Fundamentals of Programmatic Advertising


Programmatic advertising has been a widely talked-about concept in the marketing sector for a considerable period. However, what exactly is the function of programmatic? And how does it set itself apart from conventional display marketing?

What Is Programmatic Advertising

Programmatic advertising involves the utilization of automated technology and algorithmic tools. Programmatic refers to the purchasing and selling procedures of advertisements within the advertising sector. Programmatic advertising separates itself from conventional methods of media buying through the utilization of automation. The analysis of various user signals is conducted to ensure that advertisements are delivered to the appropriate individual, in the correct location, and at the optimal moment. Consider programmatic as the overarching term that encompasses various forms of programmatic purchasing that fall under it.

The distinction between programmatic and display ads

With the advancements made by Google in automated and real-time bidding capabilities, it’s become challenging to distinguish between display and programmatic advertisements.

The primary distinction between programmatic and display is:

  • Programmatic refers to how ads are bought.
  • Display refers to the format of how ads appear.

The ability to purchase advertisements across various platforms is the second major distinction between display and programmatic. The term “display ads” is typically used to describe placing advertisements in a specific advertising network, like the Google Display Network. In contrast, programmatic advertising elevates display media to a higher level. Advertisers can purchase advertising placements across various networks through platforms like sell-side platforms (SSPs) and demand-side platforms (DSPs), which are specifically designed for programmatic advertising. Advertisers typically have control over both programmatic and display advertising, including the following:

  • Audience.
  • Bidding strategy.
  • Budget.
  • Creative and assets.
  • Placements.

Programmatic Advertising Platforms

Over the years, automated technology has made considerable progress. There are various kinds of programmatic platforms available. The three main types of platforms are:

  •  Sell-side platform Often referred to as a “supply-side platform,” this software enables publishers to instantly sell their advertising space to advertisers. It includes both demand-side platforms (DSPs) and ad exchanges.
  •  Demand-side platform This platform enables advertisers to buy ad space across various platforms simultaneously.
  •  Ad exchangers This is how SSPs send their advertisement inventory to DSPs. DSPs link up with an ad exchange platform where the prices of advertisements constantly change according to the level of competition for that inventory.

In order to become acquainted with various types of platforms, let’s examine some of the major contenders in each category.

Sell-Side Platforms

A thorough compilation of SSPs available to publishers is comprised of:

  • Google Ad Manager.
  • Amazon Publisher Services.
  • OpenX.
  • Google AdMob.
  • Yahoo Ad Tech.
  • TripleLift.
  • PubMatic.
  • Verizon Media.
  • Xandr (Microsoft).
  • Index Exchange.
  • Sovrn.
  • Magnite.
  • Criteo.

If you are in search of a video SSP, some of the top companies to consider are:

  • SpotX.
  • Teads.
  • AdColony (now DigitalTurbine).

Although there are numerous options for publishers, these companies which we will mention are familiar names that you probably didn’t expect to be involved in programmatic technology.

Demand-Side Platforms

Just like SSPs, these company names may sound familiar and provide DSPs. Some of the top DSPs include:

  • Display & Video 360 (Google).
  • The Trade Desk.
  • Amazon DSP.
  • LiveRamp.
  • Adobe Advertising Cloud DSP.
  • StackAdapt.
  • Amobee.
  • Yahoo Ad Tech.
  • AdRoll.
  • Basis (formerly Centro).
  • RhythmOne.
  • Choozle.
  • BrightRoll.

A few notable digital signal processors (DSPs) that cater to Connected TV and video platforms are:

  • TubeMogul.
  • OneView (Roku).
  • MediaMath.

Once more, there is a wide array of DSPs accessible to advertisers. It is crucial to select a DSP that possesses the desired attributes and available resources. Certain DSPs provide the option for advertisers to handle their advertising independently, while others provide both self-serve and fully managed services, typically catering to larger advertisers or agencies.

Ad Exchangers

Publishers have access to several widely recognized ad exchange platforms.

  • Xandr (Microsoft).
  • Verizon Media.
  • OpenX.
  • PubMatic.
  • Google Ad Exchange.
  • Index Exchange.
  • Magnite.
  • Smaato.

Not all ad exchanges are equal. It is crucial for publishers to thoroughly investigate their choices and select platforms that are in line with their objectives.

What is the cost of programmatic advertising?

