Today, for many digital marketers programmatic advertising stands as real mystery, which is pretty comprehensible.

Programmatic ads can be a difficult subject to understand by including mixing data science, automation and machine learning.     

Programmatic marketing is a field notoriously jargon-to the point we could almost think programmatic marketers are actually using a foreign language.

 But What is Programmatic Advertising?

Since the turn of the millennium, programmatic advertising in online marketing has gradually replaced traditional advertising processes. Advertising space is sold via a real-time bidding system (RTB) on automated online platforms. This system takes into account user data so that advertisers can define which ads they want to show, to which audience, at what time and where. This way they can reach their targets in an efficient way. Real-Time Bidding (RTB) uses big data and algorithms. These auctions could not be carried out in the old advertising procedures. RTB is the main distinguishing feature of programmatic advertising compared to other forms of display advertising

Programmatic advertising is a method based on artificial intelligence and machine learning. It allows to buy online advertising spaces on specialized platforms, in a logic of real time auctions, in order to optimize the programmatic strategies. This form of display advertising is also called real-time advertising (RTB).

How Programmatic Advertising Works

Today, we can determine four major components which constitutes the basic framework of a programmatic advertising ecosystem. A demand side platform (DSP), supply side platform (SSP), data management platform (DMP), and an ad exchange. Each part of the system collaborates to serve both publishers and advertisers and allow them to trade effectively.

AD EXCHANGES

The technological core of programmatic advertising is the AdExchanges, online marketplaces where bids are made in real time and collected through advertisers (Merchants) and operators (Publishers). Among the largest operators of AdExchanges are:

AppNexus, AOL's Marketplace, Microsoft Ad Exchange, Google Marketing Platform, OpenX

DEMAND SIDE PLATFORMS (DSP)

A DSP allows advertisers to buy digital ad space made available by media publishers automatically via ad exchanges. Buyers can target audiences based on data such as website category, physical location, age, online behaviour and more. The advertiser sets up their ad inventory and audience targeting preferences in the DSP. The platform then automatically seeks opportunities in the ad exchange or network that meet these parameters.

SUPPLY SIDE PLATFORMS (SSP)

While advertisers use DSPs to manage ad buying, website operators register on a Supply-Side Platform (SSP), which is the equivalent of the DSP for publishers this time. There, operators can sell their programmatic advertising space, indicating the minimum price at which they wish to sell their advertising space, and adding any other criteria with regard to the buyers and channels involved. Supply-Side platforms can be connected to several different AdExchanges at the same time to allow operators to sell their ad spaces at the highest possible pric

Data Management Platforms (DMP)

For programmatic to work, the system needs to match up appropriate ad inventory to ad space. This is where a data management platform (DMP) comes into play.  DMPs are an independent platform that acts as a centralised data warehouse for collecting, managing, and analysing data from a range of sources. It builds comprehensive user profiles used by programmatic algorithms to match the most relevant ad to the visitor on the publisher’s site. Advertisers and publishers both use DMPs to improve targeting, create reports, and build lookalike audiences.

Diffusion in business practices and future prospects 

Programmatic advertising is the new gold standard in display advertising. In 2018, companies in the U.S. spent more than 80 percent of their online advertising budget on programmatic advertising, and the method is also gaining traction in Europe and France. According to a German study by the Interactive Advertising Bureau (IAB), European companies spend an average of up to 65% of their advertising budget on programmatic advertising. In France, 63% of companies use this smart method of display advertising.

Anyone who wants to advertise online effectively can no longer ignore programmatic advertising. In a study conducted by Google a few years ago, this method was already referred to as the new operating system for online advertising. And the potential of this method is far from being exhausted: with the continuous development of artificial intelligence and machine learning, advertisers will in future have more and better possibilities to publish their ads at the best time, on the best channel and to the most appropriate user.

 Source: www.1827marketing.com, www.ionos.fr