Programmatic for dummies

Programmatic media buying as a new way to optimize resources and investments

There exist many methods of buying ad space. Today marketers are trying to find the best solutions for effective cooperation with each other. Programmatic media buying is a revolutionary approach based on the full or partial automation of a purchasing process.

What does programmatic mean?

Programmatic advertising is based on the application of software, which functions with the help of computerized algorithms. Thus, the technology allows achieving the automation of a trading process. As a result, ad space purchasing becomes easier and faster.

Programmatic is a beneficial thing for both advertisers and publishers. On the one hand, it gives advertisers a chance to target their audience on a more advanced level. On the other hand, it allows selling remnant space and high-quality advert inventory at competitive prices.

Thanks to the automation, the manual work and human involvement become much less. Programmatic mostly concerns the deals on the online advert inventory. However, marketers claim that in the nearest future, traditional ad inventory will be available for trading by means of programmatic.

The realization of programmatic requires the involvement of supply-side and demand-side platforms. The first one is created for publishers, while the second one is for advertisers.

Directions of a programmatic approach

Programmatic advertising is a complex term. There are two main directions of such an approach:

  • – programmatic direct
  • – real-time bidding.

In programmatic direct, only certain mundane issues of dealing are removed thanks to the automation, for instance:

  • – orders insertion
  • – requests tagging
  • – adverts delivery.

At the same time, this direction still requires significant human involvement. Marketers discuss the conditions of a deal and prices. When everything is agreed upon, advertisers are to buy 100% of the ad inventory for publishers. Such an approach requires more investments because SSPs and DSPs demand commissions.

Another popular variation of programmatic is RTB. Here lots of sides are involved:

  • – a DSP
  • – an SSP
  • – advert networks
  • – an ad exchange.

In this case, a programmatic media buyer purchases advert inventory on the online auctions, which are organized by an advertising exchange. To access an AE, SSP and DSP are required. Every advertising exchange is connected with multiple advert networks (which offer ad space on the definite platforms). Thus, an advert exchange gives a chance to access a wide range of advertisers and publishers. The cooperation of marketers becomes more effective and timesaving. In the case of RTB, the trading process is fully automated. The users are to set their requirements concerning pricing, targeting, advert formats, etc. The system automatically sends requests and selects the advertisers, who match the requirements. The highest bid is also selected automatically. The risks of fraud and money losses are minimal thanks to the transparency of the system.

The effective application of information

It is vital to have enough data and to use it right for the effective application of a programmatic approach. The obvious 3 layers of information are:

  • – first-party
  • – second-party
  • – third-party.

The first layer refers to the information, which is owned by advertisers about their consumers. The second layer is the data collected by other parties (for example, agencies) and shared with advertisers to help build a programmatic marketing strategy. The 3rd layer refers to the information, which is accessible to anyone at a certain price.

With access to a large amount of information, advertisers can target their audience more effectively and make them buy.

Benefits of programmatic

Many marketers claim that programmatic is a future of modern advertising. It is supported by the advantages the approach provides for advertisers and publishers:

  • – transparency of the process (as the entire trading process or at least a part of it is computerized)
  • – low investments (compared to the traditional way of advert purchasing, you need less staff to hire for signing deals)
  • – less human involvement (thus, the risks of errors become lower)
  • – saving time (you spend less time on negotiations, requests, and orders delivery)
  • – minimal risks of fraud.
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