self-serve model dsp

The Programmatic Advertising Buyers Guide (2020)

Programmatic advertising numbers are public, and they’re also pretty vivid. In 2019, US advertisers will spend nearly $60 billion on programmatic display. By 2021, It is estimated that almost 88%, or $81.00 billion, of all US digital display ad dollars, will be done via programmatic advertising formats. That’s an 8% increase from 2018!

Why do marketers seek programmatic advertising for their display campaigns, and what’s programmatic advertising all about anyway?

programmatic advertiser

Programmatic Advertising: Definition

Simply put, automated buying, and selling of online advertising, rather than buying directly from online publishers. The point is to let the technology come in where we humans can’t. Machine learning AI is heavily involved when doing programmatic media buy. The ultimate goal for us as marketers is to increase transparency and effectiveness for both sides of the media buy transaction.

Real-time auctions are done where ads are requests and visible to the end-user in a relatively very short amount of time.

Interested in learning more about programmatic advertising and how it all works? Keep reading!

ad exchange chart

Programmatic Advertising: Who is it for?

Programmatic advertising fulfills a very wide range of channels included in digital advertising, which includes mobile, social, video, and of course display advertising or banner ads. Programmatic ads are also arriving offline with many channels beginning to advertise programmatically through public digital screens in shops and digital billboards.

 In the past, programmatic ads were more something that a large media agency would do, but as technology became more affordable and abundant, a rapid increase on self-serve DSP or programmatic platforms where one can control his own campaigns without having to engage with all the technical aspect of setting up end-points, clients are now able to access programmatic inventory and compete against the biggest brands on the same playing field, no middlemen involved

What is Programmatic Advertising?

Programmatic Marketing limited to Programmatic Advertising, meaning that when we refer to programmatic marketing we’re still referring to programmatic display ads or what we know as banner ads, of course, display advertising includes much more, such as native ads, interstitials, some form of programmatic popups and push notification ads done via programmatic ad serving.

 Programmatic is buying digital advertising space automatically, with computers using data to decide which ads to buy and how much to pay for them.

How did we get to this point, tech-wise?

The first banner ad impressions were generated in 1994 in what is known now as Wired Magazine and featured a banner by AT&T, which back then, was revolutionary.

This display ad was revolutionary in its time but would today be considered bad practice.

 Here it is in all its glory…

the first banner ads

In those days, there was no technology involved and the purchase and selling of online ad inventory was done by people as you would buy a standard magazine or newspaper advertising space.

Sales Department would reach agreements with advertisers in order to place graphically. Display ads or what we know is banner ads. Without any relevancy towards the audience. 

The first proper adserver was built in 1995.  That opened a new range of possibilities, such as displaying your ads across many different websites at the same time without much leg walk.

One of the first was DoubleClick, Which was purchased by Google in 2007. In those days, many more publishers were available than advertisers willing to buy their traffic, which created a surplus of ad inventory that wasn’t being bought by anyone. To solve this issue, ad networks were created. Ad networks are platforms that pull unsold ad space from several publishers and make it available at the very low late. Premium inventory was still being sold manually in most cases, but the leftovers were sold to the highest bidder in online media auctions at those times, no real targeting features that we take for granted in today’s world were offered. Features such as micro-bidding or even knowing which user saw your ad, how old is the user?  What is are his main interest? Those remained a mystery for advertisers, All this became a stepping Stone For Real-Time Bidding technology, which is the truest instance of programmatic ads.

Want to learn more about OpenRTB? Keep reading.

What is Real-Time Bidding (RTB)?

Real-time bidding means the selling or buying of online advertising impressions through real-time auctions that happen in the time it takes a web-page to load. Those auctions are often helped by ad exchanges or supply-side platforms.

To envision the process, keep this flow in mind 

  1. The user enters a website, then an ad request is sent to the ad exchange platform with all the information about the user and the website itself.
  2. This information is matched and checked with all available demand partners or advertisers and a real-time auction starts between all the relevant advertisers.

For example, did you ever notice that after you’ve visited a certain website, suddenly any visit you make to any other site start showing you dog food ads? That’s called remarketing and it is also based upon programmatic advertising technology which facilitates Real-Time Bidding. 

