10 Answers to the Most Common Questions About Programmatic Advertising
One of the most popular ways to run ad campaigns nowadays is through programmatic advertising, so much so that by the end of 2021, nearly 88% of all US digital display ad dollars, or $81.00 billion is projected to be done via automation. However, the AdTech industry is complex, as it is constantly evolving -from online ads to streaming, digital-out-home, radio, and TV- making marketers skeptical about the benefits of programmatic advertising and the ecosystem that surrounds it. Therefore, to help take the mystery out of programmatic advertising we’ve compiled a list of 10 of the most frequently asked questions in the space gathered from multiple online sources.
What Is Programmatic Advertising?
Programmatic advertising is the automated process of buying and selling digital advertising space in real-time through automated bidding platforms. By reducing the processes involved in creating and running a digital campaign, these sophisticated systems enable advertisers, publishers, and agencies to purchase, sell, and deliver their ad inventory with minimal human input.
How Does It Work for Advertisers?
Generally speaking, programmatic advertising automates the buying and selling of online advertising space by instantly connecting publishers — website owners with digital space to sell — and advertisers — brands who want to buy ad space to promote their products.
The process starts with an advertiser contacting their programmatic ad agency to launch a digital campaign to promote their brand. The agency will use a demand-side platform (DSP) to automate the manual aspects of buying ad impressions from multiple publishers in order to meet the campaign’s goal. Agencies will often leverage a data management platform (DMP) to ensure they are targeting the right audience by utilizing a wide range of customer data to create segmented user profiles to guide ad-buying decisions. Brands and advertisers can also manage this process themselves by signing up to use a DSP and purchasing inventory directly.
Once an individual from the target audience of the advertiser visits the publisher’s website, an ad request is immediately sent to the supply-side platform (SSP) which is used by publishers to sell their advertising space This platform starts an immediate automated auction among the potential buyers while connecting with the DSP.
Finally, using the data gathered from the SSP, the DSP evaluates the ad and matches it to their target criteria to determine the first impression bidding price, also known as real-time bidding (RTB). When an impression is sold, it is delivered and displayed on the publisher’s website until the process is repeated when a new visitor lands on the website. All of this happens within the time it takes for a web page to load so as not to interfere with the experience of the user browsing the internet.
Why Is Programmatic Advertising Important for Publishers?
Programmatic advertising offers publishers an automated way to generate advertising revenue from their inventory by allowing them to optimize their ad sales through different bidding techniques, such as exchange bidding and header bidding while protecting them with the right tools to engage their audience with ads that are most relevant to them.
The following are some of the benefits of programmatic advertising for publishers:
Publishers can benefit from programmatic advertising by lowering costs and increasing margins, allowing them to make more revenue from their available ad space.
Publishers can easily interact and collaborate with advertisers, ensuring that both can increase their profits.
Selling advertising space has never been easier thanks to programmatic advertising. Publishers can maximize their ad sales activities by using automated solutions that reduce the time required to reach advertisers.
Since they are part of the advertiser’s target audience, when visitors land on a publisher’s site, they will be delivered with ads that are relevant to them. Advertisers can reach out to a variety of publishers through the use of programmatic advertising, which eliminates the need for back-and-forth phone calls, emails, and other time-consuming methods of communication.
Why Is Programmatic Advertising Important for Advertisers?
Having access to ad inventory was a challenge for advertisers prior to programmatic advertising and as a result, nearly 60% of publisher ad space would remain unsold. Now, through automated systems, the process of buying ad inventory has become significantly easier and advertisers can improve their campaign’s efficiency to increase their return on investment. Leaving less publisher inventory unsold and making running effective cross-media campaigns easier and cheaper for advertisers.
Below are some of the benefits of programmatic advertising for advertisers:
Thanks to the targeting features of programmatic advertising, more relevant ads are delivered to the right audience, meaning advertisers can maximize the return on their spending while having access to a wide variety of publishers from different industries. Ensuring the most effective use of their advertising budget at all times.
Advertisers can modify their advertising campaigns in real-time based on their performance, as well as refining their targeting options from a diverse range of flexible parameters.
Programmatic advertising allows advertisers to engage a wider group of targeted individuals by buying advertising space from the available ad inventory of multiple publishers to reach the greatest audience possible with their campaigns.
What Are the Different Types of Programmatic Advertising?
