Programmatic advertising is the use of automated technology for media buying (the process of buying advertising space). Programmatic media buying uses data insights and algorithms to serve ads to the right user at the right time, and at the right price.
Why would I need this?
The traditional media buying process involves a lot of manual work, making it very slow and inefficient. Plus, ads are purchased in bulk and advertisers have little control over the inventory and placement.
Programmatic advertising is getting more sophisticated as new ad tech arrives. It boosts reach through ad exchanges and networks, giving advertisers access to far more ad space on thousands of websites at once. It enables advertising at scale and at affordable prices.
Programmatic gives advertisers and publishers real-time access to data about ad placements, activity and performance, maximising transparency and allowing advertisers and publishers to optimise campaigns quickly and accurately at scale.
Programmatic advertising spend is increasing every year: at the end of 2021, 88% of all digital display marketing was spent via programmatic advertising. By 2023, programmatic video advertising spend in the US is forecast to reach close to $75 billion.
How does it work?
A user clicks on a website.
The website owner puts the ad impression up for auction via the supply-side platform (SSP).
Advertisers offer bids for the impression via the demand-side platform (DSP).
The highest bidder wins the ad impression.
The ad is served on the website to the user.
With some luck, the user then clicks on the ad and converts.
Despite the steps involved, this entire process happens in an instant. What’s more, the competing bids are calculated by algorithms and a host of analytics to automatically determine the most cost-effective bid.
For example, if the user who clicked on the website is a strong potential customer for your ad, based on their historical surfing data and online profile, the bid served for your impression will be higher.