What is Programmatic advertising?

programmatic ad server and DMP

The advancement in technology and evolution of Adtech industries has led to the introduction of programmatic advertising in Adtech and Martech. Programmatic advertising is an ideal method to automatically buy and optimize digital campaigns, rather than buying directly from publishers. The system is designed to replace human interactions and every single step of the entire process is automated with machine learning and artificial intelligence optimization. Programmatic advertising increases transparency for both advertisers and publishers. The process is carried out through real-time auctions where advertisements are bough at the same as a visitor loads a website. To put it in simple manner programmatic advertisement is the use of artificial intelligence and machine learning to buy ads in real-time, instead of going through traditional means.

The rise of programmatic advertising

The first display ad was considered a revolutionary wonder in its time but the same ad will be considered as an extremely bad practice in the present circumstances. The early form of digital advertising was traded in the same way how a magazine ad will be sold. An agreement will be reached between the advertisers and the publisher for placing a digital banner on the site for a specific period of time. Irrespective of who visits the page the same banner ad will be displayed to everyone who visits the site. These types of the banner ad will annoy the user and will create a bad rapport among the audience for the site. The early days of digital advertising technology were comprised of more publishers than advertisers. This led to abundant ad space and considerably a large quantity of unsold inventory. A perfect solution to the issues faced in the early days of digital advertising was ad networks; platforms where unsold ad spaces from different publishers were pooled together and made available to advertisers at a lower price. But the main issue with that approach was targeting, meaning, if we advertise on a large publisher website there was no way to know about the viewers of your ads. This brought on the birth of “Real-Time Bidding (RTB)” that become the first instance of programmatic advertising.

Real-time bidding (RTB)

The best and fastest way for buying and selling ads through real-time auction is RTB; within 100 ms a transaction will take place. Transaction will take place before a webpage is completely loaded. Whenever a visitor enters the website a request will be sent to an ad exchange with visitor data and information about the website. The information will be matched with the available advertisers and a real-time auction will be held between advertisers who match the criteria of the information. Real-time bidding allows for better and quicker targeting, visitors who are in your target zone will be subjected to your ad.

Real-time bidding is a form of programmatic buying but the catch is not all programmatic uses real-time bidding.

Programmatic is nothing but a method to automate ad purchases and RTB is the best method it can be done. Real-time bidding is just a part of programmatic adserving ecosystem.

Programmatic ecosystem: Ad Exchange, Demand Side Platform (DSP), Supply Side Platform (SSP)

Ad exchange: The perfect place for advertisers to meet publishers and agree on the price for displaying their ads. A typical trading floor for digital advertising displays. Ad exchanges operate through real-time bidding, where an ad purchase is made when the web page is being loaded. Generally, ad exchanges are the connecting part of the programmatic ecosystem and are plugged into the Demand Side Platform (DSP) on the advertiser side and Supply Side Platform (SSP) on the publisher side. It is important to know that ad exchanges and ad network are totally different. An ad network is a platform that is connected with a number of websites and provides inventories for advertisers o those sites whereas an ad exchange is a trading floor where advertisers can buy ad space from multiple ad networks.

Demand-side platform (DSP)

A demand-side platform is an ideal tool that allows advertisers in the market to buy ad placements automatically.  DSP came into the programmatic advertising picture after the rapid increase of online publishers, advertisers started looking for a way to manage placements and purchases automatically rather than dealing in the traditional methods.

How does DSP work?

A DSP is generally connected with the ad network and an advertiser will sign up to that DSP. As mentioned earlier, an ad exchange is a place where the actual buying and selling of ads and inventory takes place, whenever a visitor enters the website an auction signal is sent to the exchange. Once the signal reaches ad exchange, the information will be sent to DSP to ads from advertisers that fit the requirement. If it does, the DSP sends a signal to enter a real-time bidding auction together with other advertisers to compete over the placement. The winning bidder gets to show his ad to the website visitor. This is the foundation of programmatic advertising on the advertiser’s side.

Supply-Side Platform (SSP)

In much the same way advertisers use Demand-Side Platforms to manage their programmatic ad buying, publishers use a Supply-Side Platform to manage their display space. What was previously a manual process where each publisher would have salespeople responsible for reaching out to advertisers and selling ad space has now been automated by Supply-Side Platforms. The SSP connects to an ad exchange and tells it what kind of inventory is available – and through Real-Time Bidding, this inventory is automatically auctioned off to the highest bidder.

Of course, a DSP’s job is to buy programmatic ad space as cheaply as possible from publishers, but an SSP has the opposite function – selling ad space for the highest possible price. An SSP can connect to several different ad exchanges in order to maximize the publisher’s exposure to potential buyers. Through an SSP a publisher can also control his inventory in a more efficient way; you can set minimum prices and dictate specific buyers or specific channels.

Data Management Platform (DMP)

A data management platform is used to collect, store and sort information. In programmatic, DMP’s are most often used in combination with a Demand-Side Platform on the advertiser’s side – or a Supply-Side Platform on the publisher’s side. In order to properly target ads to specific visitors, a DMP needs to be in place to sort and segment incoming cookie data.

DMP vs DSP

To take full advantage of the many benefits of programmatic advertising, a Demand-Side Platform needs to be connected to a Data Management Platform.  The DSP is what handles the actual buying of ad space, whereas the DMP is used to sort data and fuel ad-buying decisions. A DMP on its own is basically a file cabinet with information on users, and if it’s not connected to a DSP it can’t do much. Likewise, a DSP on its own cannot make informed decisions on where to buy ad space. They both need to exist in the ecosystem. Many Demand Side Platforms now integrate DMP solutions directly into their tools, in order to offer advertisers a more complete solution. We at dJAX technologies provide the best in class DSP and DMP, meaning there is no need for 3rd party data management software. The main benefit of an integrated Data Management Platform is the access you get to programmatic targeting options. Below you’ll find more information about what kind of targeting is available with your programmatic advertising campaigns.

DMP targeting in programmatic advertising

  • Contextual Targeting
  • Keyword Targeting
  • Data Targeting (Audience Targeting)
  • Geo-Targeting (Location-Based Targeting or Geo-Fencing)
  • Retargeting

Conclusion

The future is bright for programmatic advertising and right now is an excellent time to get in on a rising trend. Accessibility has never been better, especially for smaller brands, and hopefully, this article has given you a better view of what it’s all about.If you’re excited to try programmatic and see what it can do for your display campaigns, we provide you with all the tools and platforms for an excellent start.

 

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