In the time that it takes to load the website, roughly 100ms, an auction takes place between that dog food brand advertiser and any other advertiser looking to show you ads as a user. If the dog food brand advertiser knows you have the intent to buy dog food, he might bid more than other programmatic advertisers.   

Whoever bids the most will win the impression and get to show you, the user, an ad. 

In the past, advertisers would seek relevant sites, in our case, for example, blogs about dogs or dog nutrition sites, it is likely that users who end up on these sites own a few relevant traits you’d like to capitalize on as brand advertisers. In these cases, advertisers would manually negotiate and upload their banner ads campaigns to these sites in order to get the relevant audience to their products and services.

 Real-time bidding allows a more granular media buy process, ads can be bought and sold on a per case basis, which means that out of all the users of a certain website, you can opt-in to display ads only to the users who visited your website instead of all the users as a whole. That allows advertisers to increase their bid, or to become more competitive when buying relevant users in a programmatic auction through openRTB.

Is Real-Time Bidding a form of Programmatic Advertising?

Yes, real-time bidding, or RTB, uses programmatic marketing technology, but not all the programmatic advertising technologies utilize RTB, although most of them do.

Programmatic ads is a straight-forward way to make ad media buy automatic, openRTB can be one way to get it done. Even though a lion-share of programmatic ads are done via Real-time bidding, there are other models available for progmamatic advertisers.

Direct Programmatic

–   Mostly reserved for top advertisers looking for a volume amount of premium ad impressions from certain sites.

–   Bidding is usually done on a fixed CPM rate.

–   Ad formats usually include rich media or full-page interstitial ads.

Private Exchange buying (PMP)

  A closed marketplace where you can join trading by being ‘invited’ by the network.

  A good way to take out the middle-man which in this case are ad networks.

  Deal terms are pre-negotiated which creates less of a real-time environment and

An auction usually takes place, but the terms of the deal are pre-negotiated, creating a more manual environment than regular RTB.

So what IS the difference between RTB and Programmatic?

Real-Time Bidding is just one niche of the programmatic advertising ecosystem. It’s a granular buying method where you buy in real-time the ad impressions you deem as valuable instead of buying non-relevant users.

But for the programmatic advertising ecosystem to work, it requires a few other components to be available.

On the advertiser’s side, we have what’s called DSPs, which are connected to DMP or data management platform.  Suppliers or publishers use what’s called a supply-side-platform that is effective in distributing the publisher’s inventory to the different ad exchanges.

What is an Ad Exchange?

An Ad Exchange is where publishers trade with advertisers and close on a price to monetize their ads. Consider it similar to the stock market, where instead of shares, digital ad display impressions are being auctioned off. Most ad exchanges utilize RTB to do their auctions in real-time, maximizing gain for their publishers.

ad exchange display

How an ad exchange works

The ad exchanges are located well in the heart of the programmatic ecosystem and are connected to both the demand-side-platforms and the supply-side platforms for the publisher’s side.

What is the difference between an ad network and an ad exchange?

An ad network is a platform that’s basically a collection of publisher’s websites, it offers inventory for advertisers coming solely from these sites. An ad exchange, on the other hand, is where advertisers can buy ad space from various advertising networks.

Ad exchange vs ad networks

One makes the other, an ad exchange, simply put, is a technological connection of several ad networks. Perhaps the exchange is best with a certain type of client verticals or type of ad format, but you can buy the same traffic by dealing directly with the ad networks. Usually, publishers use ad exchanges to ‘dump’ their unsold inventory hoping it will raise their bottom line slightly. Ad exchange became much more relevant in past years due to the rapid growth of the programmatic advertising space.

the difference between ad networks and ad exchanges

Top ad exchanges 2019

There are numerous ad exchanges for publishers and advertisers to connect to. These are the biggest ones:

EZmob

AppNexus

Smaato

Rubicon Project Exchange

Microsoft Ad Exchange

OpenX

What is a Demand-Side Platform (DSP)?

A demand-side platform is a basic code that enables demand-side partners or advertisers to trade or buy ad impressions in a programmatic advertising fashion.

How does a DSP work?

An advertiser registers with a demand-side platform, that is then connected to a programmatic ad exchange. The trading itself of inventory and ad sell and buy is done through the exchange.

The DSP Ecosystem

When a user arrives at a website that’s integrated with a programmatic ad exchange, a signal of the auction is sent to the exchange. In turn, the e