In the early days of internet marketing, there were many websites around and too few advertisers to meet the high demand. Back then, we lived in a world where online publishers had a hard time filling their ad inventory. The situation is reversed nowadays! Ad demand has become much higher than the available supply, leading to an increasingly competitive market. That growing competition between advertisers for the increasingly scarce online ad inventory paved the way for what has now become the staple of the online advertising industry — programmatic advertising.
Thanks to programmatic advertising, publishers and advertisers can now streamline and optimize their ad exchange processes. The technology uses machine learning and AI optimization to increase transparency, efficiency, and revenue for advertisers and publishers.
However, the programmatic advertising world has a high barrier to entry due to its complexity. Newcomers can easily get overwhelmed by the industry-specific terminology or simply not know where to start. The truth is — it doesn’t have to be that way! That is why we decided to write this extensive guide to make programmatic advertising accessible to everyone.
If you’re looking to learn what programmatic advertising is, how it works, why you should use it, and how to start, you’re in the right place!
Let’s begin with the basics!
Programmatic advertising is a complex process, so defining it can be pretty tricky. Likely the best way to explain what programmatic advertising is would be the following:
Programmatic advertising or ad buying is the process of purchasing or selling digital ad space automatically using a piece of software.
Before programmatic advertising technology, advertisers and publishers had to manually buy and sell ad inventory, which was incredibly time-consuming. The traditional method required both parties to request proposals, quotes, and negotiate prices in-person, which could take hours, if not days. Thanks to programmatic advertising, that entire procedure is now measured in milliseconds.
Although programmatic technology helped streamline the ad buying, performance tracking, and reporting processes, they aren’t fully automated. Publishers still have to configure the software by inserting or ordering ad tags, meaning you’d still need a dedicated ad management team to handle your creatives. However, that does mean you can focus your attention more on ad optimization and campaign performance tracking than before. That should lead to more revenue in the long run.
Regardless of how advanced programmatic technology becomes, it will always need human support to operate correctly. Despite that, programmatic advertising is significantly more lucrative than traditional methods and offers incredible scalability. Although the widespread use of programmatic technology increased the competitiveness of advertising online, it also rewards the more experienced professionals by giving them a stronger foothold in the market.
Now that we’ve covered the basics, you’re probably wondering how programmatic ad buying works. What lies behind this revolutionary technology? Let’s find out!
There are many cogs in the programmatic advertising wheel, but here’s how the entire process works in a nutshell:
As you can see, there are many steps to programmatic advertising and multiple parties at play here. But despite that, the entire process is speedy and lasts less than a second! Such incredible speeds are only possible thanks to advanced algorithms that handle everything behind the scenes. That includes audience targeting!
The key to learning the intricacies of how programmatic advertising works lies in understanding the programmatic advertising ecosystem’s nuances.
As we’ve mentioned above, many different parties are involved in the programmatic ad buying process, and each plays an invaluable role. So the best way to get the complete picture is to learn the basics of each of them and their role in the programmatic ecosystem. Let’s go through the nitty-gritty of each of these elements!
A supply-side platform (SSP) is a platform publishers use to automate the selling of their ad inventory. Instead of relying on salespeople to form direct contracts with advertisers, publishers let SSPs do all the heavy lifting.
These platforms operate on an auction-based model where advertisers bid on publishers’ available ad inventory in real time. In other words, SSPs take on the role of intermediaries between publishers and ad exchanges.
The best part about these platforms is that they let publishers maximize their ad yield by connecting them with multiple ad exchanges and allowing them to set minimum prices. The more bidders they get on their inventory, the better the odds of receiving higher CPM rates. That way, publishers can guarantee they sell their inventory at the highest possible rates.
A demand-side platform (DSP) has the opposite role of an SSP. While SSPs aim to help publishers sell their inventory at the highest possible rates, DSPs strive to help advertisers buy ad inventory at the lowest possible prices.
As the digital advertising world grew more competitive, advertisers needed to find a way to streamline their inventory buying process. That is where DSPs came in to save the day! These platforms allow advertisers to purchase ad inventory automatically. In other words, DSPs are intermediaries between advertisers and ad exchanges.
The best part about DSPs is that they handle all transactions and audience targeting on behalf of advertisers. The way they operate is pretty straightforward:
As you can see, just like an SSP handles all operations on the publisher’s end, a DSP does the same on the advertiser’s end. There is one more crucial element related to DSPs, though — a data-management platform (DMP). Let’s see how the two are connected.