In addition to the traditional direct method of programmatic advertising, where advertisers can buy inventory directly from publishers through ad servers and ad networks, there are two other techniques advertisers can use to purchase ad-space: Real-time bidding (RTB) and Private Marketplace (PMP).
Real-Time Bidding (RTB) is a form of data-driven programmatic buying that allows advertisers to purchase impressions in a fraction of a second via a real-time auction. When a visitor lands on a web page, the publisher of that site instantly auctions the available ad space, and the advertiser who has submitted the highest bid to the DSP wins the spot to display their ad.
A Private Marketplace (PMP) is an exclusive, invite-only ad auction that allows advertisers to bid on premium inventory spaces before publishers offer them in an open RTB auction. The bidding process is automated via deal IDs, which advertisers use to identify PMP transactions in bid requests from SSPs and ad exchanges.
What Is a Demand-Side Platform?
In its most basic form, a demand-side platform (DSP) is an advertising technology platform that represents the buying side (advertisers) in the purchase of online ad space, allowing brands and agencies to buy various types of inventory from multiple publishers through a single unified interface.
Advertisers can buy ad impressions on publisher websites and target specific audiences using third-party data sources by using a DSP. The advertiser submits ad space bids to the platform, and the DSP automatically assigns ad impressions based on the advertiser’s bid price and group targeting options.
As a result, advertisers benefit from precise ad placement and publishers from achieving the highest bid price for their inventory.
What Is a Supply-Side Platform?
In the same way that advertisers use Demand-Side Platforms to manage their programmatic ad buying, publishers use Supply-Side Platforms (SSPs) to manage their display inventory. In other words, an SSP allows publishers to reach out to multiple advertisers and sell their ad space at the highest possible price.
This automated system connects to an ad exchange and uses real-time bidding to share the auction inventory. The SSP is designed to maximize the amount publishers receive from each ad impression by connecting to several ad exchanges increasing the publisher’s exposure to potential buyers.
An SSP also allows publishers to filter ads based on particular types of advertisers or channels, as well as establish varying prices for ad spaces to determine the most appropriate cost.
What Is the Difference Between an SSP and a DSP?
To put it simply, a DSP and an SSP support different sides of the programmatic space.
A Demand-side Platform (DSP) is the advertiser’s tool to evaluate which ad impressions to buy and how much to pay for them, whereas a Supply-side Platform (SSP) is used by publishers to offer ad spaces to brands by connecting their inventory to ad exchanges. These two platforms are then synchronized in real-time.
What Is a Data Management Platform?
A data management platform (DMP) is used to gather, store, and categorize data from a range of sources such as websites and advertising campaigns. It is usually connected to a DSP to provide advertisers with relevant information to help them accurately target visitors who could be a better match for the displayed ad. In other words, a DMP sorts and segments incoming cookie data to create user profiles and guide ad-buying decisions.
How Much Does Programmatic Advertising Cost?
Although the cost of programmatic advertising depends on several aspects including the type of programmatic media you are buying, the quality of audience associated with that inventory, the prestige or recognition associated with the publisher you are purchasing from, and many more factors. Programmatic is generally sold by publishers on a CPM (Cost per mille) model, which stands for cost per 1,000 ad impressions.
As just mentioned, the price paid depends on the quality of the list and the extent of targeting among other factors, CPMs can fluctuate significantly, meaning that the higher the quality of the inventory offered or the more precise the targeting, the higher the price rises. On average, programmatic CPMs vary from $0.50 to $2 CPM, which makes it less expensive than many other advertising mediums and increases accessibility for small businesses working with limited marketing budgets.
Increase Campaign Efficiency with Programmatic Advertising
It is clear that programmatic advertising benefits both publishers and advertisers, particularly in terms of streamlining the ad inventory buying process, allowing advertisers to improve the efficiency of their campaigns and increase the return on their ad spend, while publishers benefit from offering all of their available ad space and reaching a greater number of buyers at the highest possible price.
Programmatic provides an environment where publishers can target their most relevant prospects more efficiently than ever before through the use of digital media and user data to achieve the best results. Thanks to automation and machine learning, it is also easier for advertisers to improve the performance of online advertising campaigns via data-driven targeting. By all means, programmatic advertising has a bright future ahead of it, and now is a great opportunity to get in on a growing trend.