Programmatic advertising

Programmatic advertising is the use of advertising technology to buy and sell digital ads. Programmatic advertising serves up relevant ad impressions to audiences through automated steps, in less than a second.

Programmatic advertising uses an automated process, within advertiser-defined parameters, to purchase digital ad inventory across the web, mobile, apps, video, and social media. Programmatic advertising uses workflow automation and machine learning algorithms to deliver the most effective ads to audiences based on a variety of signals, like shopping patterns.

Programmatic ad buying takes place when consumers click on a publisher’s website, and the publisher puts the ad impression up for auction through header bidding and one or more SSPs. Then, the DSP bids on behalf of the advertiser for that impression based on campaign’s strategies, budget, creative sizes, and other factors. The publisher automatically assigns impressions to the winning bidder—the advertiser/DSP offering the highest CPM (cost per mille, or the cost per one thousand advertising impressions). The ad is instantly served on the website.

Programmatic media buying uses an automated process to buy digital space for ads. Programmatic media buying also cuts down on wasted ad impressions by serving ads to relevant audiences and minimizing ad fraud risk—making it cost-efficient, as well.

Programmatic advertising is important because it can save time in the creation of your ads and campaigns. Not only does it automate the process, it analyzes your campaign performance to help you optimize for success.

Display ads could be a type of programmatic ad. While display ads are the ads themselves, programmatic advertising is the process of distributing these ads. Display advertising is also a type of digital advertising, but it does not necessarily need to be programmatic.

Programmatic advertising offers many benefits. Advertisers may achieve greater efficiency, more targeted marketing reach, transparency, and real-time measurement and optimization.

Potential challenges with programmatic advertising include a steep learning curve. Despite this, brands that don’t adopt to programmatic advertising strategies may be missing out on the benefits of efficiency, reach, transparency, and accountability.

A demand-side platform (DSP) is programmatic software for advertisers. A DSP helps facilitate media buying from numerous publishers through SSPs, ad exchanges, ad networks, and direct integrations. DSPs help brands and agencies (the demand side) determine which impressions to buy and at what price (the supply side). Advertisers can select audiences based on demographics, shopping patterns, browsing behavior, and many other signals.

A supply-side platform (SSP) is programmatic software for publishers to facilitate sales of advertising impressions via ad exchanges. By connecting publishers with multiple ad exchanges, demand-side platforms, and networks at once, SSPs let suppliers sell impressions to a greater pool of potential buyers, and allows suppliers to set the bidding range to maximize their revenue.

Real-time bidding (RTB) is a way to buy ads programmatically. With RTB, advertisers can participate in an auction when an impression becomes available. If their bid wins the auction, their ad is displayed instantly on the publisher’s site. RTB is not only efficient, but it helps advertisers focus on the most relevant inventory.

Header bidding is a technology that allows publishers to simultaneously request bids from multiple demand sources and send the bids to their ad server to conduct an auction. The ad server determines the winning bid and renders the ad on the site. Allowing multiple bidders to bid on the same inventory at the same time increases competition, but offers advertisers the opportunity to access premium inventory with these publishers.

In programmatic advertising, an ad exchange is an online marketplace where advertisers, agencies, demand-side platforms, publishers, and supply-side platforms can bid on advertising inventory from various publishers using RTB. Advertisers determine the price by participating in the bidding process. Additionally, with an ad exchange, advertisers gain visibility regarding where their ads will appear.

Once you’ve established your campaign goals, such as driving new product discovery or increasing sales; defined your ad types, such as display, video ads, or in-app ads; and have set up the DSP, you’re ready to get started.

To maximize your impact at the lowest cost, think about the various components of your campaign setup, such as duration and audience size, as this will help determine the CPMs you need to win your bid. At this stage, you can estimate the budget you need for the campaign and develop a bidding strategy.

CPM bid levels vary by media types and creative units. Generally, display demands the lowest CPMs whereas video demands the highest CPMs.

With programmatic advertising, you have the opportunity to evaluate campaign and creative effectiveness mid-campaign through reporting on metrics such as CTR, CPC, overall spend, and conversions. You can then optimize your campaign based on these insights.

The cost of programmatic advertising varies and is generally based on CPM. CPMs range in price based on who you’re trying to reach, supply settings, advertising budget, and the amount of time the campaign has to run. Adjusting these factors will change the end price for the campaign.

For example, holding everything else constant, when you’re reaching a broad audience, the CPM is typically less than when you are trying to reach a more niche audience. Targeting and ad group variables impact the CPMs required to secure inventory. With programmatic, advertisers are charged prices through RTB.

Impressions, clicks, and actions are three main ways to measure your programmatic advertising campaign, but they are just starting points. You can also measure key performance indicators (KPIs) that map back to your business objectives. Below is a helpful guide; utilize the metrics and OKRs most relevant to your objective: