To give a simple definition of programmatic advertising, we can say that it is a way to automatically buy and optimize digital campaigns, rather than doing it directly from publishers.
Programmatic advertising is designed to replace human negotiations with machine learning and optimization made possible by AI. The objective is to increase the efficiency and transparency of digital advertising and related transactions, for both the advertiser and the publisher.
This type of advertising which first appeared in the United States in the 90s is characterized by a Real-Time Bidding system in which the ads are purchased at the same time as a visitor loads a website.
In this article, we’ll go over all the essentials you need to know about programmatic advertising, starting with real-time bidding.
Understanding Real-Time Bidding (RTB)
The RTB , or real-time auction system, is a way to buy and sell advertisements through real-time auctions, which means that transactions are completed for the time it takes to load a web page, ie. i.e. about 100ms.
Real-time bidding offers better and faster targeting, making it possible to buy and sell ads on a case-by-case basis, which means that only visitors who belong to your target audience will be submitted to the ads / ads you want to run.
Real-time auctioning is a form of programmatic buying, but that doesn’t mean all programmatic advertising uses RTB.
The term “programmatic” simply means using an automated South Africa WhatsApp Number List way to make ad purchases, and RTB remains the most common way to do this today.
Although around 90% of programmatic purchases go through real-time auctions, the field of programmatic advertising offers other alternatives:
– Direct Programmatic
It is a way to buy a guaranteed number of impressions on specific sites. It is typically used for large “premium” formats such as full page ads, and often involves a fixed price rather than an auction.
– The PMP (Private Exchange Buying)
The PMP is an invitation-only marketplace where a number of publishers invite specific advertisers to bid on their ad inventory space. This method is used to bypass ad exchanges, where your buying platform connects directly to the publisher’s inventory. An auction usually takes place, but the terms of the deal are pre-negotiated, creating a more manual environment than the regular RTB method.
So, real-time bidding is only part of the programmatic advertising ecosystem.
It’s a way of auctioning ad space on a case-by-case basis, which opposes a less finesse approach, which consists of “bombarding” with ads, and results in everyone seeing the same ad. .
For a programmatic system to function properly, other key components must be in place.
On the advertiser side, you need what is called a demand side platform (DSP), connected to a data management platform (DMP / Data Management Platform).
Suppliers or publishers use a supply side platform (SSP / Supply Side Platform) to distribute their inventory available on one or more Ad-Exchanges.
That’s a lot of new terms to integrate, but we’ll explain them one by one in the rest of this article.
What is an Ad Exchange?
An Ad Exchange is a place where publishers meet with advertisers and agree on a price to display their ads.
It works much like a stock market, but for digital display advertising.
Currently, most ad / ad exchanges operate through the real-time auction system, where an ad purchase is made at the same time a visitor loads a website.
The Ad Exchange sits in the middle of the programmatic ecosystem, and it is connected to a demand side platform ( DSP ) on the advertiser side and a supply side platform (SSP) on the publisher side.
What is the difference between an ad network and an ad exchange?
An advertising network, or Ad Network, is a platform that is connected to a number of websites and offers inventory to advertisers on those sites, while an ad exchange / Ad Exchange is similar to a trading room. where advertisers can purchase ad space from multiple ad networks.
Listing exchanges have often been used by publishers as a way to auction their unsold inventory to the highest bidder, after manually selling their premium inventory.
They just throw their remaining ad space into a pool of other unsold space, hoping it gets bought.
The rapid growth in programmatic ad buying has increased the relevance of ad exchanges, as most advertisers saw big benefits for their ad campaigns, like better targeting and the on-time bidding system. real.
Some of the biggest current ad exchanges include AppNexus, Microsoft Ad Exchange, and DoubleClick (owned by Google).
An ad exchange needs data to know which bidders are eligible for certain websites and audiences.
This is handled by demand side platforms (DSP) and supply side platforms (SSP).
Demand side platforms (DSP)
A demand-side platform is a tool or software that allows advertisers to automatically purchase ad placements.
Historically, as more publishers offered online advertising opportunities, advertisers needed a way to automatically manage ad placements and purchases, rather than dealing with sellers and trading agencies. .
Many publishers found these manual methods to be both expensive and unreliable, and DSPs helped them solve this problem.
– How does a DSP work?
An advertiser signs up with a DSP, which in turn is connected to an ad exchange.
The ad market is where the actual buying and selling of ads and inventory takes place.
When a visitor accesses a website connected to the ad exchange, a bid signal is sent to the exchange. This then asks the DSP if the advertiser has any ads that could match the location.
If so, the DSP sends a signal to enter a real-time auction with other advertisers who are also competing for placement.
The winning bidder who is awarded the location can therefore show their advertisement to the site visitor.
This is the foundation of programmatic advertising on the advertiser’s side.