Understanding Programmatic Part 2

October 2019

In part 1 of this series, we discussed what ‘programmatic’ means, Real-Time Bidding, and Ad-Exchanges, for a recap take a look here.

Part 2 looks at DSPs and SSPs in more detail as well as the mind-blowing targeting capabilities programmatic advertising offers.

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As you can see in the graphic above, an 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. Similarly, at the other end, sits the Supply-Side Platform (SSP) with the Publisher. The publisher tells the Ad Exchange what kind of advertising space is for sale and the minimum bid (price) they would accept for their inventory.

Before we go any further, it is important to distinguish between an ad network and an ad exchange. For example, you may be familiar with advertising on Google Display Network (GDN). As you’ve probably guessed, this is an ad network. It’s a platform which is connected to a certain number of websites and offers inventory for advertisers on those sites, whereas, an ad exchange is a trading floor which allows you to access multiple ad networks.

Ad Exchanges and DSPs

As with any auction (ad-exchange), the auction house needs to know who is bidding (DSP) and what inventory is for sale (SSP). This is decided by the Demand-Side Platform and Supply-Side Platform. Via the DSP, advertisers let the exchange know what they would like to purchase and what they are willing to pay for it. The demand-side platform is the tool or software that allows advertisers and/or agencies to buy ad placements automatically (programmatically). In the past, as more and more publishers started offering advertising space online, agencies (and some advertisers) tried to find a way to manage all of these media buys without the need of as many sales teams as the manual method was an arduous and expensive. DSPs were the solution to this problem.

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At Digital Willow we have a partnership in place that allows us to connect to an ad exchange where we can then buy media inventory all over the world on behalf of our clients. 

How it works (in the eyes of a consumer) 

From a consumer point of view, let’s say a 45 year old Business Owner in London is browsing the internet during his lunch break and ended up on Bloomberg’s website. Bloomberg will be connected to an ad exchange and an auction signal will be triggered and sent to the exchange. Bloomberg’s advertising space is then up for sale. 

The exchange will respond and ask the DSP if the advertiser (for argument sake; A Business Insurance company) has any ads that might fit the placements on the page. The company selling business insurance has indeed two ads, sizes 300 x 600 and 728 x 90. What’s more they are looking to communicate to business owners of a similar age in London. The advertiser enters a real-time auction via the DSP with other advertisers to compete over the inventory. The winning bid wins, showing their ad to the Business owner. 😊

One thing to keep in mind and a positive about Programmatic buying is how specific the targeting options can be i.e. occupation, age, location and so many more levels that can be altered to hit the ‘right’ audience.  These are the basic principles of programmatic advertising on the advertiser’s side and all that happens in the split-second it takes to load your webpage. 

DSPs and SSPs

A DSP and an SSP connect to opposite end of the auction. On one side, DSPs connect advertisers to the auction to help organise ad buying and on the other side, SSPs link publishers to the ad exchange to connect their inventory.

Supply-Side Platforms

In much the same way that advertisers use DSPs to manage their programmatic ad buying, publishers use a Supply-Side Platform to manage the inventory on their websites and apps that they want to sell.

The SSP connects to an ad exchange and tells it what kind of inventory is available and through RTB, this inventory is automatically sold to the highest bidder.

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A task of the DSP is to buy the ad space programmatically, usually as cheaply as possible from the publisher, whilst an objective of the SSP is to sell the inventory programmatically for the highest possible price.

In order to achieve this objective, the SSP has the functionality to allow the publisher to set minimum prices and dictate which advertisers they sell to.

In the third and final instalment of our series we will be looking at Data Management Platforms (DMPs), targeting and the future of Programmatic advertising.

As always, if you’d like any more information on anything we have covered in part 1 and part 2, or if you can't wait for part 3, please make sure you fill in the form to get in touch with Amber and her team.