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What is Programmatic Advertising?

In today’s modern digital era, capturing people’s attention can be difficult. The increasing number of applications, websites, and digital properties created and put out into the world grows by the day. With competition growing rapidly, marketers and advertisers have the daunting task of selecting appropriate channels that will be suitable to advertise their products and services. To help marketers and advertisers with this challenge, programmatic advertising was born.

So, what is programmatic advertising and how can marketers really use this to their advantage? Simply put, programmatic advertising is regarded as the process of automated buying and selling of online advertising space. However, it is much more than that, the idea of programmatic advertising can take the whole process of marketing to a new level.

Programmatic advertising uses algorithm-based software for handling the sales and placement of the digital advertisement with the exchange of platforms in a very short time. It also incorporates traffic data and online methods of targeting to serve impressions more accurately. There are two sides to programmatic advertising: Supply-Side Platform (SSP) and Demand-Side Platform (DSP). 

While programmatic advertising is not necessarily the future of advertising, because it has been around for more than 10 years, it is something that every marketer or small business should become familiar with. This is because programmatic advertising can help marketers and advertisers efficiently funnel messaging in the various desired channels and optimize their advertisements. In addition, understanding how basics work will help you run a more successful lean business.

How it Works

Programmatic advertising is the automation of buying and selling advertising spots online. Through auctioned ad exchanges, advertisers (your marketers and advertisers wanting to buy ad space), and your publishers (those who have an ad space to sell on their site) are matched. This process is advanced and uses algorithmic software to complete the transaction.

The process goes something like this when an individual clicks on a webpage that has advertising space, the publisher of the page has put an ad impression up for auction in an advertisement marketplace (on the SSP). With just one click, the marketplace then runs an auction for different advertisements to be displayed.

Advertisers compete in the auction by placing a bid for the impression (on the DSP) and the one with the highest bid wins a spot to display their ad. The auction is completed within milliseconds before a page requires to get loaded. Different algorithms are evaluated by using analytics and factors such as consumer behavior, social engagement, location, time visit, and location.

Types of Programmatic Advertising

Programmatic advertising exists in a wide range with different digital channels, along with the display, mobile video, and social. Over time, traditional offline channels are becoming digitized in different spheres like bus stations, billboards, or shopping malls.

Real-time bidding (RTB)

Real-time bidding (RTB) is a type of open auction in the marketing place and is the most used type of purchasing technique for programmatic media. The reason why many people gravitate towards RTB is that it is open to everyone for an open auction type of bidding.

The person with the highest bid “wins” and will be displayed. The entire process occurs in real-time and the advertisers can select the ad slots that are made available for them. The highest bidder may get the slot, but they do not have to pay for the amount they bid at. RTB has a unique method of auction which is known as a second price auction. This means that the person with the highest bid is charged with only one cent more than the person following the bid and so on.

RTB is easy to set up; however, there can be some lack of transparency. Marketers and advertisers know the general category of the publishers but they do not know the exact website of the publishers on which their ads may appear.

Private Marketplace (PMP)

The private marketplace (PMP) process is similar to RTB. The only difference is that publishers make the spot available based on an invite-only basis. In private or so-called closed auctions, publishers might usually set aside a premium base ad inventory that can be reserved only for selecting the advertisers.

Several DSPs are associated with their own PMPs that can be made accessible only to the users or consumers for the DSP. The pro to this method is that the PMP is that most websites doing this type have mass reach. 

Preferred Deals

In preferred deals, marketers and advertisers can purchase an ad space at a fixed price before the space is made available in the PMP. This is called spot buying. Typically, marketers and advertisers are provided with a sneak peek for the ad inventory of the publishers and may not be bound to purchase. 

Programmatic Advertising Platforms/Channels

The programmatic advertising platform is part of the conceptual network, where each element is responsible for the specific process of the programming cycle. The product of their collaboration covers advertising, analytics, and administrative objectives. 

Display Ads

Display ads are done in the header, sidebar, or footer areas. Typically, big players like Google or Microsoft facilitate the buying or selling of such ad slots.

This type of platform generates revenue through clicks and other impression types of data that are collected while the ad is displaying. Programmatic display ads include automated bidding on various display advertisement inventory in real-time. 

