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Programmatic Advertising 101

Updated: Jul 27, 2022

The world of advertising has changed drastically from the age of Mad Men. Young men sitting in board rooms, drinking sherry in a tailor-made suit is the picture of yesteryear. Today marketing is less about what is created on pen and paper and more about what is created online. A strong digital presence can be the difference between a company’s failure and its success.

There are a lot of buzzwords that come and go with digital marketing. It can be hard to keep track of them all: algorithms, influencers, SEO, and programmatic advertising are just a few of the phrases found at the tip of every digital marketer’s tongue. For now, let us focus on the later, programmatic advertising.

Programmatic advertising accounted for nearly ninety percent of all digital display marketing in 2021 but what is it? Put simply, programmatic advertising is the use of AI to purchase digital advertising space rather than the use of a human being. The objective is to improve both the advertiser's and the publisher's efficiency and transparency. This is accomplished through RTB or real-time bidding, in which advertising is purchased at the same time a visitor loads a website.

Below you will find a few terms to help you get more familiar with programmatic advertising.

Terms You Should Now

RTB: Real-Time Bidding

Once again, RTB stands for real-time bidding. Real-time bidding takes place in the time it takes for your website to load. This means that as a consumer is loading a website, thousands of companies may be bidding behind the scenes using AI to have their ad displayed. If the bid is successful, the buyer's ad is instantaneously shown on the publisher's site. This takes place on just about every website, mobile app, or game; every time they are utilized; all day every day. This would not be possible without the use of AI.

RTB necessitates the gathering, consolidation, and broadcast of data about users and their behaviors to both operate the bidding process and profile people to "enrich" bid requests. This is why your customer who just bought some dog food on Amazon may see an ad for dog-related products on the next site they visit. The information gathered from multiple websites helps your company’s AI to better target their advertising instead of throwing it out in the world and hoping the right person sees it.

DSP: Demand-Side Platform

The DSP or Demand-Side Platform is the software used by advertisers to automate the process of bidding to place their ads on a website or mobile app. This approach helps marketers to avoid wasting time and effort on tasks that can be handled by a computer.

A DSP is useful because it allows advertisers to view the success of their campaigns in real-time. Advertisers may then spend more rapidly in a DSP if a campaign is going well, while underperforming advertisements can be removed. They are also useful because of their ability to target the current audience for an ad, using a DMP. This means that your advertisement for dog food is targeted at dog owners, who would be more likely to buy your product rather than everyone who may or may not own a pet. Targeting can be based on a number of factors including, age, gender, location, and occupation. The possibilities are endless.

DMP: Data Management Platform

A DMP stands for Data Management Platform. It is the software that collects the data from a variety of sources to help the DSP more accurately target ads. Information collected by the DMP can vary from the demographics of customers to their cookie ids. The DMP collects this data and then feeds it to the DSP, allowing more targeted ads to be placed in front of the customer.

DMPs first collect raw data using information gathered from online registration forms, website visits, or cookies. This information is gathered from all smart devices including cellphones, tablets, computers, and even smart TVs. Once the data has been gathered the DMP will begin to clean the data, removing erroneous or missing data. Then using ai it looks for patterns across users and begins to organize them. For instance, it may look at the shopping habits of women over 35 who have an income of $100,000 per year and see what trends it can find. This is how DSPs use DMPs to carefully target advertisements to potential customers. In addition to better audience and market insights, data management platforms can help you manage your advertising budget.

SSP: Supply-Side Platform

Supply Side Platforms are pieces of software that automate the selling of advertisement space. Rather than approving or rejecting advertisers on a case-by-case basis using human interactions, this software automates the process so that it can happen instantaneously.

Unlike DMPs which are used by those creating and selling ads, SSPs are used by publishers to connect with DSPs to ensure that the ad space on their website is being sold to the sellers of relevant products and services. Because they offer individual ad impressions, SSPs provide publishers with more control over their inventory. Publishers can monitor who is paying for their inventory impression by impression and alter their ad requests accordingly.

Publishers can use SSPs to filter digital advertising based on the advertiser, ad type, target audience, and other parameters, as well as establish varying fees for ad spaces. SSPs often work hand in hand with DMPs as part of the programmatic marketing process. This cooperation ensures that a potential customer will not be overwhelmed by showing the same ad over and over again when visiting a site.

Final Thoughts

Ultimately, programmatic advertising is a way to automate the way companies buy and sell ad space on the web and across mobile devices. It allows for a more targeted approach to advertising to ensure that the consumer base being reached is the one that is most likely to buy a company’s product or services. Rather than taking days to negotiate the use of ad space, transactions can now occur within milliseconds with step-by-step breakdowns for companies on the backend of the system to see the effectiveness of their ads.

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