Programmatic 101: A Beginner’s Guide To Programmatic Advertising
In the first article in our series on programmatic advertising, we saw that while this buying strategy offers many advantages to advertisers, it can also be difficult to master. Between DSPs, DMPs, SSPs and all the other technological tools, it's certainly very easy to get lost.
That’s why we decided to offer you this short introductory course on the subject. On the agenda: different terms related to programmatic advertising and how different programmatic buying types work.
A Concise Glossary of Programmatic Advertising Terms
The world of programmatic advertising is characterised by a complex jargon including, as you may have noticed, many acronyms. Here are the essential terms you need to know:
Advertising Impression: This expression refers to the display of an advertisement to an individual. Thus, when we calculate the number of impressions of a campaign, we count the total number of times an ad was served, all users combined (the same individual may have seen your ad three times, and this will count as three impressions).
SSP (Supply-side Platform): This is the platform enabling publishers (websites) to put their advertising space up for sale and to share their offer of sites with advertisers’ DSPs (the brands) via an Ad Exchange. When a user lands on the publisher’s site, the SSP tells the DSPs that advertising space is available. It communicates the visitor’s information, such as geographical location, age or interests. This information helps the DSPs to determine the value of this impression and to make a bid accordingly.
DSP (Demand-side Platform): The DSP is the platform used by advertisers to buy advertising space. It is based on the advertiser’s audience targeting information to determine the price it is prepared to pay for each space offered by SSP. It sends the bid to the Ad Exchange, which will then communicate the name of the auction winner to the publisher’s SSP.
DMP (Data Management Platform): As its name suggests, it is a tool for advertisers to manage their user data. In particular, it is used to collect first-party and third-party data, define campaign audience segments and optimise the performance of current and future campaigns.
First-Party Data: This is that data collected directly by a brand. It is its proprietary data. It can be data recorded in a CRM, information entered by leads in a form, data collected on its site with cookies, etc.
Second-Party Data: This data comes from a partner in the framework of a collaboration, an exchange between companies, to enrich the first-party data available to each. In some cases, second-party data can be purchased, blurring the boundary between second-party and third-party data.
Third-Party Data: Third-party data comes from external suppliers. Brands can therefore purchase masses of relevant behavioural data about their target audience, such as anonymous data from airlines to enable other advertisers to reach travellers on specific destinations and dates.
Programmatic advertising integrates a host of platforms and technological tools, each with a defined role.
Ad Server: The ad server is a software program that administers and executes online advertising campaigns. For publishers (first-party server), it allows them to manage their inventory, display the available spaces on their site and decide which ads to serve in their spaces according to the targets. For advertisers (third-party server), the ad server is mainly used to analyse the performance of the campaigns and to monitor certain performance indicators, such as the number of impressions or the click rate.
Ad Exchange: Ad Exchanges can be compared to stock exchange floors, as they act as intermediaries between groups of SSPs and DSPs. They are known to liquidate publishers’ unsold advertising space, which would therefore be inferior quality space at a low price. However, the Ad Exchange has grown enormously in popularity in recent years, and today it is home to the majority of the inventory available for programmatic advertising.
RTB (Real Time Bidding): The term refers to the purchase of advertising space following a real-time auction process. According to the information provided by the SSP about the visitor present on the site, the SSP of each advertiser submits an offer to obtain the advertising space. Obviously, a DSP will be willing to pay much more for a user who exactly matches the criteria of the advertiser’s target audience.
This whole sequence of actions takes place in a fraction of a second.
The stages of the sale of advertising space according to the real-time auction model
Example of a Campaign for an Advertiser
To give you a better idea of how this all works, here’s what the programmatic buying process for an advertiser usually looks like:
Chloe is Marketing Director for a famous Canadian clothing brand. She wants to launch a programmatic advertising campaign in which she will target her audience with animated banners featuring her products.
Chloe contacts her agency, which will enter the characteristics of the brand’s target market into the DSP. In this case, the target is women between the ages of 25 and 55, who live in Canada and who are interested in fashion, the outdoors and travel.
Through the Ad Exchange, the agency’s DSP is constantly informed of users who visit publisher sites. When a user matches the characteristics of Chloe’s target audience, the DSP submits an offer to the Ad Exchange to buy the advertising space.
The Ad Exchange communicates to the SSP of the publisher who won the auction. If Chloe wins the auction, her advertisement will be viewed by the site visitor.
Meanwhile, the agency is able to measure the performance of the campaign in real time thanks to the ad server. It can choose to remove certain ads if they perform less well than the other versions.
Different Types of Programmatic Buying
Did you know that there are many different types of programmatic advertising buying?
First of all, there are public auctions. These are real-time auctions open to all advertisers, as we saw in the example above.
There are also private auctions. They work much like the public auction model, with the difference being that they involve only a small number of advertisers with exclusive access to the inventory of a coveted publisher. These are often highly sought-after, and therefore expensive, spaces (e.g., the cover of Forbes or the New York Times). This allows advertisers to reserve their advertisements before they are offered in public markets and to better control the media in which they wish to appear.
There are also preferred deals. This is an agreement between an advertiser and a publisher on the price of a site, but with no guarantee on volume. To reserve a fixed inventory at a fixed price, one must opt instead for guaranteed programmatic.
Where to Begin
As you can see, you must surround yourself with the right people to get started with programmatic advertising. You need to find trusted suppliers to provide you with all the software and tools you need to launch your campaigns, whether for your DMP, your ad server or your DSP.
Our advice: When it comes time to choose your suppliers, don’t base your choice on price alone. Opt instead for partners who are transparent and who offer good customer service.
If you want to keep things simple, the best solution is to work with a marketing agency, such as Braque, which already has its own ad server, DSP and network of suppliers. As such, we can take care of all stages of your campaign deployment, from start to finish.
Give us a call if you would like to get into programmatic advertising or to learn more about it.
Also available in our series on digital marketing: