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Programmatic Advertising 101: Your Guide to Programmatic Ad Ecosystem  

Programmatic Advertising 101: Your Guide to Programmatic Ad Ecosystem  

By 2022, 87 percent of all digital advertising budgets in Asia were spent on ads purchased through programmatic channels. The percentage peaked at 82% in Europe.

So why do more and more marketers use programmatic ad buying for their display advertising, and what exactly is it?

In the past, real people, just like you and me, have always been the ones to purchase and place ads across various media. The inadequacy of this method, however, was quickly apparent to the public. Errors, diverted attention, and extra time are inevitable when more people are involved in a task. Advertisers rushed to programmatic ads as a solution to these problems.

By 2023, it is expected that programmatic ad buys will be used by more than 90% of the industry. This is mostly because it can be used on a large scale and can automate even the most difficult tasks. Surveys show that programmatic advertising will only become more valuable with time as AdTech companies and agencies introduce new ways to make processes more efficient.

That said, to ensure that your brand can take full advantage of programmatic ads, this article is a must-read. Here you will learn what this kind of advertising entails and what it can do for your company. 

What is Programmatic Advertising? 

Programmatic is type of advertising that uses automated process of buying and selling online advertising. This makes transactions more efficient and effective by optimizing the process and consolidating the digital advertising efforts on one technology platform.

While traditional advertising includes requests for proposals, quotes, tenders, and negotiations, programmatic buying uses algorithmic software to buy and sell online display space. Programmatic ads automate the bidding processes, allowing the publisher to sell and the advertiser to buy ads at scale.

Machine learning is essential to any programmatic advertising platform. Processing the number of different kinds of data helps enhance the probability of campaign success. It allows optimizing campaigns in real-time by analyzing campaign inputs, user behavior, and dynamics of audiences that are most likely to convert.

Of course, the ad-buying process is not entirely automated. It is only a tool that can be truly powerful in the hands of experienced marketer. Simply put, programmatic advertising is a way to automate the purchase and optimization of digital campaigns instead of directly buying them from publishers. It is designed to replace human interference and negotiations with AI optimization and machine learning. 

The primary objective of programmatic advertising is to enhance transparency and efficiency in the industry for both the publisher and the advertiser.

Programmatic Ecosystem Elements

The regular programmatic value chain consist only Advertiser and Publisher, supply-side platform (SSP) and demand-side platform (DSP), data management platforms (DMP) and customer data platforms (CDP), ad networks and ad exchanges.

SSP belongs to and is operated by an SSP service provider. Publishers (also referred to as the first party) pay for the services to access the SSP platform and place inventory for the advertisers. Meanwhile, on the DSP, advertisers (also known as the third party) manage the process of programmatic media buying.

To process the data, the DSP providers often use external services of data management platforms (DMP) and customer data platforms (CDP). DMPs provide information about the audiences for whom the advertisement is made, and CDPs create, unify, and store audience data accessible to other marketing systems.

Other components are Ad Networks and Ad Exchanges. Ad networks play the role of facilitating and amalgamating publisher ad inventory for convenient purchase. It is supposed to help both publishers and advertisers. On the other hand, ad exchanges automate the buying and selling process on an impression-by-impression basis through real-time bidding (RTB).

In the ideal scenario, to ensure the brand-safety and efficiency advertiser also should take care of creative development, site-listing, fraud prevention, and viewability tracking. All these services usually provided by stand alone agencies or technology companies, therefore increase the cost of programmatic process.

Unlike other providers Adello developed it All-in-One Real-Time Programmatic Loop. Adello’s services include

  • Custom Ad Unit Creator,
  • Publisher White-listing and Site-listing,
  • Data Management Platform that allows Custom API Integration,
  • Pre-bid Fraud Prevention with AdCTRL™ Defender,
  • Ad Server,
  • DSP, and
  • Viewability Tracking

This allows efficient campaign optimization based on the near real time data feedback. In addition, advertisers can receive intermediate repots on campaign and creative performance.

How Does It Automate the Bidding Process?

The programmatic ecosystem comprises different technology platforms, available advertising deal types, methods of buying programmatic media, and spans across a variety of ad formats.

All components communicate and interact with each other, creating an ecosystem. This allows for making the process of automated media transactions more facile.

There are different kinds of offering and acquiring inventory in the programmatic ecosystem, and each has benefits and flows. Generally, they can be divided into 2 types: real-time bidding (RTB) and programmatic direct.

RTB includes an auction for the inventory and can be subcategorized into an open auction and private exchange. Meanwhile, programmatic direct offers a fixed price and a 1:1 relationship between a publisher and a marketer.

Combining the programmatic deals allows for cherry-picking and thus getting the most out of the campaign in terms of performance and/or price. That is why Adello combines different types of programmatic deals.

Before defining which programmatic deal type to use, Adello would have to define the ad campaign goal. If the aim is to reach out to a new audience, learn their behavior, and open new opportunities to push brand awareness – an open auction would be a suitable option.

Most of the traffic used by Adello is bought through open auctions. Open exchanges have millions of different publishers that provide an opportunity to advertise the product to the mass. The auction is handled using a "real-time bidding" process. It is a quick process, lasting only a few milliseconds, and occurs billions of times every day. 

This methods opens a large pool of impression and allows focusing more on the right place, time, and audience. The bidding decision is typically made based on campaign targets, such as user demographics, location, online behaviors, the website’s main topics, and so on. One of the main benefits Adello provides to its clients is near real-time intermediate campaign reporting.

If there is no inventory available through the open market and Adello doesn't have to fulfill advertiser preference for a specific publisher, we choose preferred deals. Such deals negotiate the preferred price but don't require securing the inventory. Adello can either buy the traffic required to meet an agreed-upon price or pass it if a better matching inventory or price is available elsewhere.

However, some publishers sell only a part of their inventory on open markets or don’t sell there at all. If Adello needs to secure the inventory of those specific publishers, we use a private marketplace.

Programmatic guaranteed is the most favorable option for most publishers since they can sell a guaranteed amount of inventory for a fixed price. Adello uses this type of programmatic deal in 2 cases: 1) if the advertiser asks for a specific publisher, or 2) if inventory shows a good performance for a reasonable price.

Why Should You Consider Programmatic Ad Buying?

Now that you know what programmatic advertising is and how it works, the real question is: should you rely on programmatic ad buying to increase your company's reach? To keep it short, yes, programmatic ad buying can be a great addition to business growth potential.

Since bidding via programmatic advertising gives you the capacity to leverage Big Data and Machine Learning, it will allow you to identify and target the audience that is most likely to convert across millions of publishers. This approach will give you faster, better, and more cost-effective results.

For buyers, the success of programmatic ads heavily depends of selected DSP. If the DSP leverages not only programmatic ad buying but also creative development, fraud prevention, site-listing, performance tracking and reporting than you have a higher chance to optimally spend your media budget.

Programmatic advertising is a deep and exciting method of digital advertising. Understanding how programmatic works enables marketers to make more informed and calculated decisions. The information provided in the article is only a foundation of the programmatic universe. Nevertheless, Adello is always glad to share valuable insider information about marketing and answer your questions.

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