Decoding the concept of Programmatic buying for beginners
Programmatic buying is an advanced form of online advertising often regarded as the future of virtual advertising. It’s another form of ad buying, but surely not the beginning of the end for all manual processes in digital advertising. Let’s discuss in detail what exactly does programmatic buying mean:
Basically there are two types of programmatic buying decreed by the the Internet Advertising Bureau (IAB): programmatic direct and programmatic RTB
Programmatic Buying: As the word suggests programmatic simply means automated. And, Programmatic buying refers to any ad space bought automatically on a web page, through either bidding for the space or buying it directly so it’s guaranteed to be yours.
Now, let’s understand both the types of programmatic buying:
Programmatic RTB: Programmatic RTB is not a complex concept it is much alike Google AdWords, only difference being that it’s for display ads rather than search results.
Real-time bidding is used for serving internet users with display advertising around the internet. As a webpage loads, if it has ad space on it that is available for real-time bidding, information about the webpage and the user viewing it is passed on to an ad exchange. An ad exchange is a platform that auctions off the available ad space to the highest bidder. The winning ad will then appear on the webpage when it has finished loading.These auctions are held in the milliseconds it takes for a webpage to load.
This available ad space is also known as an impression. Every time an ad loads this is one impression. Some impressions are more valuable to certain marketers than others, depending on the particular website it appears on, its relevance and the likelihood that a user will click-through on the ad.
The price of an impression is determined by what buyers are willing to pay in real-time.Advertisers often use demand-side platforms (DSPs) to help them decide which ad impressions to purchase. A DSP is a fully automated piece of software that bids on impressions from an ad exchange. This removes the need for human sales people, negotiation skills and a huge amount of time as the decision to bid on an impression is made immediately, and simply the highest bidder wins. As an extra bonus piece of jargon busting, you may hear the phrase ad inventory a lot. Ad inventory is the amount of ad space a publisher has available to sell to an advertiser.
The use of RTB means that advertisers no longer have to purchase display ad space for a set amount of money over a set period of time on a website they assume will bring it traffic.
Instead ads can be specifically targeted to relevant people across a wide range of sites, and budgets can be managed in real-time.
Programmatic Direct: Programmatic Direct also known as automated or programmatic guaranteed, basically stands for an automated process of buying guaranteed ad space that doesn’t involve an auction. The typical process for buying ad inventory was notoriously inefficient before programmatic, often taking up to 42 steps for an ad to go from conception to its eventual virtual display.
An agency would have to research the best space to place an ad, rely on an admin heavy process of sending requests to discover pricing and availability from publishers, transact deals with paper insertion orders and manually add the advertisement into the ad server. This is before the ad has even begun running.