A data management platform (DMP) plays a vital role in the programmatic advertising ecosystem. These platforms collect, store, and sort first-, second-, and third-party audience data that advertisers use to target their ads. In other words, DMPs sort and segment cookie data and signal SSPs when a customer fitting an advertiser’s profile enters a website.
Without data management platforms, advertisers wouldn’t know where and when to purchase ad space. That would result in inefficient ad spending and would lead to significant revenue losses.
Luckily, with the advanced programmatic targeting options these platforms offer, advertisers can rest assured they will spend their money optimally.
Thanks to DMPs, advertisers can enjoy various high-end audience targeting options to maximize their ads’ effectiveness. Here are just some of the targeting options you’ll have at your disposal:
Without these advanced targeting options, programmatic advertising wouldn’t be nearly as potent. That is why DMPs play an integral role in the programmatic advertising ecosystem.
The final piece of the programmatic advertising puzzle is ad exchanges. The simplest way to define an ad exchange would be as a place where publishers and advertisers meet to arrange a price for their ad creatives and ad inventory. You can think of ad exchanges as trading centers or auction houses, but for digital advertising!
Ad exchanges lie at the core of the programmatic advertising ecosystem and are connected to both SSPs and DSPs. They are an intermediary through which all transactions between the two are realized.
As you can see from the above, SSPs, DSPs, DMPs, and Ad Exchanges are interconnected and form the programmatic advertising ecosystem. These elements have an essential role in buying and selling ad inventory, either from the publisher’s or the advertiser’s side, and serve to automate everything. By doing so, they allow both parties to streamline the process and save time and resources.
|Publisher Side||Advertiser Side||Mediator|
|Supply-Side Platform||Demand-Side Platform|
Data Management Platform
Here is a quick step-by-step illustration of how the entire programmatic advertising ecosystem operates and how its elements interact:
The above should give you a clearer picture of what happens behind the scenes of every programmatic advertising request and how the elements in the ecosystem interact. Now that we’ve gotten the hard part out of the way, let’s learn about the different types of programmatic advertising and how they work.
Just like there are many elements in the programmatic advertising ecosystem, there are several types of programmatic advertising. Here are the three most common ones:
Real-time bidding is likely the most widely used type of programmatic advertising in the industry, and it works on the principle of buying and selling ads in real-time auctions.
But what makes RTB one of the most common systems publishers turn toward? It’s pretty simple — it’s due to its better and quicker targeting and selective, case-by-case ad selling. That allows publishers to serve ads only to the most relevant users based on their search history and behavior.
Does the above sound familiar? That’s right — this system is the one DSPs use to help advertisers get in front of their ideal customers.
Important: There is a common misconception that programmatic advertising is the same as real-time bidding. While most of the programmatic advertising world follows this system, not all of it does. Real-time bidding is only one type of programmatic advertising and should be treated as such.
Although RTB has been around for a while, it has developed and improved over the years. That is evident by multiple other advanced programmatic techniques derived from it. Few are as lucrative and popular as header bidding, though. That is why we believe it’s well worthy of a mention here.
Header bidding or prebidding is an advanced programmatic technique that allows publishers to put their ad inventory up for an auction on multiple ad exchanges simultaneously before requesting calls to ad servers. That enables publishers to offer their ad inventory to numerous SSPs and have several DSPs bid on the same inventory. That leads to higher competition over publisher’s ad slots, boosting their revenue.
Header bidding works similarly to real-time bidding, but there are two bidding rounds instead of one. What do we mean by that? It’s pretty straightforward.
Once a user enters a website, the site sends an ad call to all DSPs participating in the header bidding auction. Each DSP holds an “internal” auction between its advertisers, and each of them sends their highest bid back to the publisher’s ad server. There, each partner’s highest bids are compared, and the largest one wins the ad slot.
The most notable benefits of header bidding are higher yield and better fill rates due to increased competition among advertisers. But perhaps the most profitable option is using video header bidding.
Most video ad formats have high CPM rates, making video ad inventory some of the most competitive on the market. And since programmatic technology is so advanced nowadays that it also supports video advertising, the two make a highly profitable combo.
The best part about programmatic video advertising is that you don’t even need to have video content on your site anymore, thanks to outstream video technology. So if you’re just starting with programmatic advertising and want to earn the most money, we suggest you give video header bidding a shot!
Do you want to get started with video header bidding quickly and easily? Send us an email and let us show you how you can leverage Brid.TV’s online video platform to start with video advertising!
