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What is Programmatic Advertising?

Updated: Sep 7, 2023

Worldwide, online advertising is now a $602B* industry and projected to reach $876B by 2026. For the first time ever, digital ad spend is set to exceed traditional media spend. It is great news, because online advertising offers more options at a lower cost. But there are challenges that come with it and that is where programmatic advertising comes into place.

So what is Programmatic advertising (PA)? It is part of the digital marketing umbrella (everything online), under which social media marketing falls.

Let's rewind and go back in time a bit. To understand PA, we need to understand advertising basics:

Before programatic advertising, an advertiser (buyer) would contact a publisher (e.g. TV, Radio, Newspaper, website, aka seller) and buy an advertising slot.

Simple right? I am sure you have seen ads on billboards, or listen to you favourite radio station and in-between there are your friendly little ads, trying to sell you something.

With the rise of websites aka different online advertising platforms, it is becoming more difficult to track all the publishers to advertise on/ have contracts with. The solution was to create something called ad networks.

With an ad network, an advertiser can publish on multiple platforms with one contract.

The most commonly used ad network is Google display network (GND).

AD network

With time and popularity passing, more and more ad networks arose. So now there was the need for an ad exchange, where advertisers and publishers can have access to all ad networks of publishers/ advertisers. Ad exchange is like a marketplace, where all the buying and selling takes place. You could compare it to a trading platform.

Let me elaborate on how this works:

Advertisers would connect to something called a demand side platform (DSP) and publishers would connect to supply side platform (SSP)

The whole buying and selling is happening through softwares, all the advertiser would do, is to input their information (target market, what they are advertising, goals etc.) and the platform would do the rest.

So, programatic advertising is an ad buying mode and it is done through programs. Duh!

So how do advertisers buy inventory? Here are some examples:

Case 1:

Adidas wants to show ads only on Advertiser (Adidas) would create a campaign and set it up in DSP. would then get the proposal. Then the buying and selling process will start.

This is called programmatic guaranteed advertising (1 to 1 deal)

Case 2: has their homepage, but doesn't want to sell their slots to just anyone. So they would only allow selected advertisers and create a proposal to them.

This is called private market place ((1 to view deal)

Case 3:

The publisher can sell their inventory to anyone. The publisher has different ad units on their website. (With competitor restrictions. e.g. BBC would not allow CNN to advertise)

This is called open auction or real time bidding (1 to all)

In order to evaluate which platforms to advertise on, who to advertise to, to be as effective and efficient as possible and which performs better etc. , we need data. For this we can use data management platforms (DMP) to understand audience behaviour.

So to sum it up:

1. Know your target audience

2. Identify your campaign & campaign goals

3. Set up your campaign

4. Set a budget and communicate it to the program

5. Let the automation do its thing.

Hope this was helpful.


Data Sources:

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