You may have heard the phrase ‘Programmatic’ marketing thrown around during your course of business and wondered how it really works. Thanks to some feedback from our clients we learnt that you are not alone, and it was high time we explained it in detail.
Put simply, programmatic is an ostentatious way of saying automated. This ‘automated digital buying’ takes a lot of the human element away from how we would normally negotiate with a publisher. No longer are there delays getting hold of a publisher if they are on holidays or caught up in meetings. The media buyer can plug into a platform that gives them access to digital ad inventory on a scale never seen before with targeting and optimising opportunities way beyond the capabilities of old. If you have ever run Facebook advertising with Digital Willow, its likely you have already used touched upon the programmatic world, Facebook ads are in fact bought programmatically!
Programmatic buying exists in every aspect of digital advertising, whether that be display, mobile, video or social. Traditional media channels are also turning to the programmatic world, more and more digital out of home sites are being sold programmatically and even Sky is readying itself for programmatic TV buying. At its inception, programmatic was reserved for larger budget but these days, through partners such as Digital Willow, it can be available to everyone.
How does it work?
Through a process known as RTB or Real-Time Bidding (yep, another acronym!). RTB is a way of buying and selling ads through an auction. Meaning a transaction is made during the time it takes to load a webpage, on average 100 milliseconds. When a visitor enters a website, a request is sent to an ad-exchange (the auction) with information on the website along with visitor data. Visitor data comes in the form of cookies, not the delicious, gooey, baked biscuits of dreams, but data which details the websites you have visited. This data is used to categorise visitors into different audience segments (e.g. high affluence, parents, first time home buyers).
This information is then matched against available advertisers and a real-time auction takes place between those advertisers who match the criteria. For instance, let’s say you visit a website that sells insurance. Later you visit your favourite news site and suddenly there’s are ads about insurance everywhere! (Big brother is watching.)
These ads are placed in front of you with the help of Real-Time Bidding. As you have visited an insurance related website previously, you have now been placed in an in-market insurance audience. The company whose ads you have seen, have programmed the software to ensure that their ads show on certain websites, but only to visitors who are in-market for insurance. During the time it takes you to load the website an auction takes place between the insurance company and everyone else who is interested in showing you an ad. The winning bidder gets to display its ad to you on the publisher’s website.
What is an Ad Exchange?
An Ad Exchange is where publishers meet advertisers and agree on a price to display their ads. It works much like the trading floor of a stock exchange (with far less aftershave). Most ad exchanges operate through real-time auctions, where an ad purchase is made at the same time as a visitor loads a website.
The Ad Exchange sits in the middle of the programmatic ecosystem and is plugged into a Demand-Side Platform (DSP) where the advertiser sets the criteria for which sites they want to advertise on and who they want to advertise to and a Supply-Side Platform (SSP) on the publishers side where the publisher tells the Ad Exchange what kind of advertising space is for sale and the minimum bid they would accept for it.
If you want to know more about the mind-blowing targeting capabilities programmatic advertising offers, please make sure you fill in the form to get in touch with Amber and her team.