Are you a marketer looking to understand programmatic advertising? Well, there’s a lot that you need to learn about it, including what it means and the various terms that relate to it.
“Programmatic advertising is expected to surpass $200 billion for the first time in 2023. By 2026, it will approach $300 billion.” – Statista
A good background understanding of programmatic advertising will help you grow as a marketer.
This article is the best guide to use when looking to master programmatic advertising. It has all you need to know about it, including how it works and the various terms it uses. Read to the end to have a better understanding of programmatic advertising and get started with it.
Here’s what you should know.
What is Programmatic Advertising?
It is an excellent idea to start by defining programmatic advertising. It will make it easier to understand the rest of the terms we’ll explore in this article. Programmatic advertising is an automated process that simplifies the buying and selling of digital ad space by marketers.
The aim of using programmatic advertising is to automate manual processes. As a marketer, you need to leverage this type of advertising to boost marketing efficiency. This is because programmatic advertising is simpler, faster, and more cost-effective than manual processes.
With that said, it will be vital to mention that programmatic understanding requires good knowledge of what it entails. If you aren’t well-versed in it, the best idea will be to hire someone to do it for you. You can consider working with a performance marketing agency.
Experts who understand programmatic advertising will ensure you get the most out of it. They will come up with a strategy that will work best for your needs. This will save you the hours of learning that you need before getting started. Thus, you can get results faster as you learn.
Definitions of Terms Used in Programmatic Advertising
Although you can hire a performance marketing agency, it is important to have knowledge of this concept. This section will explore some of the definitions of programmatic advertising. It’ll help to know these terms because they’ll help ensure you get the desired results.
Here are some of these definitions:
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Advertiser
This is the party that wants to put up a digital ad. They can be a commercial brand, SMB, SaaS, or even an e-commerce seller. The advertiser might not put the ad themselves, as we mentioned earlier. Some might hire digital agencies to help them put up their digital ads.
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Publisher
This is the part that owns the advertising space that the advertiser wants to use. They sell ad space, which marketers refer to as inventory. Publishers put up these spaces for sale, and advertisers go ahead and buy them. Thus, advertisers and publishers are the parties involved.
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Ad Exchange
This is a platform where the ad space being sold gets auctioned to prospective buyers. It works more like the stock market, where one party offers an asset for sale, and buyers bid for it. In this case, advertisers will bid for the space, and the highest bidder will get the space.
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Demand Side Platform (DSP)
This is one side of the ad exchange platform where the advertiser uploads their assets. They need to set up criteria for the audience demographics when setting up this platform. The other step is setting the requirements one must meet before one can take up the ad space.
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Supply Side Platform (SSP)
This is the platform where publishers list their inventory. All the relevant information for the ad exchange gets stored in the DSP. It gets pulled out, and the spaces are offered to advertisers who have the right offers. The supply side is where most if not all, the magic happens.
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Real-Time Bidding (RTB)
This is the process that makes programmatic advertising kick-off. It entails the bidding and, finally, the award of digital ad space. This process happens at the ad exchange platform, where the DSP and SSP converge. This is where you get the ad space and can start advertising.
How Does Programmatic Advertising Work?
Programmatic advertising automates the process of buying digital ad space. In this process, the highest bidder takes the digital ad space on sale. One of the terms that we discussed above is real-time bidding. This tells you that programmatic advertising happens in real time.
The advertisers initiate the process by putting up space on the ad exchange. They put up the digital space and then added the specifications about the audience demographics they needed. They add all these details to the DSP, which then links them to the ad exchange and bidding starts.
In short, programmatic advertising works in a simple way. It is much more efficient and effective than the manual processes we’re used to. You need to ensure that your business leverages technology to boost efficiency. Programmatic advertising is the best to use for marketing.
The Three Types of Programmatic Advertising
There are three types that you need to keep in mind as a marketer. Here are some of them:
- Programmatic direct
- Real-time bidding
- Private marketplaces
Those are the primary types of programmatic advertising that you must take note of. There’s a lot more that you need to understand about these types, so you need to learn a lot more.
What Does the Future of Programmatic Advertising Look Like?
It will also help to mention a little bit about the future of programmatic advertising. Well, the reality is that this technology is futuristic, and it won’t go away anytime soon. As a marketer, the best you can do is embrace this technology and get started using it for digital ads.
Final Thoughts
This article has explored everything you need to know about programmatic advertising. If you want to get started with it, then this post has provided the best ideas for you. What’s left is to start phasing out the use of manual processes to secure advertising spaces.
You now know the terms used by experts in this industry. You also know how this kind of advertising works and the various types that you can consider. Last but not least, we have explored what the future holds for programmatic advertising.
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