What Is Programmatic Advertising?

Blog | 02 min read

Written By: Chelsea Brown

What is programmatic advertising?

Programmatic advertising is the automated transaction of buying and selling digital advertising. The process involves using different programmatic platforms to sell a product/service/idea on publishing sites. For advertisers, it is the buying of inventory and placing ads on publishers sites. The traditional way of advertising involved RFP’s (Requests for Proposals), human negotiations, and manual insertion orders. Today, with the latest algorithms in place, advertisers are able to buy, place, and optimize ads much easier and more efficiently. Programmatic advertising allows advertising professionals more time to create and optimize personalized ads to improve the customer experience online.

How does it work?

When a viewer lands on a specific website where programmatic ads have the potential to be placed, there is an automatic bidding process that takes place for an ad to be visible to the user. Next, the SSP (Supply-Side Platform) is involved, and this is where the publisher of a particular website lists the ad space for the viewer. The SSP sells on behalf of the publisher and sends information like the type of site, user, and ad space, to the advertiser.

The SSP receives information regarding ad space and then analyzes the viewer’s cookies to determine their characteristics (ie. geographic location). The information the SSP collects is reviewed by the DSP. The DSP then makes a bid on ad placement. DSPs act on behalf of the advertiser by choosing the ad space according to the advertiser’s budget, and specific targeting parameters.

From here, the SSP will pick the winning bid provided by a single DSP. There are many different types of bidding strategies, including water-fall and header bidding. Finally, once the winning bid has been chosen, the ad will be shown on the publisher’s website. Remarkably, this all happens after the user has navigated to the website and while the page is loading.

But how does programmatic ACTUALLY work? Let’s see it in action.

1.

Advertising agency Polka Dot Solutions wants to run a few programmatic campaigns for its apparel client Only Jaqetz.

2.

PDS finds a programmatic advertising company offering a self-serve creative ad platform that serves personalized ads at scale.

3.

Further, Only Jaqetz wants to target:

    • Females aged 22-35
    • Living in Orange County, California
    • Interested in fashion and surfing
    • Online between 5-9pm

4.

Advertisements are then personalized to this specific audience based on their behavior and interests.

5.

The platform is able to gain access to real-time data and use this data to serve personalized ads to this particular market segment. As a result, this creates better interactions between the advertiser and customer, insights are generated, and performance is optimized.