Programmatic advertising refers to online advertising where determining which ad to show to which consumer in which context is determined in real-timeReal-time analysis refers to analysis of data that is currently being collected. For example, a publishing media might use real-time data to see how many people are consuming content at any given time. "Real-time" is never really real-time – there's always a latency of at least some milliseconds, usually seconds or even minutes..
Example
The next time you browse products in an online store, don’t be surprised if you see ads for those products on other websites you visit. The store, in this case, is the advertiserAdvertisers have products, services, and brands that they want to promote through digital ads. They participate in auctions hoping to get their ads to consumers in relevant contexts around the web., as they want to remind you about products you viewed but did not buy.
The websites that show ads from other sites are known as publishersIn programmatic advertising, the publisher owns a website, app, or other digital property, and they are willing to sell ad placements to advertisers. When consumers visit the publisher's site, for example, they might see ads from other websites in these placements.. PublishersIn programmatic advertising, the publisher owns a website, app, or other digital property, and they are willing to sell ad placements to advertisers. When consumers visit the publisher's site, for example, they might see ads from other websites in these placements. get money for renting ad space to advertisersAdvertisers have products, services, and brands that they want to promote through digital ads. They participate in auctions hoping to get their ads to consumers in relevant contexts around the web..
To determine which ads are shown to visitors is the end result of a mechanism known as programmatic advertising. “Programmatic” means that the process of buying, placing, and optimizing the media inventory of ads is automated through a real-timeReal-time analysis refers to analysis of data that is currently being collected. For example, a publishing media might use real-time data to see how many people are consuming content at any given time. "Real-time" is never really real-time – there's always a latency of at least some milliseconds, usually seconds or even minutes. bidding (RTBReal-time bidding is a fully automated auction process for buying and selling digital ad impressions. Both advertisers and publishers use it to optimize ad placements by targeting specific users in real-time.) system.
When the visitor visits the web page, information about the page and the user is sent to an ad exchangeVirtual marketplace where advertisers and publishers connect to buy and sell ad placements. Most often the transactions are done via real-time bidding auctions.. This exchange then auctions the advertising opportunity to the advertiserAdvertisers have products, services, and brands that they want to promote through digital ads. They participate in auctions hoping to get their ads to consumers in relevant contexts around the web. willing to pay the highest price – it’s thus somewhat similar to how the bid auction mechanism of search advertising works.
The winning ad is then almost instantly displayed to the user.
Programmatic advertising frequently relies on cross-site audiences, meaning that the more the ad exchangeVirtual marketplace where advertisers and publishers connect to buy and sell ad placements. Most often the transactions are done via real-time bidding auctions. knows about the visitor’s browsing history, the better they can target them with ads.
This reliance on cross-site trackingTracking that collects data from users as they visit different, unrelated sites on the web. Usually requires third-party cookies to work. is one of the reasons programmatic advertising has been in flux over the last years, as web browsers have been removing cross-site trackingTracking that collects data from users as they visit different, unrelated sites on the web. Usually requires third-party cookies to work. capabilities to help preserve user privacy and hide their browsing history from the ad networks.
Types of display ads
The days of just boring, rectangular banner ads are long since over.
The web is a multimedia playground, so it makes sense that the advertising industry has adapted to different ways of populating content with a diverse media inventory.
Online advertising can be delivered in many different formats, and here are some of the most popular ones.
Banner ads are horizontal or vertical rectangles that contain graphics and text. They are the prototypical display ad, and you can still find them on websites, usually populating the top, bottom, or sides of a web page.
Interstitial ads are more invasive. They are usually full-page ads, or at least they take up the majority of the visible area of the page, often blurring the background to make it clear the ad wants your attention. They usually have a timer or a close button that clears them and lets you get back to the content below the ad. They are more common in apps, but sometimes they spoil your web browsing experience, too.
Rich media ads can be delivered in banner or interstitial format, and they often include animations, video, audio, or other elements that engage the visitor. They are more captivating but also more distracting than a plain, static banner ad.
