The Ultimate Introduction To Programmatic Advertising: Free Bonus Glossary
Programmatic advertising is a billion-dollar industry shaping up to be the dominant model for digital advertising. The United States was the market leader for programmatic ad spend in 2020, reaching nearly 70 billion dollars, according to Statista.
Before publishers can use programmatic advertising, they need to understand what it is and how it can work for their websites. You will also need to know what key terms and acronyms are used within this advertising ecosystem.
Stay with us here; even seasoned marketers can get their heads turned around with programmatic acronyms and terms. Feel free to consult the glossary at the end of the article anytime you get lost on a term.
In this article, we’ll explore:
- An introduction to programmatic advertising.
- How it works.
- Types of programmatic advertising.
- Why publishers should use it.
- Key terms and acronyms you need to know.
Let’s begin by talking about what programmatic advertising is.
What Is Programmatic Advertising?
Simply put, it’s the process of buying and selling digital ads via automated platforms. You may have also heard of programmatic media buying, programmatic marketing, or real-time bidding (RTB).
Marketers put nearly 50% of their budget into this form of advertising, so it’s worth getting to know the technical nuances of what it is and how it works. This makes programmatic an extremely lucrative and rewarding revenue stream for publishers; that is, if the ads are set up and managed correctly.
Programmatic advertising uses software to automatically buy space for advertising on several channels, websites, and platforms. This happens in real-time via an automated system and allows advertisers to place ads on many channels with little to no human interaction. In turn, publishers can receive automatic bids for their ad inventory through their supply-side platform (SSP), ad network, or monetization partner.
How Programmatic Advertising Began
Advertisers want their marketing messages to reach their target market, influencing them to take action, like buying a product. To facilitate the process, publishers need to have a website with appealing content, attracting the audience an advertiser would want to see their ads. Before programmatic became the popular advertising ecosystem it is today, advertisers would pay for banner ads, which publishers would manually place on their sites.
Unfortunately, this early model wasn’t entirely effective. It left a lot of potential ad space unused and unmonetized. The solution to this was ad networks, which categorized unsold ad inventory so that it was easier to access and include in media campaigns. From there, online media was separated into premium ad inventories and remnant ad inventories. Premium was sold with a direct relationship between publishers and advertisers, while remnant ad inventories were sold through ad networks.
As this process evolved, the process to sell ad space became a bit more complicated for publishers to manage access to their own inventory. That is where the SSP and the DSP come in, making the process easier. The SSP helps you maximize your revenue and acts as a layer between you and third party advertising networks.
The benefits for a publisher here is that you control your ad inventory and how it’s sold and delivered. The bidding environment of an SSP helps you get the highest bids and most revenue possible for your ad space.
Let’s look into the process in action, so you can see how it works for you.
How Does It Work?
How does programmatic advertising show ads on your website? While the process can seem (and be) complex, we can break it down into a simplified explanation. Don’t forget about the glossary at the bottom if you get lost in the jargon.
Programmatic advertising has five components it relies on when placing ads on websites and media platforms:
- Demand Side Platforms (DSPs).
- Supply-Side Platforms (SSPs).
- Ad Exchanges.
- Data Providers.
Programmatic advertising starts when a user lands on a publisher’s site. That is when the automatic bidding process begins. As we mentioned earlier, you list your ad inventory with an SSP and they will sell it for you, letting advertisers know about your site, user demographics, and available ad space.
That information is what allows the DSPs to make a bid on your inventory on the advertiser’s behalf. The demand-side platform will review the information that the supply-side provided and choose the inventory that best fits their advertisers’ needs. The SSP reviews the bids from DSPs and picks the winner based on predefined criteria such as a bid floor.
This entire process happens all in the few moments it takes to load a web page. Every time a new page is loaded, an auction occurs, ads are selected, and the winning advertisements are shown to visitors.
While not an “official” part of the primary ecosystem per se, you can also work with a monetization partner who manages ad inventory on your behalf. For example, let’s say you don’t qualify to join a particular ad network or exchange.
These partners, like Rev·Amp, work with multiple platforms and publishers, joining the SSPs, exchanges, and networks on your behalf. You, as the publisher, gain access to ads from all these platforms, while the partner manages the process and helps boost your revenue. There are also several different formats available, and a partner can help you identify the best formats to increase your income.
What Types of Programmatic Advertising Exist?
As technology advances, so does what the ad industry can do for digital marketing. There are several types of programmatic advertising, but we will briefly list them for you:
- Real-Time Bidding
- Private Marketplace (PMP)
- Automated Guaranteed/Programmatic Direct or Guaranteed
- Preferred Deals
Each type of ad has its benefits and considerations. Once you understand them, you will better choose one that best fits your business needs.
Why Should Publishers Use Programmatic Advertising?
Many advertisers take advantage of the programmatic ecosystem to reach their audience and buy profitable ad inventory. The 2018 Statista reports indicate programmatic advertising accounted for 61% of digital advertising spending worldwide, expected to increase to 72% in 2021.
