledge.