Programmatic advertising is not just the future of advertising; it is advertising. Eighty-eight percent of digital marketing in the United States is projected to be done by programmatic advertising by the end of 2021. So, what is programmatic advertising, and why is it so popular?
WHAT IS PROGRAMMATIC ADVERTISING?
Programmatic advertising is the automatic process of buying and selling online ads. It utilizes Artificial Intelligence and machine learning to buy advertising and avoid going through human negotiations.
WHY?
Programmatic advertising promotes efficiency. Before the automation of ad buying, digital ad purchases were facilitated through human interactions and negotiations. We all know that humans can be unreliable, so removing them from the ad buying process makes for a more efficient and cheaper process. Some of the steps that can become automated are ad placement, performance tracking, campaign optimization, campaign design, media buying, and many others. Programmatic ad platforms also allow publishers to easily manage ad inventory.
WHAT IS AN AD EXCHANGE?
An ad exchange is a marketplace where advertisements are bought and sold. Publishers meet advertisers and negotiate a price for displaying their ads. It is similar to the trading floor of a stock market, but instead of stocks, it is for digital display advertisements.
There are three main types of programmatic ad platforms that each serve their own unique purpose. Let’s take a look at them.
SUPPLY-SIDE PLATFORMS
Supply-side platforms (SSP) are designed for publishers to connect their ad inventories to ad exchanges. If a person falls within the advertiser’s target audience when they land on a publisher’s site, the website will automatically send an ad request to the SSP. The goal is to maximize the value the publisher receives from an impression. The SSP allows for everyone on the ad exchange to know what is available for purchase; the inventory is then auctioned off to advertisers and sold to the highest bidder.
SUPPLY-SIDE PLATFORMS
Supply-side platforms (SSP) are designed for publishers to connect their ad inventories to ad exchanges. If a person falls within the advertiser’s target audience when they land on a publisher’s site, the website will automatically send an ad request to the SSP. The goal is to maximize the value the publisher receives from an impression. The SSP allows for everyone on the ad exchange to know what is available for purchase; the inventory is then auctioned off to advertisers and sold to the highest bidder.
DEMAND-SIDE PLATFORMS
Demand-side platforms (DSP) use algorithms and quick-learning technology to help advertisers purchase ad placements automatically. DSP helps advertisers find an ideal place for the advertisement. An advertiser will register with a DSP, and when a visitor comes to a connected website, an auction signal is sent to the ad exchange connected to the DSP. Once this happens, the DSP will be triggered to see if the advertiser has any ads that could be relevant to that user. If it finds there are relevant ads, the DSP will enter the auction.
DATA MANAGEMENT PLATFORMS
Data management platforms (DMP) are designed to sort information like cookies that can help advertisements reach their desired audience. Publishers and advertisers often combine their DSP or SSP with a DMP.
DIFFERENCE BETWEEN AN SSP AND DSP?
A DSP and SSP connect to different parts of the programmatic system. Advertisers use a DSP to organize ad buying, and publishers use an SSP to link their inventory to ad exchanges.
BENEFITS OF PROGRAMMATIC AD BUYING FOR ADVERTISERS
– Scalability: Programmatic ad buying provides advertisers with the opportunity to reach large audiences. Advertisers can purchase ad space from any available inventory and aren’t limited like they previously were
– Flexibility: Programmatic advertising allows advertisers to make real-time adjustments to their ads based on current impressions
– Better Targeting: An advertiser’s budget can be spent more efficiently thanks to the superior targeting that programmatic advertising creates.
– Efficiency: Programmatic advertising creates an opportunity for maximized efficiency. The process of advertising is streamlined, and more relevant ads are displayed through targeting. Advertisers can get a better return on their investment because of their access to many publishers.
BENEFITS OF PROGRAMMATIC AD BUYING FOR PUBLISHERS
– Simple: Publishers can use automation tools that reduce the time it takes to find advertisers to optimize their ad sales.
– Communication: Collaborating and communicating with advertisers is made easier with programmatic advertising.
– Relevance: When visitors come to a publisher site, they will be delivered ads relevant to them, making their web experience more enjoyable.
– Efficiency: Programmatic advertising also improves efficiency for publishers by lowering their costs and raising margins.
Participating in programmatic advertising is a great way to improve your digital advertising strategy. It is an excellent investment that will provide you with a more efficient and cost-effective ad buying method.