How does programmatic advertising work?

Published
Jan 11, 2023
Tags:
Programmatic

A dear child has many names

Programmatic, programmatic advertising, programmatic commerce, programmatic advertising, programmatic marketing. Or why not automated advertising, machine learning-based advertising and AI-based advertising. All these terms refer to the same technology and processes used to buy and sell digital ads in real time using automated systems and algorithms.

In this post, we go through in a little more detail how programmatic advertising works.

What is programmatic advertising?

Programmatic advertising is a rapidly growing method of digital advertising that has changed the traditional way of buying and selling ads. It is an automated method of buying and selling digital ads in real time through the use of technology and algorithms. Programmatic advertising allows for optimization based on audience data and online behavior, increasing the efficiency and accuracy of digital advertising.

What is a DSP?

To understand how programmatic advertising works, it is important to understand the two main systems used - DSP (Demand Side Platform) and SSP (Supply Side Platform). DSP is a platform for buyers to buy ads and SSP is a platform for sellers to sell ads. When a DSP chooses to buy an ad slot, it is matched with an available ad slot on an SSP, and an auction starts. It is in this auction that the highest bidder gets the ad slot. The auction takes place in real time and is called Real Time Bidding (RTB).

Buyers can select several parameters in the DSP to achieve their goals, such as geography, age, gender, publisher, time of day, media channels and ad materials. Programmatic advertising allows for targeted advertising to a more specific audience, which can increase efficiency and ROI.

Advantages of Programmatic Advertising?

The benefits of programmatic advertising include increased precision and efficiency, increased ROI, the ability to target a specific audience, and increased transparency. By using data on consumer behavior, ads can be targeted to people who are more likely to make a purchase or perform a desired action.

Short and sweet

To summarize, we can break this down into three points.

- Programmatic advertising is an automated method of buying and selling digital ads in real time using technology and algorithms.

- It is an effective method of targeting ads to a specific audience and increasing the return on investment.

- By using consumer behavior data, ads can be targeted to people who are more likely to make a purchase or perform a desired action.

Josefine Lopes Helgesson

Sales & Marketing Coordinator

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