Programmatic Advertising: A Beginner-Friendly Guide

In this Digital era, only reputable advertising agencies will agree that buying advertising space at a reasonable price and directing it to the right audience with the help of the optimum placement is the whole game plan.

You probably have heard people raving about how programmatic ads have transformed the online advertising landscape if your company is engaged in online advertising.

So if you’ve nodded wisely when people made that proclamation (as though you understood/agreed with them) but weren’t sure what it meant, this article is for you!

Having been around for more than 15 years, programmatic marketing has proven itself true to its original promise, i.e., to be the future of digital advertising.

Hence, read on to learn more about this terminology and explore its working principle in greater depth.

 

Programmatic Advertising – A Comprehensive Explanation

 

The Digital advertising space is operated by computerized auctions where both parties are brought together:

1.Online advertisers who are looking for ad space.

2.Publishers, the owners of websites with digital space that can be rented.

Programmatic Advertising is an automated, real-time bidding process that uses artificial intelligence and algorithmic software to buy and sell online advertising space. It enables advertising agencies to purchase ad impressions on publisher sites in a fraction of a second without undertaking any time-consuming manual process such as requests for proposals (RFPs), tenders, human negotiations, and pre-set prices.

The artificial intelligence (AI) powered algorithms evaluate users based on their behavior, demographic data, cookie data, and other criteria, which yields hyper-targeted, super-effective advertisements delivered to the right people at the optimal times.

Programmatic ads give advertising agencies more time to optimize and improve their ads and reduces the guesswork associated with ROI.

 

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How does Programmatic Advertising Work?

Despite the many steps involved, the process occurs in milliseconds. For your convenience, we have outlined the process in simple steps.

Step 1:

When a visitor who falls within the advertiser’s target audience lands on a website that uses programmatic advertising, the automated bidding process is initiated to serve an ad to this user.

Step 2:

The publisher lists the ad space for this viewer on their supply-side platform (SSP). In addition to acting as the seller for the publisher, the SSP informs advertisers of the site’s characteristics, user, and ad space, which allows DSPs to make their bids.

Step 3:

Upon receiving the ad space information, the SSP analyzes the user’s cookies to determine factors such as their location, demographics, online activity, interests, etc.

Step 4:A demand-side platform (DSP) reviews the information provided by the SSP about the user. The DSP assists advertisers by selecting ad spaces that are aligned with their budgets and targeting parameters.

Step 5:On behalf of the advertiser, the DSP places a bid for an open advertising spot. The whole process occurs in real-time, which is why it is commonly called real-time bidding (RTB).

Step 6:Once the SSP receives the bids from various DSPs, it will determine the winner based on the most cost-effective proposal.

Step 7:After the SSP has chosen the winning bid, it displays the ad on the publisher’s website.

Step 8:Lastly, it will likely prompt the customer to click on the advertisement and purchase, mainly if the ad contains relevant content.

 

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What are the benefits of programmatic advertising?

In addition to the increased efficiency of AI-driven algorithms and the reduced need for human intervention, Programmatic advertising offers a host of other advantages like:

Real-time Insights

Rather than waiting for weeks to receive an excel sheet from their advertising agency after the ads have gone live, advertisers can get immediate feedback on the success of their ad campaigns before it is too late to adjust and optimize them.

Transparency

With reduced human involvement in programmatic advertising, publishers’ errors or fraudulent ad practices are less likely to occur. By providing detailed information about the inventory they buy, the audience they target, and publishers who meet their criteria, advertisers, feel empowered knowing where their money is going.

Improved Targeting

It enables you to target your intended audience on a granular level with the help of keywords and the contextual relevance of a page. Programmatic advertising supports advanced targeting, such as remarketing, IP address targeting, or geo-targeting, to help advertisers reach the high-quality specified audiences and improve ROAS (Return On Ad Spend)

Enhanced budget control

It enables you to direct your money towards reaching your targeted audience more effectively. Much like Pay-per-click (PPC) advertising, you set the maximum amount you’re willing to pay. Plus, spending money on relevant impressions ensures you reach people who are most likely to convert. The ease of buying digital media across publishers further reduces administration costs.

Multi-channel and format reach

In light of the increasing number of digital touchpoints, your average target audience has, your advertising will need to follow suit. Programmatic advertising can be implemented on desktop, mobile, videos, or apps, or TV. Therefore, you can customize your ads to reach people through the medium your audience interacts with the most.

Final Words

Programmatic Advertising is not the future of advertising; it’s already here!

No matter your business size, implementing programmatic advertising now is an excellent time to capitalize on a rising trend.

In this article, we hope you’ve gotten a better sense of what it is.

You can begin testing the potential of programmatic advertising with PromotEdge if you’re curious to know where it can take your display campaigns.

Creating programmatic campaigns are what we do best as a full-service digital advertising agency.

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