Programmatic advertising is a trending topic in the world of marketing. However, it is not well-understood because it is complex and shrouded behind a wall of industry lingo like SSPs, DSPs, RTB and DMP. This article will offer a quick overview of programmatic advertising in order to demystify the subject.
Programmatic advertising is the next logical step past the traditional system of media buyers and sellers.
Using emerging technology, programmatic ads are bought and sold through auctions via automated systems – or bots. At the moment, online ads are mainly being sold programmatically, but all advertising will be bought and sold this way in the future.
Most of the process is automated, from generating insertion orders, trafficking the ad to collecting data. This allows advertisers to buy ads that target specific audiences by using data to figure out when, how, and where to place the ads.
This method improves efficiency, and reduces cost. In addition, programmatic advertising allows marketers to fine-tune their targeting to reach their exact audience. An advertiser will set up parameters such as network reach, and bid price. The service will automatically match the parameters with audience data to make targeted ad purchases.
Some benefits of programmatic advertising are, transparent pricing, and the ability of buyers to use third-party data to optimize their advertising campaigns.
Ad-retargeting is an example of how programmatic advertising works. Retargeting works automatically to help marketers reach out to the majority of visitors who bounce off of a site before making a purchase.
Contrary to popular belief, programmatic buying is not remnant ad buying. It is an extension of traditional ad-buying that uses automated systems to maximize efficiency.
Programmatic advertising lingo
Here are some common terms and definitions commonly used in connection with programmatic advertising:
Ad exchange: This is on online marketplace where eligible buyers purchase impressions from participating vendors such as publishers and ad networks. The marketplace will announce individual impressions in real-time and ask buyers to purchase the impression at a specific price.
ATD – Agency Trading Desk: This is the department within an ad agency that handles programmatic buying for that agency.
DMP – Data Management Platform: This is a centralized place to integrate a marketer’s own data with third-party data, that is, data collected by other websites. This helps marketers to understand their audience in order to more precisely target their advertising.
DSP – Demand Side Platform: This is an automated purchasing platform that works by using algorithms to target ad impressions. These are usually integrated into ad exchanges or other supply sources.
RTB – Real-Time Bidding: This is an automatic process that allows marketers to trade digital media assets in real-time, via auction.
SSP – Sell Side Platform: This is a method for selling a publisher’s inventory using agency trading desks, advertisers and ad exchanges.
Programmatic advertising allows marketers to make smart, efficient and targeted advertising purchases. This helps marketers get the most impact for their advertising dollars.
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