Video ads are short video clips that autoplay or start with user interaction. A common method of delivering a video ad is as a pre-roll video that plays before you can watch the actual video you wanted to see.
Because display ads are shown on publisherIn programmatic advertising, the publisher owns a website, app, or other digital property, and they are willing to sell ad placements to advertisers. When consumers visit the publisher's site, for example, they might see ads from other websites in these placements. sites, it’s possible that the reaction to the ad can generate negative sentiment towards the publisherIn programmatic advertising, the publisher owns a website, app, or other digital property, and they are willing to sell ad placements to advertisers. When consumers visit the publisher's site, for example, they might see ads from other websites in these placements. site itself.
Example
If you are advertising cheap flights, it would be awkward if that ad was shown next to a news article about the negative climate impact of air travel. When a publisherIn programmatic advertising, the publisher owns a website, app, or other digital property, and they are willing to sell ad placements to advertisers. When consumers visit the publisher's site, for example, they might see ads from other websites in these placements. chooses to work with an ad exchangeVirtual marketplace where advertisers and publishers connect to buy and sell ad placements. Most often the transactions are done via real-time bidding auctions., the risk of negative association is always there.
Note that there are ways to mitigate this. As an advertiserAdvertisers have products, services, and brands that they want to promote through digital ads. They participate in auctions hoping to get their ads to consumers in relevant contexts around the web., you have tools available to establish contextual parameters for your campaigns. For example, you can use these tools to exclude placements, contexts, and topics that are negative to your brand.
Similarly, you can also work with publishersIn programmatic advertising, the publisher owns a website, app, or other digital property, and they are willing to sell ad placements to advertisers. When consumers visit the publisher's site, for example, they might see ads from other websites in these placements. that have a track record of brand safety protection. These publishersIn programmatic advertising, the publisher owns a website, app, or other digital property, and they are willing to sell ad placements to advertisers. When consumers visit the publisher's site, for example, they might see ads from other websites in these placements. have the means to prevent ad placement on pages with sensitive content, such as a news report on a tragedy.
Don’t miss this fact!
Sometimes lack of adequate contextual information can lead to publisherIn programmatic advertising, the publisher owns a website, app, or other digital property, and they are willing to sell ad placements to advertisers. When consumers visit the publisher's site, for example, they might see ads from other websites in these placements. sites showing ads in unfavorable placements. This can lead to negative brand sentiment, as those who saw the ad might now associate the advertised brand with the unfortunate context its ads showed up in. It is important to proactively protect your brand by using tools to avoid negative placements and by working with publishersIn programmatic advertising, the publisher owns a website, app, or other digital property, and they are willing to sell ad placements to advertisers. When consumers visit the publisher's site, for example, they might see ads from other websites in these placements. that take brand safety seriously.
Programmatic advertising
Programmatic advertising, in general, refers to the automated process of displaying online ads on publisherIn programmatic advertising, the publisher owns a website, app, or other digital property, and they are willing to sell ad placements to advertisers. When consumers visit the publisher's site, for example, they might see ads from other websites in these placements. sites.
AdvertisersAdvertisers have products, services, and brands that they want to promote through digital ads. They participate in auctions hoping to get their ads to consumers in relevant contexts around the web. buy impressionsWhen something is viewed, it generates an impression. Programmatic advertising is measured and sold in chunks of impressions, i.e. potential views of any given ad. rather than clicks, and the cost of displaying an ad is usually calculated by views (or thousands of views). However, even though the advertiserAdvertisers have products, services, and brands that they want to promote through digital ads. They participate in auctions hoping to get their ads to consumers in relevant contexts around the web. is buying impressionsWhen something is viewed, it generates an impression. Programmatic advertising is measured and sold in chunks of impressions, i.e. potential views of any given ad., optimization is still done with cost-per-click, cost-per-acquisition, and cost-per-view metrics. Budgets and limits are set similar to how you’d do it with search ads.
