What is Programmatic Advertising?

Alright, digest this fact: 80% of display marketing ‘digitally’ in the US was/is programmatic advertising.

It is a method to pre programmatically buying and optimising the digital campaigns as opposed to purchasing from publishers. Simply put, you use software to purchase digital advertising. It is the Machine Learning and Artificial Intelligence way to supersede human negotiations whilst purchasing digital spaces. Unlike traditional methods like requests for proposals, quotes, human negotiation, tenders, etc, programmatic advertising is a form of buying that uses machines and algorithms. The aim is to improve efficiency and transparency to the publisher and the advertiser.

The irony is, it has been in use for more than a decade although it is gaining much attention in recent times only. With programmatic ads in place, humans will have more time for optimizing and enhancing the efficiency of ads. It is the biggest display advertising buzz across paid media space.

Advent of Programmatic Advertising

In the previous days, salespeople will make agreements with publishers to display their ad for a specific time on the website regardless of the audiences that were to see the same banner. In 1995, the first central ad server was created that allowed salespeople to trade ads on numerous websites. Publishers outnumbered advertisers and this meant publishers simply had void space of available inventory.

Later…

The solution was building Ad networks – a platform to pool available ad space and make accessible to advertisers at a reduction price. However, the problem was targeting with this method.

Then came the Real-Time Bidding (RTB), which personified as one of the methods of programmatic advertising.

What is RTB?

RTB is buying and selling advertisements through a real-time bargain. The transaction is so quick and happens during the webpage loading time: 100 ms.

When the visitant enters a website, a request is forwarded to the ad-exchange with all possible information along with visitor’s data. This information will be run through the available advertisers for a live auction to match the visitor’s criteria.

Is RTB and Programmatic Advertising the same?

Real-Time Bidding forms a division of the programmatic advertising space.

It is a method of auctioning ad space on specific conditions as opposed to the blanket approach. Everybody won’t see the same ad. It will be made highly relevant based on the visitor’s search patterns.

In order to make the programmatic work efficiently, there are key components to be kept in mind.

Advertisers will use a Demand-Side Platform (DSP) that will be connected to a Data Management Platform (DMP) whilst the publishers will use Supply-Side Platform to dispense the available inventory covering one or many Ad-Exchanges.

What is an Ad Exchange?

An Ad Exchange is the meeting place of publishers and advertisers to come to a consensus to display their ads at a fixed price. It is the place where the actual buying and selling of advertisements and inventory take place.
It is the digital trading floor of a stock market.

The ad exchange is the median of programmatic space and is connected to advertiser’s Demand-Side Platform (DSP) and publisher’s Supply-Side Platform (SSP).

What is a Demand-Side Platform (DSP)?

A demand-side platform is a software that authorizes advertisers to automatically purchase ad placements.

The work-cycle of a DSP

Advertisers connect with a DSP, thus gaining an automatic connection with an Ad Exchange.

When a visitant looks in on a website connected to the ad exchange, it immediately receives an auction indication. The exchange then communicates with the DSP to check if any of the available advertisers have ads that might suit the requirement.

If yes, the DSP will signal to enter the real-time bidding auction and will also alert the other advertisers to compete.

Apparently, the highest winning bidder will get the placement to display his ad.

This is programmatic advertising for you on the advertiser’s side.

What is a Supply-Side Platform (DSP)?

An automated process of reaching out to advertisers to sell ad spaces and warding out the need for human interaction is a supply-side platform.

The work cycle of SSP

The SSP is connected to an ad exchange and it feeds information about the nature of inventory it has. The inventory will then be handed over to the apparent highest bidder through Real-Time Bidding.

Although DSP is allowed to buy programmatic ad space at a very lower price, SSP has a contradictory function – giving out ad space for the highest price possible.

SSPs has the potential to connect to numerous ad exchanges so the publisher’s exposure to potential buyers can be maximum.

Through an SSP, a publisher has the authority to control his inventory in an efficient way by fixing minimum prices and dictating specific buyers or channels.

Final Thoughts

The future is secure for programmatic advertising and is now the latest trend. For smaller brands, accessibility seems to be very easy after the rise of programmatic advertising.

At Digital X, we are masters in offering Programmatic Services and are known as the best Programmatic Advertising Agency in Dubai. We enlighten you on the best programmatic platform that you can set up for your campaign initiatives to drive value for your business.

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