The Basics of Programmatic Advertising You Must Know for Your Business

Programmatic advertising illustration

In the changing digital landscape, businesses are continually looking for better ways to advertise. Programmatic advertising is the latest trend that’s expected to change this landscape by a huge margin. Experts believe that nearly 88% of digital display advertising in the US alone will be done through programmatic advertising. It is an innovative tool to promote your products and reach the target audience without missing your performance benchmarks.

To define programmatic advertising in simple terms, it is the tool that uses automated placement and bidding platforms to buy or sell digital ad spaces. Before implementing it into your digital marketing strategy, understand these basics.

What Technologies Does It Use?

Since programmatic advertising leverages a digital ecosystem, it relies on technology to automate the buying and selling process for ad spaces in real-time. Key technologies it uses are:

  • Supply-side platforms: They allow the publishers to offer and manage ad spaces for marketers, advertisers, and business owners looking to purchase digital ad space.
  • Demand-side platforms: With these platforms, you can directly purchase ad space via ad exchanges that feature advertising inventory from several publishers.
  • Data management platforms: Businesses can collect and manage user data for various digital marketing strategies through these platforms.
  • Ad servers: They place the winning advertisements in the correct digital page slots. Ad exchanges are another part of this puzzle that connects demand-side and supply-side platforms to facilitate the auction process.

How Does It Work?

You also need to understand the working of this technological process to define programmatic advertising and implement it. When an advertiser uses programmatic technology, they upload the ad on the ad server using DSP services to determine the location, time, and target audience of the same. It also helps in placing the bids for each impression. Know more about how ads are important for keeping online businesses alive.

The platforms submit the bids through an auction organized by the ad exchange. The winning bids allow the ad to funnel through the SSP into a specific ad server to be placed on a corresponding web page.

Can It Control Marketing Costs?

Contrary to popular beliefs, programmatic advertising is a major cost-saver for companies looking to expand their marketing into the digital space. You can automate your bidding process and modify the cost per thousand impressions (CPM) in real-time to optimize your total ad budget in this strategy. For example, Google uses programmatic advertising for Google Search App, which resulted in a decrease of 30% in its CPMs.

What Are the Auction Types Available for Programmatic Advertising?

You can select an appropriate auction type depending on your advertising needs and budget. The options are:

  • Exchange bidding is a server-side process where SSPs and ad exchanges place bids on ad inventories.
  • Header bidding is a process where publishers give ad inventory to several ad exchanges.
  • The open auction allows ad exchanges to match buyers and sellers in a public marketplace.
  • The first price auction facilitates the advertisers to bid where the highest bidder can determine their impression costs.
  • The second price auction is relatively similar to the first-price auction, but the runner up sets the impression prices in this option.
  • Non-guaranteed private marketplaces offer an invite-only model for publishers to restrict their inventory and exercise more control on the selection of advertisers.

With all its benefits and scalability, programmatic advertising has become an essential weapon in the digital marketer’s arsenal. Follow the right strategies to implement it for the success of your business advertising endeavors.