For each impressionWhen something is viewed, it generates an impression. Programmatic advertising is measured and sold in chunks of impressions, i.e. potential views of any given ad. of an ad, the ad exchangeVirtual marketplace where advertisers and publishers connect to buy and sell ad placements. Most often the transactions are done via real-time bidding auctions. needs to make a lightning-fast decision about which ad to display in near-real-time based on things like the user’s browsing behavior, which site they’re on, what time of day it is, what the user’s device is, and so on.
The number of data points about the user and the visit correlates with the accuracy of the targeting mechanism for these ads. The more targeted the ads are, the more likely they are to be relevant to the user and thus lead to an eventual conversion.
Deep Dive
Real-time bidding
Real-timeReal-time analysis refers to analysis of data that is currently being collected. For example, a publishing media might use real-time data to see how many people are consuming content at any given time. "Real-time" is never really real-time – there's always a latency of at least some milliseconds, usually seconds or even minutes. decision-making is known as real-timeReal-time analysis refers to analysis of data that is currently being collected. For example, a publishing media might use real-time data to see how many people are consuming content at any given time. "Real-time" is never really real-time – there's always a latency of at least some milliseconds, usually seconds or even minutes. bidding (RTBReal-time bidding is a fully automated auction process for buying and selling digital ad impressions. Both advertisers and publishers use it to optimize ad placements by targeting specific users in real-time.). The highest bidder gets their ad displayed to the user.
Here’s an overview of the process:
- The user visits the web page that has spaces allocated for ads.
- An ad opportunity is identified when the page loads. Information about the visitor and the context of the site they’re on is collected and sent to the ad exchangeVirtual marketplace where advertisers and publishers connect to buy and sell ad placements. Most often the transactions are done via real-time bidding auctions..
- An auction begins as the ad exchangeVirtual marketplace where advertisers and publishers connect to buy and sell ad placements. Most often the transactions are done via real-time bidding auctions. packages the information they received and sends it to potential advertisersAdvertisers have products, services, and brands that they want to promote through digital ads. They participate in auctions hoping to get their ads to consumers in relevant contexts around the web.. The exchange informs advertisersAdvertisers have products, services, and brands that they want to promote through digital ads. They participate in auctions hoping to get their ads to consumers in relevant contexts around the web. that there’s an ad impressionWhen something is viewed, it generates an impression. Programmatic advertising is measured and sold in chunks of impressions, i.e. potential views of any given ad. available and initiates the auction.
- AdvertisersAdvertisers have products, services, and brands that they want to promote through digital ads. They participate in auctions hoping to get their ads to consumers in relevant contexts around the web. evaluate the data from the ad exchangeVirtual marketplace where advertisers and publishers connect to buy and sell ad placements. Most often the transactions are done via real-time bidding auctions. to decide whether to bid on the impressionWhen something is viewed, it generates an impression. Programmatic advertising is measured and sold in chunks of impressions, i.e. potential views of any given ad. opportunity. If they find the opportunity lucrative, they’ll decide next how much to bid on it. They need to consider the value of the impressionWhen something is viewed, it generates an impression. Programmatic advertising is measured and sold in chunks of impressions, i.e. potential views of any given ad. vs. the potential gains from displaying their ad.
- Bidding begins when advertisersAdvertisers have products, services, and brands that they want to promote through digital ads. They participate in auctions hoping to get their ads to consumers in relevant contexts around the web. who are interested place their bids. The bid represents the maximum price they’re willing to pay for the impressionWhen something is viewed, it generates an impression. Programmatic advertising is measured and sold in chunks of impressions, i.e. potential views of any given ad..
- The winner is determined by evaluating the highest bid at the end of the auction. The bidder wins the right to display their ad.
- The ad is delivered instantaneously onto the web page in the ad space reserved for the impressionWhen something is viewed, it generates an impression. Programmatic advertising is measured and sold in chunks of impressions, i.e. potential views of any given ad..
All of the above, from the visitor’s viewpoint, happens in milliseconds and is completely automated.
Ready for a quick break?
