No matter how creative or eye-catching your ad is, it will only be seen by your audience if it is well-placed and targeted. And when it comes to digital marketing and internet advertising, programmatic advertising is the new normal. The process involves programmatic advertising platforms, which sell advertising space, and advertisers wanting to place ads online. Therefore, one of the biggest challenges for marketers is investing in the best place to reach their target audience at the best possible price.
Programmatic advertising: definition
It is important to define programmatic advertising because it is not necessarily a term that has entered popular usage.
In essence, programmatic advertising is advertising, the purchase and distribution of which is regulated by “programs”, that is, which operate in an automated manner. This type of 100% digital advertising is based on various data (geolocation, browsing history, preferences, etc.) and an algorithm to present the best possible advertisement to the Internet user.
Thus, the display of programmatic ads will not be set manually, but will be based on an automatic process. The job of programmatic advertising is to deliver the best possible ROI by serving the right ads to the right targets. This type of advertising can be managed by a programmatic advertising agency, such as SmartyAds agency, or through the use of special platforms.
How does programmatic advertising work?
Programmatic advertising gradually replaced traditional ad buying, which required prior agreements between the advertiser and the publisher, allowing for the acceleration and automation of many exchanges.
Participants in programmatic advertising
As it has always been in media buying, programmatic advertising begins with the need to create contracts between advertisers and publishers:
- Advertiser: This is a company that is willing to pay to show their ad. Its purpose is to reach its target audience.
- Publisher: This is a media outlet that wants to monetize its advertising space (for example, an online newspaper that wants to show ads in its articles). Its purpose is to monetize its audience.
While some advertisers manage their ad distribution directly to publishers, many prefer to turn to programmatic ad agencies, such as SmartyAds, which manage ad distribution. Likewise, some publishers may use advertising agencies that are responsible for optimizing their advertising revenue.
3 main types of programmatic marketing
The programmatic advertising market is necessarily based on a commercial exchange between publishers and advertisers.
To manage these relations, three main economic models can be distinguished from the point of view of programmatic advertising:
- Real-Time Bidding (RTB): Advertisers pre-determine the target they are interested in, as well as their SEA budget, and the publisher’s ad placement is decided in real-time, according to each advertiser’s bids. It is the advertiser who is willing to pay the most that will appear. This is an effective way of broadcasting advertising to a large audience through programmatic advertising media and platforms.
- Private Marketplace (PMP): A Private Marketplace (PMP) is similar to RTB, except that advertisers are hand-selected (often by invitation). This type of operation is usually carried out by large mass media, which can then verify the seriousness and quality of the advertising broadcast on their media.
- Direct software: is an even more limited form than PMP. Here, the publisher can directly sell a certain number of broadcasts to specific programmatic ads media and platforms. The latter is guaranteed a threshold for the distribution of its advertising (often determined by CPM, that is, the price per thousand impressions). This type of offer is usually made in very large media outlets, which can therefore provide significant exposure to carefully selected advertisers.
Hower, you should note that programmatic advertising will still be based on audience buying. Guaranteed are not just impressions, but influence on a certain type of audience.
Programmatic advertising platforms
Naturally, programmatic advertising is inherently based on technical solutions.
In this regard, the programmatic advertising ecosystem can be based on three types of platforms (sometimes intertwined):
- SSP: for “Sell-side Platform” is a platform that allows publishers to sell their advertising space in real time. An SSP can run ads on various networks, including ad exchanges (see below), to market to a publisher’s audience. A big publisher usually uses SSP to monetize their audience.
- DSP: for “Demand-side Platform” is a platform that allows advertisers and agencies to buy advertising inventory. A DSP may be associated with various ad exchanges in order to obtain the best prices or the best distribution. A large advertiser usually goes through a DSP.
- Advertising Exchange: This is a marketplace for advertising space that connects advertisers and publishers. Ad exchanges can be associated with different SSPs and DSPs. Small publishers and advertisers will apply directly through the ad exchange, not through SSPs or DSPs. In France, an example of a well-known advertising exchange is Media Square, which is an alliance of the main French web media and allows advertisers to reach a very large audience.
How a business uses platforms can vary depending on the company’s goals. And also the number of platforms used by the same company will necessarily depend on the size of the advertiser or publisher. The larger the audiences buying or selling, the more will be needed to ensure broad reach (and therefore potentially multiple platforms).
Conclusion
Currently, programmatic advertising is used by at least 85% of marketers to reach audiences who are more likely to become brand followers, consumers, or users. This method provides you access to an infinite number of distribution channels, allows you to bid in real-time (real-time bidding), and charges you just for each thousand impressions your ad receives.
Although programmatic buying may initially appear daunting, there’s no denying that the more you understand the ideas and procedures, the more pleasurable they become. Furthermore, you may always choose to delegate management of your efforts and advertising space purchases to a specialist agency in order to promote your brand, products, and services. This marketing serves as real-world evidence of technology’s power and how to take use of it.