Programmatic ads have given publishers an edge, dynamically shifting away from the traditional process. Instead of pitching your rates to an advertiser and hoping to beat the competition, advertisers now have to win an intense bidding war to see who gets your ad inventory. Having a monetization partner will help you have easier access to selling your ad space.
Additionally, advertisers will pay premium prices for ads with high viewability and click-through rates. The system gives publishers a lot of control over their ad inventory, while also allowing them to generate excellent revenue by using profitable ad formats.
How You Can Get Started Today
After reading this article today, are you left asking yourself, “How do I start using programmatic advertising to put ads on my website and get paid?”
Rev·Amp can help you by leaving the content up to you and the advertisements up to us. We provide you with a dedicated account manager, so you don’t have to micromanage anything. Our team has proven experience in ad tech and will support you along with your entire campaign.
- Real-time open auction bidding with pricing.
- Preferred Deals.
- Unreserved Inventory.
- And much more!
Your Bonus Glossary - 33 Key Terms You Should Know
We don’t want you to get lost in all the programmatic jargon. This glossary will help you understand all the key terms and acronyms commonly found in programmatic advertising. Not all of them may have been found in this article, but you may come across them as you dive deeper into the programmatic industry:
- Ad Exchange - Marketplace for buying and selling ad space. Connects SSPs and DSPs.
- Ad Network - Bundles up various publisher inventory and puts them up for sale.
- Ad Server - Distribution platform that delivers ads to end devices, like mobile phones or tablets. This will capture performance metrics as well.
- Advertisements - Also called Ad, Ads, Adverts, these are marketing communications designed to promote and sell products.
- Agency Trading Desk - The ATD is a system of trading developed by large agencies that hold companies and are designed to make purchasing more efficient for buyers. The Agency Trading Desk has access to several DSPs and has a more extensive inventory to connect to more data streams via the DMPs.
- Application Programming Interface - Commonly referred to as API. APIs enable connections to an external application to allow data transfer between multiple platforms to a centralized dashboard.
- Campaign - A strategy designed to be carried out in a series of advertising messages, unified by a central theme or idea.
- Cookies - These are designed to gather information from users via their devices to display relevant advertisements.
- Cost Per Action (CPA) - Average price of conversions, click of specific links, time spent on site, and other previously defined actions.
- Cost Per Click (CPC) - The cost of a single ad click.
- Cost Per Mile (CPM) - Price per 1,000 impressions on a website
- Cost Per View (CPV) - The price of one video play once a predefined minimum viewing time has been reached.
- Data Management Platform (DMP) - A system that manages data used by publishers, agencies, and advertisers.
- Data Providers - Data providers, collect and sell data to advertisers to help them run successful ad campaigns.
- Demand-Side Platforms (DSP) - A platform that enables automatic bids on ad inventory by brands and agencies.
- Demographics - Data on population and particular groups in it. It covers education, religion, age, income, and employment, amongst others.
- First Price Auction - A type of auction where the bidder pays exactly the amount they’ve bid for an impression.
- Floor Price - The publisher’s minimum price for which their ad inventory can be sold.
- Header Bidding - Allows ad inventory to be auctioned off in real time.
- Key Performance Indicators (KPIs) - Measures of performance over time on specific objectives. Examples include revenue growth, profit margin, client retention rate, and customer satisfaction.
- Media Kit - a prepacked set of marketing materials used to promote a business or cause.
- Multichannel Advertising - The practice of interacting with consumers using both indirect and direct communications through a variety of channels, including social media, emails, display ads, etc.
- Over-the-top (OOT) - Fast-growing channel that refers to TV and video content currently available online without needing to subscribe to cable or satellite.
- Preferred Deals - A variant deal in the PMP where the opportunity to bid on a publisher’s inventory is restricted to selected advertisers.
- Private Marketplace (PMP) - Ad groups of high value that are grouped up by an SSP or publisher and not available for open auction. Only select advertisers will have access to these ads.
- Programmatic Advertising - The process of buying and selling digital ads via automated platforms.
- Programmatic Direct - A transaction from publisher and advertiser on the programmatic ad buying system. Inventory is guaranteed and directly sold.
- Publisher - The site containing content and attracting visitors. Their websites display the ads that won the programmatic auction.
- Real-Time Bidding (RTB) - A bid done in real-time, consisting of both bid requests and responses. The request is triggered when a user visits a page, and the request is offered in the sale via an SSP.
- Supply-Side Platforms (SSPs) - The platform that allows publishers to sell their inventory automatically and linked to ad exchanges. It will enable floor prices to be set as well as bundling of inventory for private marketplace sales.
- Target Audience - The audience your message is intended to reach, defined as the people who want or need your products and services.
- Third-Party - a person or group besides the two primary entities involved together.
- Video Ad Serving Template (VAST) - A uniform template used to structure tags and metadata that is transferred from the ad server to the video player.
Programmatic advertising has revolutionized the way digital ad sales are done. The benefits for publishers are undeniable. The ability to sell your ad space to the highest bidder in the span of milliseconds, granting you the highest revenue possible, is a significant benefit of this system.
While it can seem confusing and complex, programmatic advertising is well worth the effort. Publishers can work directly with exchanges and networks, or partner with a managed advertising platform to get the best results.