It’s time to take a short, rejuvenating break (SRB), drink a glass of water (GOW), and then review what you’ve learned about RTBReal-time bidding is a fully automated auction process for buying and selling digital ad impressions. Both advertisers and publishers use it to optimize ad placements by targeting specific users in real-time., DMPsAdvertisers use DMPs to upload additional information about their consumers and potential target audiences. This information can be used to add further granularity to the cohorts that should be targeted with the advertiser's ads., DSPsAdvertisers can use DSPs to negotiate with different auctions and ad exchanges automatically. The advertiser would create their ad campaign in the DSP and then have the DSP determine which auctions to participate in. to maximize your ROI from this Handbook.
Inventory control with DSPs and SSPs
AdvertisersAdvertisers have products, services, and brands that they want to promote through digital ads. They participate in auctions hoping to get their ads to consumers in relevant contexts around the web. can control their ad inventory and the ad exchangesVirtual marketplace where advertisers and publishers connect to buy and sell ad placements. Most often the transactions are done via real-time bidding auctions. they participate in using specialized demand-side platformsAdvertisers can use DSPs to negotiate with different auctions and ad exchanges automatically. The advertiser would create their ad campaign in the DSP and then have the DSP determine which auctions to participate in. (DSPsAdvertisers can use DSPs to negotiate with different auctions and ad exchanges automatically. The advertiser would create their ad campaign in the DSP and then have the DSP determine which auctions to participate in.). A company that wants their ads to show up on relevant sites would create their ads and campaigns in a DSPAdvertisers can use DSPs to negotiate with different auctions and ad exchanges automatically. The advertiser would create their ad campaign in the DSP and then have the DSP determine which auctions to participate in., and the DSPAdvertisers can use DSPs to negotiate with different auctions and ad exchanges automatically. The advertiser would create their ad campaign in the DSP and then have the DSP determine which auctions to participate in. would then manage all the ad exchangesVirtual marketplace where advertisers and publishers connect to buy and sell ad placements. Most often the transactions are done via real-time bidding auctions. and auctions for the brand.
Both advertisersAdvertisers have products, services, and brands that they want to promote through digital ads. They participate in auctions hoping to get their ads to consumers in relevant contexts around the web. and publishersIn programmatic advertising, the publisher owns a website, app, or other digital property, and they are willing to sell ad placements to advertisers. When consumers visit the publisher's site, for example, they might see ads from other websites in these placements. can use data management platformsAdvertisers use DMPs to upload additional information about their consumers and potential target audiences. This information can be used to add further granularity to the cohorts that should be targeted with the advertiser's ads. (DMPsAdvertisers use DMPs to upload additional information about their consumers and potential target audiences. This information can be used to add further granularity to the cohorts that should be targeted with the advertiser's ads.) to create visitor segmentsWhen data is grouped by property, attribute, or value, it is segmented. When building audiences for ads, for example, you need to choose for which user segments to target the ads. for the ad exchangeVirtual marketplace where advertisers and publishers connect to buy and sell ad placements. Most often the transactions are done via real-time bidding auctions.. AdvertisersAdvertisers have products, services, and brands that they want to promote through digital ads. They participate in auctions hoping to get their ads to consumers in relevant contexts around the web., in particular, can use these segmentsWhen data is grouped by property, attribute, or value, it is segmented. When building audiences for ads, for example, you need to choose for which user segments to target the ads. for ensuring the ads are only shown to specific audience segmentsWhen data is grouped by property, attribute, or value, it is segmented. When building audiences for ads, for example, you need to choose for which user segments to target the ads. based on known interest categories, for example.
