Programmatic Advertising, Why and How Should You Use It

Ana Kealy

Ana Kealy

Ad Serving

Ad Tech

RTB

Programmatic Advertising, Why and How Should You Use It

Table of contents:

Introduction

Programmatic advertising started as a way of capitalizing on remnant ad inventory. Today, due to the developments in programmatic technologies, it is a digital marketing strategy that is defined as the automated purchasing and placing of digital ads. This includes a variety of ads, from display ads to DOOH ads. Let’s run through all its key elements, benefits and the programmatic advertising platforms that make it all happen.

Programmatic advertising growth 

The online advertising spend in programmatic has been constantly increasing in the past decade, with the US leading the way as the largest market. With an 18% growth rate, it is expected to reach over 700 billion by 2026. 

Global programmatic advertising spending from 2017 to 2026:

Global programmatic advertising spending

Source: Statista.

The same report forecasts that the biggest growth will be registered by the Open Auction model for programmatic advertising. This is attributed to the large volume of vendors joining this space.

This increasing demand is also highlighted in the EXADS programmatic ad serving data insights. When comparing data between Q1 and Q4 of 2022, we noticed an increase of 63.1% in EXADS clients who have added more DSPs. A massive growth of 88.2% was also registered for SSPs when comparing data for the same period

How does programmatic advertising work?

The process of the automated selling and buying of ad impressions happens in milliseconds:

  1. Publishers make their inventory available through SSPs (Supply Side Platforms)
  2. Advertisers create their campaigns and ads via DSPs (Demand Side Platforms)
  3. Once a user clicks on a publisher site, the SSP will send ad requests to the DSPs and Ad Exchanges it is integrated with.
  4. The advertisers with ads that match the requirements of the ad inventory available will start bidding for it.
  5. The winning ad gets to be displayed on the publisher website. 

The data used to match advertisers with the ad inventory available, comes from the Data Management Platforms, or DMPs.

How Programmatic Advertising works

Essentially, programmatic advertising automatically matches advertisers that want to buy digital ad space with publishers that have space to sell with the help of software. 

Programmatic Advertising Platforms

The programmatic process can seem complex but when using the real-time bidding or programmatic RTB model, it is based around four programmatic advertising platforms:

  • Demand side platform (DSP) used by advertisers for media buying
  • Supply side platform (SSP) that managed the publisher’s inventory
  • Ad Exchange, the digital marketplace where the ad trade happens
  • Data Management Platform (DMP), that collects and analyzes data. 

Demand side platform, DSP 

The DSP is the ad serving platform that allows advertisers to create their campaigns, set their targeting options, budgets, etc., and then participate in programmatic RTB auctions to access a global audience. As the media buying teams rely on the DSP, the platform must have multiple supply integrations with SSPs, ad exchanges and ad networks. 

This programmatic ad platform offers multiple benefits to advertisers as an efficient way of creating, managing, monitoring and optimizing multiple programmatic campaigns from one interface. The most obvious and immediate benefit is the wide reach of the ads. Then, advertisers have at their disposal advanced targeting options and automatic optimizations that increase efficiency, real-time reporting and many other features. The advantages for advertisers also include better brand exposure by being able to place themselves next to well known brands and better return on investment (ROI)

Fortune Business Insights estimates that the global DSP market will grow from $20.77 billion in 2022 to $92.12 billion by 2029, at a CAGR of 23.7% in the forecast period.

The EXADS DSP solution has proven to help advertisers in maximizing their ROI from programmatic ad buying. The platform offers a vast range of premium features without additional costs, meaning that advertisers can start using them from the get-go. Some of these features are: easy integrations, custom targeting options and statistics and real-time reports. The paltform also offers automatic optimizations like the Bidder, ad variations and landing page optimizations, and a variety of high performing ad formats.

Supply side platform, SSP

Publishers can serve programmatic ads with the help of the supply side platform (SSP). By using this programmatic advertising platform, Publishers and digital media owners can manage and automate the selling of their ad inventory. 

The SSP through its integrations with multiple ad exchanges, ad networks and DSPs gives publishers access to a variety of demand sources, helping them to maximize their revenues. Offering benefits such as full transparency and control over demand sources, the SSP also allows publishers to set floor prices for their ad inventory. It also helps to protect their brand by ensuring that the displayed ads are relevant for their audiences.

