What is programmatic advertising?
Programmatic advertising involves employing automated tech for procuring advertising space, distinguishing itself from the conventional, often manual, digital advertising acquisition methods. It leverages data insights and algorithms to deliver advertisements to the appropriate users at precise moments and optimal cost.
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In order to grasp programmatic ad buying, it is crucial to familiarize yourself with the associated terminology. To begin, programmatic media buying can be divided into three distinct categories.
1.Real-Time Bidding (RTB)
Commonly referred to as an “Open auction”, RTB entails determining inventory prices through real-time auctions. This approach is open to all advertisers and publishers and is widely recognized as a cost-effective method for acquiring media with a broad and diverse audience.
2.Private Marketplace (PMP)
While PMPs share similarities with open auctions, they impose limitations on participant access. PMPs are exclusively available to a select group of advertisers through invitation-only access. Nevertheless, in certain instances, publishers may institute a process to choose advertisers that permits them to request an invitation.
In this scenario, a publisher sidesteps auctions and directly sells media inventory to one or many advertisers at a predetermined “Cost-per-mille” (CPM).
Three fundamental elements of the programmatic buying framework
DSPs are programmatic ads software solutions that facilitate agencies/advertisers in purchasing ad inventory across various platforms.
SSPs are software tools that empower publishers to automatically sell ad impressions for display, mobile, and video content to potential buyers in real time. This encompasses ad exchanges, networks, and DSPs. SSPs grant publishers enhanced control over their inventory and CPMs.
This mechanism serves as the conduit through which the SSP inputs their inventory into the ad exchange. The DSP interfaces with the ad exchange, enabling agencies, advertisers, publishers, and networks to engage in the buying and selling of ad space. Prices for inventory are determined through the bidding process.
Ad inventory is typically acquired through a real-time auction in programmatic trading. Advertisers have the ability to purchase programmatic ads on a per-impression basis via programmatic channels, allowing precise targeting of the desired audience. The automated nature of this process ensures unmatched pace and efficiency, a feature not replicated in traditional media purchasing methods.
Why is programmatic digital advertising crucial?
The classic media purchasing process is characterized by extensive manual tasks, including the submission of multiple requests for proposals (RFPs), negotiations conducted by humans, and the manual input of orders (IOs), which collectively result in a poor and under efficient procedure. Moreover, ad purchases are typically made in large quantities, limiting advertisers’ influence over inventory and ad placement.
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