What Is Programmatic Media Buying And How Does It Work?

What Is Programmatic Media Buying And How Does It Work

Digital advertising can be super creative, but it won’t generate sales if the target audience or platform is chosen incorrectly. These are the problems that programmatic marketing helps solve. In this article, you will learn what programmatic advertising is, how it works, and how PMP advertising differs from programmatic RTB.


What Is Programmatic Advertising?

Programmatic advertising uses automated technologies to purchase advertising space. Unlike traditional procurement, this type involves analytical data and algorithms that analyze signals from users. This way, your ad is almost 100% likely to be seen by the right person at the right time. In simple words, programmatic advertising completely automates the process of buying advertising.


How Does Programmatic Advertising Work?

The programmatic ecosystem brings together representatives of sellers and buyers who meet on an advertising exchange. To understand how the process works, you need to know a few terms.


  • DSP (Demand-Side Platform). This platform represents the interests of advertisers. Here, using the Trading Desk programmatic manager, they register, publish advertisements, and set parameters for display.
  • SSP (Sell-Side Platform). This platform represents the interests of advertising platform sellers. They tell you what offers are available to advertisers.
  • Ad Exchange is an advertising exchange to which both platforms connect. Here transactions between sellers and buyers take place online.


Programmatic purchasing occurs automatically. Let’s look at the process using the example of a store that sells diving equipment:


  1. Marketers register on DSP: place advertising creative materials, and indicate budget and targeting parameters.
  2. A visitor who meets the specified parameters (for example, a 35-year-old man with an above-average income, traveling 5-6 times a year) visits a relevant site (for example, a tour operator platform).
  3. The SSP sends a message about the visitor to the advertising exchange.
  4. Automatic trading takes place in real time.
  5. The site visitor sees an advertisement for the winning bidder who offered the highest bid. This is programmatic advertising.
  6. Payment is made for actual ad impressions.

Types of Programmatic Advertising

Next, it is important to understand what types of programmatic advertising exist to choose the best option for your strategy. The most common include:


  1. Real-time bidding (RTB) is a type of bidding available to all advertisers where instant ad auctions take place in real time.


  1. A private marketplace (PMP) is a variation of the previous type, but it is a closed marketplace with a higher bid price. In PMP advertising there is only a selected circle of brands that previously received information about placements. Bidding occurs when publishers have agreements with a limited number of advertisers.


  1. Programmatic direct implies a direct agreement between the advertiser and the publisher without involving the parties to the exchange. Advertisers approach publishers directly to purchase advertising space. Direct communication allows the advertiser and publisher to agree on a fixed cost per thousand impressions.


How to Launch Programmatic Advertising: Step By Step

Programmatic, like any advertising campaign, starts with analysis – and only then moves on to creative and targeting settings.


Step 1. Analyze the target audience (or use a ready-made analysis, if available) and divide it into segments. Determine the goals of the advertising campaign: expand the audience, strengthen the brand image, and increase sales. The last goal is the most difficult: the audience needs to be warmed up, and this takes time.


Step 2. Develop creative material that will attract the attention of the target audience: think over the format, write texts and catchy headlines, and select illustrations.


Step 3. Select a platform for purchasing advertising space. Focus on whether the advertising network has relevant sites with a reliable reputation and high coverage. Pay attention to the flexibility of advertising settings, cost, and analytics capabilities.


Step 4. Set up targeting based on your target audience analysis.


Step 5. Set KPIs. Track and analyze your advertising campaign. Adjust settings to achieve results.

What Are The Advantages And Disadvantages of Programmatic Advertising?

Programmatic technology is not a universal way to solve digital problems. It has both great potential and pitfalls.

  • Pros:


  1. Launch advertising yourself without intermediary agencies.
  2. Simultaneous coverage of sites of different types.
  3. The most precise targeting settings.
  4. Flexible betting system.
  5. Pay only for real impressions.
  6. Real-time ad optimization based on statistics.
  7. Saving time and effort in launching advertising campaigns.

  • Cons:


  1. Not everything is automated: robots cannot yet analyze your target audience and create an ad for you.
  2. Results are not immediate: meeting KPIs takes time and constant testing of options.
  3. You will have to understand many nuances: choosing a programmatic platform, assessing the quality of traffic, and analyzing campaign performance indicators.

  • Risks:


  1. Publishing your advertisements on sites with a bad reputation. Even if you specify a blacklist of online resources when registering, this does not guarantee anything: every day thousands of new suspicious sites appear on the Internet.  
  2. Inconsistencies in statistics between the data of the advertising platform and the DSP. Most often the problem is on the DSP side, in which case you need to change it to a more reliable one.

  • Tips:


Programmatic advertising is the main tool in the digital advertising market. On the one hand, it is talked about as an effective way to quickly reach the desired audience and push them to the target action. On the other hand, this is not a magic wand. To use programmatic advertising with maximum efficiency, we recommend implementing the following practices:


  • combine different ad formats to help reach audiences at different stages of the user journey;
  • use personalized creatives to correctly convey the required message;
  • carefully select placements that align with your business goals;
  • analyze the impact of advertising on user behavior.


Wrapping It Up

Programmatic advertising is a tool that can make life easier for marketers and contextual advertising specialists. Fully automated processes will save time and effort. The advantage of programmatic advertising campaigns conducted using PMP and RTB approaches is that it can be added to an existing promotion strategy as an additional channel. We recommend contacting SmartyAds, a company that specializes in working with modern programmatic advertising solutions.


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Programmatic Media Buying And How Does It Work

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