No two ads are created equal!

Have you ever wondered how advertisers seem so conveniently present on whatever platform you're currently accessing with an ad about a product you just searched on google?

The answer to the above-mentioned question lies in Programmatic Advertising. In order to understand the nuances of Programmatic Advertising, it is important to back up a bit to look at where the industry started off. The placement of the Ad was a serious problem because, firstly, the channel was generally mass media, meaning there was no way of accurately knowing which people you were reaching out to. Secondly, the cost and revenue attribution was a nightmare. Therefore, buying the best ad space at the best price and targeting it to the right audience is the whole name of the game.

Fast forward to the current decade, and things have changed dramatically. The rise of AI and increased computational power has created a segue to increased efficiency and targeting in the advertising industry. One of those innovations has been the rise of Programmatic Advertising.

What is Programmatic Advertising?

"Programmatic advertising" refers to the automated process of purchasing and selling digital advertising space.?Ad exchanges perform electronic auctions to connect buyers and sellers in the digital advertising business.

• Web banner ads buyers, also known as advertisers.
• In the digital arena, publishers are the website/platform owners.

This is all elevated to a new level with programmatic advertising. It employs algorithmic technologies to instantly (fraction of a second) sell and purchase digital ad space on ad exchange networks.

More precise, efficient, and scalable impression serving provides a higher return on investment (ROI) for advertisers and publishers thanks to the use of traffic data (for instance, user cookies) and online targeting technologies.

How are programmatic ads processed?

The programmatic buying process may be summarised as follows:

After a user clicks on a website, the site's supply-side platform (SSP) solicits bids from demand-side platforms (DSPs) on behalf of advertisers interested in displaying their ads to that user, and the highest bidder receives the impression. The user sees the ad while browsing the website; the user (ideally) clicks the ad, which leads to a successful conversion.

This occurs instantaneously despite the multiple stages needed. Algorithms and various analytics are then applied to the competing bids to decide which is the best value.

A larger bid will be provided for your impression if, for instance, the user who clicked on the website is a highly qualified lead for your business based on their online profile and browsing history.

What is SSP?

SSP is responsible for managing the real-estate stock of digital ad space When a publisher submits a website to be used as an ad source, the Ad Exchange will negotiate terms, and the publisher will then insert a pixel code into the page to monitor user engagement.

The code sends information about site users and their behavior anonymously (at least, that is what they claim). The SSP is optimized to increase the revenue earned by publishers per ad impression (an impression being an instance of the ad being shown to someone).

Ads may be filtered based on characteristics such as sponsor or content, and publishers can charge varying amounts for different ad slots with the use of a supply-side platform.

What is DSP?

A demand-side platform (DSP) is an advertiser-focused programmatic platform. With a DSP, advertisers place bids, and the platform selects the winning ads.

A DSP is a database that aggregates user profiles, third-party data, and advertising bids. If a user lands on a web page, the DSP is responsible for choosing which ad to show. The highest bidder takes the spot, but the ad and its price to the advertiser must also be taken into account.

A publisher's website pixel transmits data to a demand-side platform (DSP) to be used in creating targeted audience segments. In order to ensure that the most relevant ad is served to the right people, the DSP has advertisers prepared to submit bids automatically.

Advertisers profit from appropriate ad placement, while publishers benefit from the highest bidder winning. The SSP receives information about which ads were selected for specific pages from the DSP and Ad Exchange.

How does programmatic advertising target users?

With programmatic advertising, there are variety of targeting options, each with the potential to improve targeting:

• Contextual Targeting: This kind of advertising attempts to display adverts relevant to the content of a page. Advertisers targeting the sports industry could opt to be on ESPN's website, while those targeting the financial services industry might do better on Financial Times.
• Keyword Targeting: Advertising based on keywords is an example of keyword targeting, a subset of contextual targeting. You may, for instance, provide a list of keywords related to the subject matter of your business, in this case, bicycle spare parts. Maybe you want your name to pop up in stories about cycling and safety but not in those about motorcycle gear or electric bikes. By comparing your keyword list to the article's, we can choose the most relevant terms to display in your advertising.
• User-centric Targeting: Advertisements can also be displayed based on users' cookies rather than the context of a website, so a user who has previously visited your financial services site may be served an ad for your brand even if they visit Vogue next, as they have already demonstrated an interest in what you are offering.
• Brands may contact customers in their area using geo-targeting (called location-based targeting or geo-fencing). Having your adverts displayed to individuals in Delhi may not make sense if you own a brick-and-mortar retail business in Ahmedabad. Ads for global businesses or online services may reach local consumers in their native tongue by using geo-targeting.

Why Programmatic advertising is so relevant?

Advertisers had a hard time getting their hands on ad space before programmatic advertising. As a result, 60% of the advertising space in the publishers was unsold. Automating the process of understanding and purchasing ad inventory contributed to the solution.

Advertisers benefit from programmatic advertising in several ways, including:

• Scalability: With programmatic advertising, businesses are no longer restricted in their ability to reach a wide audience since they may buy ad space on any accessible inventory.
• Responsive adaptability: Ads may be optimized in real time depending on user interaction, and a wide variety of targeting options are available to advertisers. ?
• Transparency: Ad placement and activity data may be accessed in real-time with programmatic advertising, increasing openness for both advertisers and publishers.?
• Efficiency: Targeting simplifies the process and ensures that only adverts truly relevant to the user are seen. With a vast publisher network at their disposal, both publishers and advertisers may optimize their earnings.

Outlook for Programmatic Advertising

As with the rest of the world, advertising is being influenced by developments in artificial intelligence and machine learning. Best practices, shifting attitudes, and broader cultural shifts all have an impact on the direction of programmatic advertising, in addition to technological developments.

Dynamic Creative Optimization (DCO) is the newest development in the Programmatic advertising space. It enables advertisers to provide highly relevant and personalized ads to their targeted groups. Artificial intelligence provides the necessary data and insights to deliver more precise messaging to the right users. As a result of DCO's ability to identify its audience and select the most effective creative combination to convey a specific message curated for each user, publishers can be certain that their message is being presented in a way that is relevant to those consumers. DCO is being tested intensively, especially on social media platforms.

The following representation depicts the process for DCO-based allocation of ads integrated into the DSP. Therefore, a single brand can create multiple iterations/combinations of ads using AI, which can be put up based on the ad space purchased during the auction.