Programmatic direct is a type of programmatic advertising that works the opposite of real-time bidding. Publishers using programmatic direct sell their inventory to advertisers directly instead of putting it up for an auction. That means all metrics like CPM, impressions, and ad placements will be predetermined by a mutual agreement.
But why would a publisher want to make a deal with an advertiser directly instead of auctioning off their ad slots? There are two solid reasons:
Although direct programmatic deals amount to less than 10% of the programmatic advertising market, these can be a win-win for both publishers and advertisers.
Programmatic advertising conducted in a private marketplace works on the same principle as real-time bidding. Still, with one crucial difference — the bidding takes place in an invitation-only digital marketplace. That is an excellent way to exclude ad exchanges from the equation and get direct access to a specific publisher’s inventory on custom terms.
Although PMPs aren’t for everyone, especially since they take more resources and direct communication to set up, they are beneficial for both advertisers and publishers. Advertisers get access tohighly targeted ad inventory and fewer competitors in an auction, while publishers get premium prices due to particular demand.
Understanding the ins and outs of programmatic advertising is quite challenging — we know — and it’s easy to see why it may give people headaches. However, if you aren’t taking advantage of programmatic advertising, you are choosing to handicap yourself since your competitors surely are!
But is programmatic worth it overall? Of course! There are many reasons you should take it up besides staying on top of your competitors. But don’t take our word for it — see what some of the industry professionals have to say about it:
Programmatic advertising brings excellent value to both publishers and advertisers — that much should be clear by now. But how does it achieve that? Here’s a quick recap of the most notable advantages of programmatic advertising we briefly touched upon above:
When you consider all the above benefits, it should be clear why programmatic advertising should be an indispensable part of your marketing strategy. Likely the best part about it is that you can apply it to multiple marketing channels. Whether you are into video content marketing or PPC, you can implement programmatic technology into your advertising efforts.
Either way, you have options!
If you are still skeptical about programmatic advertising’s effectiveness, we decided to showcase a few examples that serve as a testament to how lucrative this marketing technique can be. These programmatic advertising campaigns are famous in the online advertising world as some of the most successful ones to date.
Here a few programmatic advertising examples that will hopefully give you a few ideas of your own:
Back when programmatic advertising was still in its infancy, Google was one of the first big companies to try their hand at it. So how did it go? It was a huge success!
In 2014, Google had already realized the potential of digital advertising, so they decided to try promoting their Google Search App programmatically. They approached their campaign proactively. Google used various first- and third-party data to zero in on their target audience and invested a lot of time and effort tracking, tweaking, and adapting their campaign in real time.
Here is what they managed to achieve:
Although you could argue that Google found such massive success because programmatic technology was still relatively new back then, it doesn’t mean you can’t replicate such or similar results anymore.
Another excellent programmatic ad campaign example was that of The Economist, an online publication covering various topics. The Economist took advantage of programmatic display advertising to reel in over 650,000 prospects and skyrocket its reader base.
This media giant’s display campaign focused on creating catchy headlines and curiosity-inducing banners on many different topics. The Economist segmented its audience by several topical interests like finance, economics, technology, politics, and much more. They then proceeded to create over 60 different banner ads before launching their campaign.
So how did this campaign perform? You be the judge!
|Unique Actions||6 Million|
|Unique Website Visitors||1 Million|
|Awareness Increase in the U.S.||64%|
|Consideration Increase in the U.S.||22%|
These are some pretty impressive numbers, if we have to say so ourselves. That is why The Economist’s success story is one of the most famous in the programmatic advertising world!
Another excellent example of programmatic advertising at its finest was the programmatic campaign Audi used to launch its customizable cars. This automobile manufacturing giant demonstrated just how critical (and lucrative) data analysis and campaign optimization can be in one of the most successful programmatic campaigns of the last decade.
When the company launched its new website feature that users could use to customize their dream vehicles, Audi decided to try their hand at programmatic. They exported the behavioral data from their car configuration tool and used it to craft dynamic creative ads fitting their target audience’s tastes.
So what were the results? Audi’s programmatic campaign achieved double the efficiency of their regular advertising efforts! This example just goes to show that a data-driven marketing approach can take you a long way!
This example comes from a U.K. charity organization, Missing People, whose goal was to encourage higher responsiveness in missing children cases. The organization’s primary obstacle was their low marketing budget, so they decided to try their luck with programmatic advertising as it was quite affordable at the time.