GoogleADx is one of the largest programmatic platforms for display ads. It hosts a price auction along with selling the space of display ads in real-time. There is a premium version of Google AdSense for huge publishers that can compare the AdSense used by the smaller publisher.

Video Ads  

Videos are increasingly becoming a preferred method of consumption for consumers. In fact, the digital video expenditure in the US has been predicted to be about 22.18 billion dollars by the end of 2021.

There are three main types of video ads:

  • Instream ads- These appear in the video players like the advertisements that are seen before any YouTube video.
  • Outstream ads- These are the pop-up videos that one can see in between any articles. These ads can also be placed along with the content of the video.
  • In-display ads- These ads might not be displayed in the video player but can be seen as recommendations for the users.
Social Ads

Social media platforms collect a huge amount of data about the consumers in order to enhance the target capabilities. Programmatic social advertisements use this data to align the ads with the ideal time, format, and frequency caps.

Social ads are not only developed for social media platforms. The developers automate the campaign to be identified with appropriate influencers by getting them on board along with automating the campaign management that can be dependent on the audience and performance of the ad. 

Audio Ads

Programmatic audio ads heavily rely on the real-time data of the audience to place the ads. This is then used to engage with the display or video apps that can help in optimizing the experience of the users. The apps that might be streaming can help in serving the companion ads that can often be used as disable ads as audio podcasts that are similar to the audio version of video ads. Google, SoundCloud, and Pandora are some of the main players in such programmatic advertising.

Native Ads

Native ads follow the form and align with the medium that they might be displayed on. What this means is that the ad looks seamlessly incorporated where it is displayed. Native ads are 53% more effective when compared to that of the display ads. Some major platforms that use native ads are Tumblr, Foursquare, and Facebook.

Digital Out of Home (DOOH)

Digital Out-Of-Home (DOOH) is described as a promotional strategy where advertising media are displayed seamlessly and digitally in public spaces outside of the home. This includes visual billboards and public exhibits, as well as monitors in institutions such as centers and healthcare organizations. 

Its impressive publicity is one of the key reasons why DOOH is such a successful marketing tool. Digital displays are also seen in high-traffic areas to ensure that many people see their contents. Furthermore, the user has no way of skipping, using an ad-blocker, or changing the contents of the frame, as opposed to a home or online advertisements.

All in All, There are Several Benefits of Programmatic Advertising

By the year 2021, digital advertisers are forecasted to invest nearly $80 billion for programmatic advertising. This is because it offers many benefits like endless data and faster reporting times.

Real-time measurement

Real-time reporting and data measuring are one of the most desired aspects in terms of marketing. Programmatic advertising makes it easier to keep track of metrics in real-time for both sides of the equation.

Increased transparency

Programmatic advertising offers a layer of transparency that marketing and advertising may not traditionally get. Marketers and advertisers can see the websites their advertisements actually reach. They are also able to find out what type of customer views their ad and what costs they are incurring in real-time. This then allows marketers and advertisers to make changes quickly and be more educated in their advertising approaches so they can capitalize on every impression.

Higher efficiency

Marketers and advertisers no longer have to wait until a campaign is over to gain insights to how their ad is doing. Since everything is in real-time, the ad campaign can be quickly tweaked in order to optimize the ad.

Greater targeting abilities

The enhanced capabilities targeting abilities have allowed marketers and advertisers to really hone in on their customers. In addition, being able to continually modify the ad targeting, it allows marketers and advertisers to do A/B testing or quickly pivot to reach their target audience.

Enhanced the reach of the audience

Nearly 4.66 billion people have used the internet actively in 2020. Therefore, being able to narrow down on a target market will still leave marketers with a large segment of people to reach. This specific segment will also then more likely click on the ad because the marketer is choosing people who fit their target audience, buyer persona and consumer profile.


Pragmatic advertising will help you take your business to the next level. In addition, if you are a physician looking to start your own business, check our my book, Entrepreneur Rx. In Entrepreneur Rx, I share time tested insights and knowledge for building a thriving startup while maintaining your practice. From identifying winning business ideas to raising necessary capital, I offer a comprehensive insider’s view into strategies that have helped me develop and nurture a number of successful businesses.