In other words, the expense of programmatic advertising can be determined by the size of your budget, ranging from low to high costs. Many people believe that programmatic technologies are not useful for small businesses, but we are here to debunk that misconception. Programmatic advertisements are usually purchased based on the cost per thousand impressions they generate (CPM). CPMs usually vary from $0.50 to $2.00. Nevertheless, the cost per thousand impressions (CPMs) may increase significantly due to various factors such as:

  • Which DSP you choose.
  • Your target audience.
  • The level of competitiveness.

One general guideline for the cost of programmatic ads is that the more specific your target audience is, the more you can expect to pay for every thousand impressions. Whether you are a large corporation with a substantial advertising budget or a small business in the early stages of growth, incorporating programmatic advertising into your marketing strategy is feasible.

Advantages that programmatic advertising offer

There are numerous advantages to including programmatic advertising in your marketing strategy. Some of the top benefits include:

  • Large-scale audience reach.
  • Efficient and low-cost awareness.
  • Real-time data and analysis.
  • Capability to use data from both internal and external sources.
  • Ways to leverage cross-device campaign strategies.

Large-Scale Audience Reach

One of the main advantages of programmatic advertising is the potential for expansion and growth. Due to the wide availability of ad inventory across multiple platforms, programmatic is considered the most effective method for reaching a large audience.

Efficient And Low-Cost Awareness

Programmatic advertising is currently one of the most cost-efficient forms of advertising available, which is closely linked to the advantage of expanding audience reach. In the previous conversation, we talked about the typical cost per thousand views (CPMs) for programmatic advertising, which usually ranges from $0.50 to $2.00. When investing in marketing, your budget can be utilized effectively to reach the specific group you are targeting and raise visibility for your product or service.

Real-Time Data And Analysis

Advertisers can take advantage of receiving almost instantaneous data thanks to the use of programmatic platforms that heavily rely on real-time bidding. Why does this matter? Having real-time data allows you to make quicker decisions and adjustments. It also allows you to be more proactive rather than reactive.

Utilizing First And Third-Party Data

Advertisers have access to a variety of data segments as an advantage of programmatic advertising. To illustrate, advertisers have the ability to securely upload their own first-party data and directly focus on specific individuals by leveraging real-time bidding signals. Furthermore, digital service providers offer numerous third-party segments to advertisers as a targeting option when they lack their own first-party data. Advertisers have the option to utilize a different kind of data from third parties, known as third-party data, that involves transforming their own first-party data into this category. This can be achieved by generating groups of potential customers who resemble their existing customers, essentially creating a similar audience. This opportunity provides the chance to discover new customers who are similar to our existing ones.

Cross-Device Campaign Strategy

An important aspect of digital advertising is awareness tactics. Due to this, companies that only focus on the success of the last click frequently fail to recognize the actual possibilities of programmatic advertising. Therefore, how does programmatic advertising align with a cross-device campaign? The main objective is to catch the users’ attention at the very beginning using programmatic advertisements. It is improbable that a user will make a purchase or avail of a service after their initial encounter with a brand. After piquing a user’s interest, you can then target them again on different platforms, taking into account their interaction or engagement with the initial advertisement. Combining that data from the initial interaction to the final purchase is crucial in evaluating the effectiveness of your programmatic approach.

Types Of Programmatic Advertising

Programmatic advertising encompasses various forms. It is important to distinguish these from the actual programmatic platforms. Programmatic advertising involves the various ways through which an advertiser can acquire advertisement space. The four most common types are:

  •  Real-time bidding All advertisers can participate in this form of bidding, which involves real-time ad auctions. It is commonly referred to as the “open marketplace.”
  •  Private marketplace This process occurs when publishers have contracts with a select group of advertisers. These websites often charge higher prices due to the highly desired advertising spots they provide.
  •  Preferred deals Programmatic advertising includes a lesser-known approach where advertisers opt for ad spots in advance, either in the private or open market. This approach is commonly referred to as “spot buying.”
  •  Programmatic guaranteed The mentioned paragraph can be paraphrased as follows: Like a preferred deal, but without any auction bidding, the publisher and advertiser come to an agreement on a set price for the available advertisement space.


Understanding the fundamentals and advantages of programmatic advertising can serve as a useful framework for your current programmatic approach. Alternatively, if you are a beginner, it can assist you in developing a fresh strategy that integrates programmatic elements.

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