Everything You Need To Know About Programmatic Advertising

Programmatic advertising is one of the fastest-growing segments of the advertising industry and is widely used in digital advertising to achieve maximum efficiency in working with the target audience. If you are interested in a white-label solution for advertising exchange, then this article is for you. You will learn about the features of working with programmatic advertising.

Operating Principle Of RTB

Programmatic RTB is an automated advertising buying method that is gaining increasing popularity. It replaced conventional media advertising. It is enough to compare the organization of the process. Back in 2010, an advertiser had to find several advertising networks themselves and negotiate with them the price of impressions. At the same time, a limited number of ads were launched. Thanks to programmatic, the entire advertising process has become automated and transparent for advertisers.

RTB is a technology that provides an auction for the sale and purchase of advertising impressions. Thanks to it, the entire process takes a fraction of a second, which is spent by the user loading the page. It involves 3 parties: the RTB system itself (it is assigned the role of auction organizer), platforms that sell advertising impressions, and advertising placement systems. The latter buy impressions for their advertisers. RTB auction is the most common type of programmatic advertising, but it is not the only one. We’ll talk about others below.

Here’s how it works:

1. Sites allocate space for banners, they are purchased by advertisers, and the cost is calculated based on the number of impressions;
2. The advertiser cannot influence who sees his advertisement. It only evaluates the resource traffic;
3. It is possible to purchase advertising directly from the site or through intermediaries;
4. You can buy all the traffic from the banner or share it with other campaigns – then the ads will be shown in turn.

What banner the user sees depends not on the site, but on the user himself. Information about the visitor (age, gender, interests, etc.) enters the RTB system, which finds the most relevant advertising offer for him. Therefore, if a man opens the site page, he will not see advertisements for cosmetology services for women. And a user from Paris will not be shown a banner for a restaurant in Norway. Programmatic advertising targets potential customers and is therefore more effective for companies.

It is worth noting that the company that offers the highest bid wins the auction. As a result, everyone benefits. The user sees an interesting advertisement, the site sells places at the maximum price, and the advertiser works with the target audience. In order for an advertiser to participate in the auction, he needs to perform a number of actions on the list:

• choose a site;
• prepare creatives;
• set up targeting;
• set cross-frequency;
• make a forecast.

Once the process is started, the advertiser will need to constantly monitor ad impressions. The task of sellers (platforms providing advertising space) and buyers (advertising systems representing the interests of advertisers) is to draw the visitor’s attention to a relevant ad. As soon as a user enters the site, he is immediately shown the best offer that matches his request history, as well as social and demographic characteristics, and region of residence.

Types Of Programmatic Advertising

There are several types of programmatic advertising, each with its own characteristics. Let’s look at the main types.

1. Programmatic RTB. This technology is an open auction. The actual amount the advertiser pays is the other bidder’s bid + commission.
2. Programmatic Direct. Here, advertising space is also sold using programmatic tools, but the advertiser can communicate directly with the platform. Programmatic Direct is usually chosen by large brands for which their reputation comes first. The prerequisite for the growth in popularity of this tool was the scandal of 2017. At that time, brands refused to place their advertisements on YouTube because they were broadcast in extremist videos.

Participants In The Programmatic Advertising Market

The programmatic advertising market includes a variety of participants, each of whom has a different role to play in the process of placing and optimizing programmatic advertising campaigns. If you are already looking for a white-label solution for advertising exchange, you should ask about them. Among the main participants:

1. SSP (Sell Side Platform). These are publisher platforms that help large ad networks and individual sites sell banner space.
2. Ad Exchange. An advertising exchange where trading takes place. It helps sites find advertisers and sell banner space. The exchange gives brands the opportunity to display advertising to their target audience at affordable prices.
3. DSP (Demand Side Platform). A system for purchasing advertising space on sites with which advertisers cooperate. It accumulates information from the customer (placement prices, user characteristics, etc.) and finds placement options that meet his request.
4. Trading Desk. These are companies and advertising agencies that specialize in RTB technologies. They are contractors and can be used to purchase advertising.

Advantages Of Programmatic Technology

You’ve probably already assessed the capabilities and advantages of programmatic advertising, but let’s list them briefly:

1. Direct access to the advertising system, no intermediaries (advertising agencies).
2. Payment is only for real impressions. The user does not need to search for sites in advance and agree on a price for each of them.
3. Individual setting of bids for each visitor. Thus, targeting becomes more precise, and the user finds the target audience in the right place and at the right time.
4. Wide range of targeting options. Many criteria by which the user can target advertising and create analytics (reports in which the user can customize indicators to suit his goals).
5. The ability to purchase advertising space on different platforms within one campaign.
6. Automation of routine operations. While the algorithm performs standard media purchasing operations, the user can create catchy creatives and texts.

Wrapping It Up

The future of programmatic advertising will be characterized by greater automation, smart targeting, more personalized campaigns, and better integration of different marketing channels. If you want to immerse yourself in this interesting world and launch an advertising exchange based on a white-label solution, we recommend contacting SmartHub.