Luckily, the organization received donations that helped them fund and scale their advertising efforts. Missing People’s awareness campaign used all the benefits of programmatic advertising targeting options to get their organization’s message across and highlight their Child Rescue Alert system.
What were the results of this endeavor?
Over 44,000 people engaged with the charity’s ads and signed up for their child protection system. That was four times as successful as their previous, traditional advertising campaign using print ads, which only converted around 10,000 people. The organization also managed to increase its response rates by a whopping 20%!
This programmatic advertising example is truly one for the ages! It just goes to show that you don’t have to be a brand with huge advertising budgets to find success with programmatic!
A prominent U.K. online trading company, CMC Markets, showcased just how effective programmatic advertising can be if used correctly. Back in 2017, CMC Markets launched a programmatic campaign after the unexpected results of that year’s British General Election. The company used the momentum and came up with witty display ads and pushed them out programmatically. Here’s an example of an ad they used:
But the company didn’t stop at programmatic advertising; they put these ads outs in print too! This combination of a quick reaction from their marketing team and making the most out of a fresh opportunity is what made this campaign so successful.
So what can we learn from CMC Markets’ example? That programmatic advertising can launch your brand to stardom if used at an opportune moment!
If everything we’ve covered so far managed to convince you to try out programmatic advertising, you’re going to need to find a reliable and feature-rich programmatic advertising platform to start your journey.
A programmatic advertising platform lets advertisers streamline the purchasing and management of their ad campaigns. Some of these programmatic advertising solutions even offer handy editing tools marketers can use to design their creatives. But regardless of the company you choose, they will all let you manage, buy, or sell your ad inventory through a handy platform and CMS.
With that out of the way, let’s look at some of the best programmatic advertising platforms you can start with:
PubMatic is one of the leading programmatic advertising companies globally and offers advertisers high-quality inventory through their marketplace.
Aside from various ad management tools across multiple ad formats, PubMatic also offers excellent ad fraud insurance. Advertisers don’t have to worry about losing money to ad fraud anymore since PubMatic offers refunds in the form of credits for all invalid traffic.
PubMatic users can also expect access to extensive real-time analytics, state-of-the-art security, and high impression yield.
All of the above make PubMatic an excellent choice for aspiring and established advertisers looking for a well-rounded programmatic advertising solution.
SmartyAds is another big name in the programmatic advertising industry, but what makes it stand out is that it offers a complete programmatic advertising ecosystem. Their ecosystem comprises a DSP, SSP, DMP, and an ad exchange, making it a well-rounded choice for both publishers and advertisers.
Another strength of this programmatic advertising company is that it also offers a white-label solution. That is perfect for brands looking to tailor their platform to their needs and brand identity.
SmartyAds is a fantastic choice for businesses interested in video, in-app, native, and display advertising, as it offers all of these options. These come with various creative and editing tools, in-depth analytics, and rich targeting options, making SmartyAds’ platform one of the most versatile ones on the market.
And if you want more advanced programmatic options, SmartyAds has them too! Publishers looking to maximize their revenue can take advantage of this platform’s header bidding feature to auction off their inventory to the highest bidder.
If you are looking for an all-in-one programmatic advertising solution, there is likely no better choice than SmartyAds.
MediaMath is a multichannel programmatic advertising platform that prides itself on offering advertisers high-end campaign management tools. One of its most notable features is that it lets advertisers integrate and segment data from first- and third-party sources to streamline performance tracking from multiple sources.
Perhaps the most significant advantage MediaMath has over its competitors lies in its omnichannel campaigns that comprise display, video, audio, and even mobile ads. These features make MediaMath the perfect choice for advertisers who utilize different channels to reach their target audiences.
Simpli.fi is another all-in-one programmatic advertising company whose services include everything in the programmatic advertising ecosystem.
Advertisers get access to various audience targeting options (device, OS, browser, GEO, etc.) and can further facilitate that by importing their CRM data to Simpli.fi platform. And if they want to expand their existing audience base, advertisers can take advantage of Simpli.fi’s look-alike and search-alike modeling.
And for everyone who finds reporting tedious, you’ll be glad to hear that Simpli.fi offers upwards of 60 reporting templates, including automated custom reports.
Brid.TV Marketplace is a video ad provider that specializes in programmatic video advertising. Brid.TV Marketplace lets publishers serve instream video ads on their websites seamlessly and maximize their revenue through effective use of ad waterfalling.