A robust platform, such as the EXADS SSP, has a strong set of features that will help publishers monitor and manage their sites and zones. Some of these features include: powerful statistics and reporting, ad inventory management, variety of ad formats, the ability to easily integrate with demand sources and access advanced programmatic techniques like Header Bidding

Ad Exchange

The Ad Exchange is the programmatic platform where the selling and buying of digital ad inventory happens, using real-time bidding (RTB). Ad Exchanges are generally used for the selling of display, video, native and mobile ad inventory. They are sometimes called digital marketplaces and they generally come under two forms:

  • Open Ad Exchange: as the name indicates, this ad exchange allows all sellers and buyers access to the digital inventory bidding process. Examples of Open Ad Exchanges would be Google or Yahoo.
  • Private Ad Exchange or Private Marketplace (PMP): this ad exchange only allows selected buyers and sellers to bid for the ad inventory. There are also some ad tech companies who offer their services to help create Private Ad Exchanges.

The way the Ad Exchange works is that it allows publishers to make their ad inventory available to advertisers through SSPs and from here, advertisers, using DSPs, buy the inventory that matches their criteria, via RTB. Although this might seem similar to an SSP, publishers use the SSP to plug in to multiple Ad Exchanges, thus increasing their potential revenues. This is why the Ad Exchange is considered a trading ad platform.

Data Management Platform, DMP

A DMP is a platform that essentially builds audience profiles. It does this by collecting, storing, managing and analyzing audience data. The data used by DMPs can come from various sources and can be:

  • First Party Data: collected directly from users, by the company owning the platform (web analytics, CRM systems, social media, subscriptions, etc.).
  • Second Party Data: collected from partners and associates.
  • Third Party Data: data from other platforms, which is used to enhance the first and second party data.

DMPs role in programmatic advertising, and marketing in general is to organize and segment the audience into different cohorts, factoring elements such as location, browsing behavior, devices used, purchase history, etc. DMPs connect with programmatic ad platforms like DSPs, SSPs and Ad Exchanges to facilitate accurately targeted advertising purchases. By using EXADS programmatic platforms, you can easily connect with any DMP via APIs.  

DMP (Data Management Platform)

In conclusion, a Data Management Platform helps both advertisers and publishers. It helps advertisers to target the right audience and to optimize their campaigns, and it helps publishers to deliver a better user experience on their sites. 

Benefits of Programmatic Advertising 

Programmatic advertising has helped to streamline the placing of ads online by making the ad inventory buying process more efficient, better targeted and ultimately more convenient. It helps businesses diversify and move away from the traditional dependency on direct deals or ad networks.

Brand exposure

Any advertiser can participate, regardless of the size or level of awareness of their brand. As the buy and sell process relies on RTB and Audience targeting, small brands can compete for ad inventory with well known brands, or even have their ads displayed alongside big brands. 

Wide reach

It opens the way to access ad inventory across a huge range of publishers, without having to contact them or have direct deals with them. Once the DSP is connected to multiple ad exchanges, ad networks and SSPs, the advertisers can have their ads shown to their selected audiences at scale. 

Precise targeting 

When using programmatic, you gain access to a massive ad inventory. This means that selecting the right targeting options becomes crucial. The good news is that companies such as EXADS have developed ways in which brands can reach both niche and mass audiences. From GEO targeting, to contextual and custom targeting, programmatic advertising platforms offer endless possibilities.  

Full control and transparency

With programmatic, both advertisers and publishers can be in full control of their advertising. Advertisers can see where their ads appear, they can block or whitelist publishers. The same is also valid for publishers who can block certain advertisers from accessing their ad inventory. Both types of users can see the performance of their advertising in real time, optimize or avail of automatic optimizations that are offered by Saas providers like EXADS. 

The Ultimate Programmatic Advertising Platform

Without a doubt, there are numerous benefits of programmatic advertising that can impact the bottom line for both advertisers and publishers. Although it can seem to be an overly complex process that requires vast tech knowledge, programmatic doesn’t have to be like that! Ultimately, it is a strategy that became popular due to the fact that it facilitates businesses to diversify, access global audiences and monetize all their ad inventory, through its automated nature. 

Ad tech providers like EXADS have been building DSPs and SSPs for advertisers, agencies and publishers for over 10 years, offering support and expert guidance. At EXADS, we want to ensure that our platforms meet all your requirements, but most importantly, we want you to reach your goals. 

Let’s discuss programmatic advertising and how we can build your customized, programmatic advertising platform! Get in touch today! 

 

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Ana Kealy

Ana Kealy

Product Marketing Manager

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