Different Types of Programmatic Advertising Explained
Whether you’re a publisher, advertiser, or agency, you’ve likely heard of programmatic advertising. The automated buying and selling of ad space have grown increasingly popular as a monetization strategy. Additionally, and the robust capabilities of programmatic ads are also appealing.
Before you start planning to advertise your content, it’s critical to understand the different types of programmatic ads, how they work, and what benefits they hold.
In this article, we’re going to explain briefly:
- What programmatic advertising is.
- The primary types of programmatic advertising.
- The advantages and disadvantages for publishers.
First, let’s take a quick look at programmatic advertising.
What is Programmatic Advertising?
In a nutshell, programmatic advertising uses intelligent software that allows for the automatic buying and selling of ads and ad space. The complex ecosystem contains ad exchanges, DSPs, SSPs, ad networks, DMPs, and other platforms.
Most of the process is typically automated, and publishers and advertisers don’t need to interact. However, some types of programmatic ads need a lot of negotiation, time, and technical knowledge to be effective.
If you work with a monetization partner, much of the red tape and management requirements fall away. You can focus on creating content while we manage the system and ads on your behalf.
The Primary Types of Programmatic Advertising
Programmatic advertising has evolved significantly over the past few years and will likely continue to do so. Its continual growth and development has seen many technologies fall away or change while new ones are introduced. Currently, there are four primary types of programmatic ads available.
Real-time bidding is also known as open auction or open marketplace. It’s one of the most widely used methods of programmatic media buying. In fact, according to eMarketer:
- Real-time bidding comprised 35.5% of all programmatic ad spend in 2020.
- Of that, 48.9% of RTB ad spending happened on open exchanges and auctions.
If you, a publisher, list inventory on an SSP, it’ll typically go into an RTB open auction. Your ad space isn’t sold at a fixed price or reserved. Instead, it’s sold over third-party networks and exchanges. The highest bidding advertiser gets to show their creatives on your site or content.
The entire process takes place in real-time, which is why it’s called “real-time bidding.”
RTB is beneficial for publishers since they have a higher chance of getting their inventory bought most of the time. However, SSPs typically have high minimum requirements that can act as a barrier for most smaller publishers.
Private Marketplace (PMP)
Ad space offered via a private marketplace typically doesn't go into open auctions. Instead, think of a PMP as a private real-time bidding auction. It’s also known as an invitation-only auction, and it gives publishers a lot more control over their inventory and the advertisers allowed to access the ad space.
According to eMarketer, 51.1% of programmatic advertising spending happened on PMPs in 2020. That number is expected to grow in 2021, with the ad spend expected to reach over $13 billion.
A publisher will decide which advertisers it’ll give access to its premium, exclusive inventory in a private marketplace. Advertisers can apply for an invitation to the auction, but the general terms are agreed on before it takes place. You can also negotiate custom deals.
You, or your preferred ad exchange, can set a minimum CPM, and the invited group of advertisers can bid to win the impressions.
Since private marketplaces offer publishers significant benefits, it’s primarily used by sites with a massive reach and top-quality traffic. In return, advertisers can see exactly when and where their ads are being served, allowing them to track their ROI more accurately.
Programmatic Guaranteed / Direct
Programmatic guaranteed, also known as programmatic direct or automated guaranteed, is a more traditional method of selling ad space. Under this type of advertising, a publisher’s inventory is reserved and sold at a fixed price.
Publishers and advertisers negotiate the terms of the deal one-on-one, bypassing bidding entirely. Instead, it’s a direct sale that allows advertisers to choose ad space and audience targeting parameters. It also allows them to set prices and frequency caps.
Even though the deal is struck between a publisher and advertiser, a programmatic set of platforms execute delivery.
Like programmatic guaranteed, preferred deals start by bypassing the auction process and connecting publishers and advertisers directly. The main difference is that the ad space remains unreserved while the price is negotiated and fixed.
- A publisher negotiates a minimum CPM for their premium ad space with selected advertisers.
- These advertisers bid on the inventory either at or above the agreed-upon price before it enters open auction.
Much like PMPs, the entire transaction takes place in a closed environment. However, unlike private marketplace deals, the same ad inventory can go into an open auction after a preferred deal auction. Advertisers that have preferred agreements can’t bid on the same space again at that point.
The system allows publishers to benefit from a controlled, stable revenue stream. Similarly, advertisers get access to exclusive first-look space. Additionally, an advertiser gets a “sneak peek” at a publisher’s available inventory and audience without having to buy. The information helps them determine if this “premium” ad space is worth the investment.
What Types of Programmatic Advertising Does Rev•Amp Offer?
Our Softonic team created Rev•Amp to provide publishers with the types of programmatic ads that are robust and deliver excellent results:
- Open auction real-time bidding with auction pricing
- Unreserved inventory
- Preferred deals and negotiations
With the goal to revamp and revitalize your monetization strategy, our teams focus on methods that offer high returns and generate consistent revenue.
The different types of programmatic advertising have their advantages and disadvantages, and one size doesn’t fit all.
If you’re not sure what type of programmatic advertising would work best for your site or content, don’t rush the decision. Instead, reach out to a reputable monetization partner that can guide you through the process or manage it on your behalf.