Programmatic Advertising – What is it??

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What is programmatic advertising?

You may have heard about programmatic advertising and are wondering what it’s all about. It’s actually quite a significant development in the world of digital advertising and look as though it will increase in influence across many digital channels.

Essentially programmatic advertising removed the human element from deciding which adverts are placed on websites. Instead of human sales people and advertising buyers agreeing on which adverts go where and for what prices, software is used to buy and place the adverts.

Before programmatic advertising was introduced there would be sales people representing the publishing website, e.g. thesun.co.uk or bbc.co.uk and they would sell advertising space to brands that wanted to advertise there. So for example bbc.co.uk may do a deal with BMW to place its advertising on the bbc.co.uk which would then link to a BMW landing page. A salesperson from BBC and a media buyer from BMW would agree on the content, price, location of adverts and other contract details.

Now with programmatic advertising the need for human interaction can be removed. Software can be used to replace many of the human tasks like dealing with tagging and insertion orders.

Programmatic advertising has helped companies target specific users, rather than just targetting specific sites. For example if they want to target football fans, they would traditionally have advertised on football related sites, however now with all of the data available to them they can advertise to football fans wherever they may be, for example they may be looking at travel sites, or retail sites but still be able to target them there and potentially for a lower cost per click than from advertising on a football specific site.

Real-time bidding

You may have also heard about Real-time bidding (RTB). This is a type of programmatic advertising, it’s not the only one but it’s getting a lot of traction at the moment. RTB refers to the purchase of display adverts through real-time auctions that takes place in the time it takes for a page to load.

This works by the users web browser sending details of the page and the user to the ad exchange, this then automatically auctions off the ad space on the webpage to the highest bidder. The advert that bids the highest is then loaded into the display ad space on the website, all of this is done instantaneously.

Demand Side Platforms (DSPs) are used by the advertisers to purchase display ad inventory via RTB exchanges. DPSs have very sophisticated algorithms that calculate the best rates to ensure advertisers are getting the best rate for each ad impression. Some of the leading DSP platforms are: MediaMath, Invite Media, DataXu, Triggit

Programmatic Direct

“Programmatic Direct” refers to when software is used to guarantee ad impressions from a particular site at a specific price.

Advertising Exchanges

Advertising exchanges are the platform that allows advertisers (brands) and publishers (site owners) to buy and sell advertising space, mobile, video and display, often via RTB. Ad exchanges allow advertisers to buy advert space across many sites at once without having to negotiate each one separately.

Programmatic advertising future

Programmatic advertising future


Future of Programmatic Advertising

Programmatic advertising looks set to grow and be the dominant method of purchasing display adverts and will also probably expand into other areas of advertising such as TV advertising.

This increase in programmatic advertising will likely mean a decrease in the number of ad buyers, however it will allow companies to focus resources more on strategy and planning rather than the process of actually buying the ad space.