The best part of Brid.TV marketplace is that publishers can use it in conjunction with other ad providers. All they have to do is implement their VAST and VPAID ad tags on top of their other ones to create a reliable backfill system and maximize fill rates.
Brid.TV Marketplace supports both desktop and mobile video advertising and provides publishers with extensive real-time analytics and automated reporting to track their creatives’ performance. All Brid.TV Marketplace users also receive a dedicated ad optimization team to help publishers optimize their campaigns and get the highest yield.
So if you are looking to dip your toe into programmatic video advertising or just wish to improve your existing video ad waterfall, a programmatic video advertising provider like Brid.TV Marketplace is likely the best choice.
Advertising has come far over the years — that much is certain. But it should be clear that programmatic technology will be an integral part of it going forward. However, even this tech is still relatively young and is rapidly changing. Although programmatic advertising is guaranteed to be the technology of the future, the direction it will develop in is not set in stone.
So what can we expect from programmatic advertising in the future? What programmatic trends are we bound to see? Let’s find out!
Our first prediction would be that header bidding will become much more popular soon. The reason is simple — header bidding is significantly more profitable for publishers, so more businesses will flock to it as they begin to realize its potential.
Although it’s unlikely that header bidding will ever completely repress other programmatic advertising forms, it’s undoubtedly going to dominate the industry. So if you wish to get ahead of your competition, you can start immediately by trying your hand at header bidding!
With digital ad fraud running rampant in the online world more than ever before, advertisers will be looking for ways to protect themselves. Nowadays, digital ad fraud causes brands to lose $1 for every $3 spent on digital ads. That amounts to a quarter of most brands’ ad revenue!
With such staggering numbers at stake, it’s safe to assume that the programmatic advertising industry will focus on developing reliable solutions to prevent ad fraud. Blockchain technology looks particularly promising in that regard, as many industry professionals are looking into ways to use it to combat invalid traffic.
Unfortunately, ad fraud prevention is still not a staple in the industry. But there are already ways for publishers and advertisers to protect themselves! There are many companies out there dedicated to helping brands fight ad fraud already, so partnering with them is currently the best way to tackle this issue.
For instance, Brid.TV’s partnership with Protected Media ensures all our premium users have access to reliable ad fraud prevention services they can activate from our CMS with a single click of a button.
But considering how rapidly digital ad fraud is growing, it’s only a matter of time before similar defensive measures become a norm in the industry.
Artificial intelligence in marketing is becoming increasingly common nowadays, and that trend began creeping into the advertising industry too. AI and machine learning have proven to be excellent tools for predicting and automating various advertising processes like mapping ad metrics and ad targeting. Although the technology is still in its infancy, we expect it will gain more prominence soon.
Programmatic advertising technology revolutionized digital advertising due to its extensive targeting options and the ability to track and optimize campaigns in real time. However, there’s more room for improvement in the personalization department!
By combining the power of AI with programmatic technology, new and improved targeting options are already beginning to appear. These will allow advertisers to zero in on their target audience and make the best creatives possible to suit their customers’ tastes.
We can safely assume that the existing targeting technology will only keep getting better to meet the demand of the already highly competitive online market.
The last prediction we have is that many businesses will be taking their programmatic efforts in-house going forward. Why? Because brands will soon realize how much money they’re losing by relying on various platforms and any other third parties.
The above will be particularly true for large publishers whose losses to intermediaries amount in millions!
Don’t believe us? We’ll let some numbers do the talking.
In 2018, only 45% of businesses took care of their programmatic advertising in-house, while experts predict that number to rise to around 62% by 2022! This upward trend of transition to in-house programmatic has been ongoing for a few years now, as you can see in the graph below:
Although more and more brands are moving in-house, this option is not available to everyone. The reason is that smaller publishers may have difficulties reaching the minimum requirements to join ad exchanges independently. So despite in-house programmatic being a more profitable option, not everyone will be able to make the transition.
We hope that this article managed to shed some light on the elements of the complex programmatic advertising ecosystem. We understand that all of the above can feel overwhelming at first, but it’s critical not to get discouraged! Programmatic advertising will be the future, so you’d be wise to consider switching to it if you haven’t already.
Out of all the programmatic advertising types currently on the market, header bidding is the one with the brightest future. And if you’re looking to get into the most lucrative form of online advertising, video advertising should be the obvious choice.
Whether you have a rich video content library you want to monetize or have no video content on your site but want to try video advertising, there are ways to do it! If you wish to monetize your videos or website using the latest video programmatic advertising technology has to offer, come talk to us and let our team help you get started!