What, Why, and How: Programmatic Advertising, A Brief Introduction

The best time to explore the world of programmatic advertising was four years ago, the next best time is right now. 


As the world steps into a new decade, it brings forth a new wave of automation into every aspect of business. One of which is the automatic buying and selling of online advertising—also known as programmatic advertising.


To put it simply, programmatic advertising is a tool to buy digital advertising based on algorithms and data driven solutions, rather than tenders, proposals, quotes and human negotiation. 


In the age of automation, adding data driven solutions can not only eliminate the excess labour and shave off costs, but it also clears the pathway for a more transparent way of conducting business through artificially intelligent models of operation.


With the expansion of the web and the plethora of websites that came with it, the serial demand of ad spaces increased at a pace uncatchable by the supply. Finding the perfect vendors for your space became increasingly competitive and often ineffective. Through the boon of automated transactions, you can now add to the optimization and improvement of ads, instead of manually preparing the tags or orders behind each placement.


Programmatic Advertising uses targeting tactics to eliminate the wasteful cycles of trial and error and deliver the right ads to the right people. With acute targeting, advertisers cut through the “spray and pray” method and instead, prioritize data driven demographic assessments for ad buying, placement and organization.   


Through automation, an efficient and effective digital advertising strategy is implemented to websites all across the board. Streamlined through one technology platform, a condensed overlay is then studied in real-time to crystallize the perfect ad response to each webpage.


Why is Programmatic Advertising successful?


Nothing adds much to the success story of Programmatic Advertising as much as its efficiency, even though it is only a partial feature. Ever since its inception in 2015, Programmatic Advertising has captured 65% of the digital media market, with gross expenditure climbing to $45.94 billion. As businesses race to capture the core brand objectives, programmatic advertising assists in ways unreachable by manual ad targeting. 


As eMarketer’s principal analyst Lauren Fisher notes: “Private setups give buyers and sellers greater control over their automated buy,” programmatic advertising enables private exchanges with a higher buying power and control over a limited set of resources. 


Through programmatic advertising, private setups drive up the momentum in a marketplace as parties around the table race to garner higher control over the programmatic efforts, as opposed to the cooked up offers of manual buying. 


Through data driven solutions and real time bidding, programmatic advertising discards the hit-or-miss campaigns and old fashioned ways of rationing ad spaces, a system notorious for costing a fortune to marketers all around the globe. 


Adding to the logic of automation, Tim Webster, co-founder of The Exchange Lab, concurs: “The effectiveness of programmatic advertising cannot be disputed. Programmatic allows us to understand the media journey better than ever before and have one-to-one conversations with individuals.


Marketers have concluded that programmatic advertising is key for modern brands to thrive in the age of digital marketing. Resonating with your target audience, optimizing ad spending and diligently tracking your return on investment are all the factors which add to the success of programmatic advertising. 


How does programmatic advertising work?


Let’s dig a little deeper and understand how this works:


> An independent SSP (Supply Side Platform) is created and connected with ad exchange. 


> Through Demand Side Platform, the target audience, budget, cost and other primary details are shared and connected with the ad exchange. 


> User behaviour is recorded via the webpage visit and the buying behaviour is shared with the ad exchange.


> User’s information is matched with the audience and auctions are set for Real Time Bidding. 


> Through direct programmatic decisions, the ad is served.


> Advertisers with highest bidding win the ad space.


> Finally, the publisher is paid for the ad.

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