Programmatic Buying 101 and Programmatic Advertising

What is Programmatic Buying?

In the digital marketing, Programmatic Buying is also referred to as Programmatic Advertising or Programmatic Marketing. Programmatic Buying is used by advertisers to show ads to its prospects via RTB. This encompasses environments such as mobile, display, video, social and now native.

In addition to automation, this Programmatic Advertising enables use of analytic data and look alike modelling for better targeting. This results in significantly better ROI than direct publisher buys.

Major Components of Programmatic Buying

• • Real Time Bidding (or RTB): Is an digital ad buying standard defined and maintained by IAB. It governs automated sale of digital ad inventory via auctions. Refer to this article for an illustrative video on RTB.

• • Programmatic Direct: Buying method that enables advertisers to buy a fixed number of impressions in a guaranteed manner from a publisher. There is no auction in this method. These are usually premium ad inventories that the publisher look to sell to specific advertisers. In United States, Programmatic Direct is expected to be more than 50% of the total programmatic spend.

• • Demand Side Platform (or DSP): This is a software platform that automates the process of buying ad inventory from Ad Exchanges. The protocol used can be either RTB or Programmatic Direct. The Media Agency creates a digital media plan for the advertiser’s campaign which contains some spend on Programmatic Advertising. A Programmatic Specialist Agency then executes this spend on a DSP.

• • Ad Exchanges: Are like brokers that run auctions for digital ad inventories from various publishers via RTB. Advertisers can buy inventory from Ad Exchanges that aggregate this inventory from publishers. This eliminates the need for the advertisers to contract with a number of publishers directly.

• • Supply Side Server (or SSP): Manage a publisher’s sources of contracted indirect demand such as ad networks or Ad Exchanges. Their primary function is to increase the publisher’s inventory yield or eCPM.

• Ad Server: Ads displayed online on various mediums like desktop website, mobile website, apps etc are stored and are loaded from ad servers on the websites, apps etc when requested through a URL load.

Benefits of Programmatic Advertising

• • Automated Media Buying: No more human intervention required. Big data based software tools now buy digital media leveraging human intuition and intelligence.

• • Better Targeting: Programmatic Advertising enables better targeting as these parameters can be applied at the level of each ad impression using a complex algorithm involving multiple variables.

• • Cost Effective: The improvement in targeting above along with increases choices (the same user can be targeted across cheaper ad inventory) increases the ROI hence making Programmatic Buying much more cost effective as compared to the alternatives.

• Scale: It has access to a number of ad exchanges that have very large scale of inventory.

Issues with Programmatic Advertising

A number of times, publishers need to be able to mask their domains for legitimate reasons such as to avoid cannibalisation of the direct sales channel (that gives them higher CPMs) by the Programmatic Advertising route. Bad actors sometimes use this masking feature to pass off poor quality inventory as premium.

Ad Exchanges and DSPs are building better technology to identify and block these cases. In addition, the programmatic eco system has integrated with tools such as DoubleVerify to ensure brand safety from an advertiser perspective.