The global programmatic advertising spending in 2020 was around 129.1 billion U.S. dollars, which is likely to reach 155 billion dollars in 2021 – according to Statista.
So the question is what is programmatic advertising? And why are advertising companies increasingly turning to this methodology for their ad campaigns? Is it a better option over the traditional advertising method? Let’s find out!
What is Programmatic Advertising
Programmatic Advertising is nothing but a process of purchasing a digital ad in real-time. It is done with the help of Artificial Intelligence and machine learning, removing the traditional methodologies involving human negotiations and pre-set prices.
The process consists of using different platforms, which sell inventory on both publishing and advertising sites. The process, sometimes, also refers to programmatic marketing. This method is more efficient, quicker, and cheaper than manual methodologies.
How programmatic advertising works
Artificial Intelligence uses a set of algorithms to analyze visitor’s behavior. It further helps in campaign optimization according to the audience who is more likely to convert. The programmatic companies gather this audience data to precisely know whom to target. Different types of programmatic advertising platforms are used to achieve it.
Programmatic Advertising Platforms types
During the online campaign planning, various programmatic advertising platforms use 1st, 2nd, and 3rd-party data of clients to predict results more accurately. The overall environment of programmatic advertising has mainly three types of programmatic advertising, each serving different purposes.
- SSP or Supply-Side Platforms: SSP, a publisher’s inventory, is a platform where the publisher submits his web page as an advertisement source. It helps to set up everything and have them start working. DoubleClick, SmartyAds, and AppNexus are some popular supply side platform (SSP) systems in the market right now.
- DSP or Demand Side Platform – DSP platform stores user’s profiles and 3rd party data, which the advertisers can use to bid on. Demand Side Platforms (DSP) later makes a decision, when a user visits the page, based on the user’s information and bids declared by the advertisers. Adform, BidTheatre, AppNexus, etc., are some famous Demand Side Platforms (DSP)
- DMP or Data Management Platform – DMP, being an independent programmatic advertising platform, can collect, analyze, activate, and manage user’s data. These stored data help DMP represent user profiles for marketers.
- Ad Exchange – This platform acts as a center of all programmatic advertising, where supply side platform (SSP) and Demand Side Platforms (DSP)
- DSP meet to sell and buy Ads. Multiple systems are available in the market that provides supply side platform (SSP), DSP, and DMP functions in a single Ad exchange. AppNexus, SmartyAds, and DV 360 are some popular ones.
Today, most marketers use programmatic advertising platforms to automate digital marketing, which is a more cost-effective method to use.
The marketers can set up the most advanced campaign configurations and spot a predicted result using these programmatic platforms. Presently, only online ads are traded programmatically.
However, the media and ad agencies are looking for ways to sell ‘traditional’ media the same way. This can open many future opportunities in this field.
FAQ’s On Programmatic Advertising
As a career, programmatic advertising comes with both pros and cons. If you have good knowledge and you are passionate enough, this field can prove to be rewarding. The industry is likely to expand in the coming future, given the demands and benefits it provides.
DSP, which further analyzes the user’s worth and assigns it a value. According to the value, the DSP sends a bid to SSP. The supply side platform (SSP) then delivers an Ad to the user based on the highest bid.
There are many reasons why programmatic advertising is gaining importance over manual methodologies. This method works in real-time, which makes the process more efficient. It also helps in better targeting by providing a large exposure to a vast group of audience.