On the other side of the fence, publishersIn programmatic advertising, the publisher owns a website, app, or other digital property, and they are willing to sell ad placements to advertisers. When consumers visit the publisher's site, for example, they might see ads from other websites in these placements. use supply-side platformsPublishers can use SSPs to manage their ad placements and available ad spaces. By managing inventory in an SSP, the publisher can access different auctions, ad exchanges, and advertisers automatically. (SSPsPublishers can use SSPs to manage their ad placements and available ad spaces. By managing inventory in an SSP, the publisher can access different auctions, ad exchanges, and advertisers automatically.) to manage, optimize, and sell their ad spaces for potential advertisersAdvertisers have products, services, and brands that they want to promote through digital ads. They participate in auctions hoping to get their ads to consumers in relevant contexts around the web.. They can also make use of data purchased from specialized data brokersData brokers sell additional information about consumers to advertisers and publishers. They usually hold huge swaths of data about users' browsing history and interests, and this data is then traded to (ideally) improve the relevance of ads and ad placements across the board. to improve the quality of the exchange by increasing the number of variablesVariables are (usually small) pieces of code run in a TMS to fetch dynamic values for tags when they fire. A defining feature of variables is that they are re-evaluated whenever a tag fires. For example, if a variable fetches the exact time when a tag fired, it's important that it doesn't use the same, fixed value for all tags on the page. and values available when choosing the target audience and the placement context for any given ad.
An advertiserAdvertisers have products, services, and brands that they want to promote through digital ads. They participate in auctions hoping to get their ads to consumers in relevant contexts around the web. that wants to sell a pair of shoes would use a DSPAdvertisers can use DSPs to negotiate with different auctions and ad exchanges automatically. The advertiser would create their ad campaign in the DSP and then have the DSP determine which auctions to participate in. to create the campaign. They can upload additional data from their data management platformAdvertisers use DMPs to upload additional information about their consumers and potential target audiences. This information can be used to add further granularity to the cohorts that should be targeted with the advertiser's ads. to make sure that the ads are only shown to new customers and those who haven’t already bought a pair.
A publisherIn programmatic advertising, the publisher owns a website, app, or other digital property, and they are willing to sell ad placements to advertisers. When consumers visit the publisher's site, for example, they might see ads from other websites in these placements. would similarly use an SSPPublishers can use SSPs to manage their ad placements and available ad spaces. By managing inventory in an SSP, the publisher can access different auctions, ad exchanges, and advertisers automatically. to inform ad exchangesVirtual marketplace where advertisers and publishers connect to buy and sell ad placements. Most often the transactions are done via real-time bidding auctions. that they have some excellent ad placements available. The exchange then uses real-timeReal-time analysis refers to analysis of data that is currently being collected. For example, a publishing media might use real-time data to see how many people are consuming content at any given time. "Real-time" is never really real-time – there's always a latency of at least some milliseconds, usually seconds or even minutes. bidding (RTBReal-time bidding is a fully automated auction process for buying and selling digital ad impressions. Both advertisers and publishers use it to optimize ad placements by targeting specific users in real-time.) mechanisms to join the ad with a suitable placement.
Yes, ad tech loves its acronyms.
RTBReal-time bidding is a fully automated auction process for buying and selling digital ad impressions. Both advertisers and publishers use it to optimize ad placements by targeting specific users in real-time. is fascinating technology. In the space of milliseconds, an ad exchangeVirtual marketplace where advertisers and publishers connect to buy and sell ad placements. Most often the transactions are done via real-time bidding auctions. can browse through countless potential ads and placements to find a match that should yield the best results for the consumer.
The entire RTBReal-time bidding is a fully automated auction process for buying and selling digital ad impressions. Both advertisers and publishers use it to optimize ad placements by targeting specific users in real-time. process is based on automation. Both the advertiserAdvertisers have products, services, and brands that they want to promote through digital ads. They participate in auctions hoping to get their ads to consumers in relevant contexts around the web. and the publisherIn programmatic advertising, the publisher owns a website, app, or other digital property, and they are willing to sell ad placements to advertisers. When consumers visit the publisher's site, for example, they might see ads from other websites in these placements. sets appropriate budgets and limits for bidding, and the automation takes care of the rest.
As a technical marketer, you’ll run into many of these acronyms while working on marketing campaigns. While you don’t necessarily need to understand the internal mechanisms of RTBReal-time bidding is a fully automated auction process for buying and selling digital ad impressions. Both advertisers and publishers use it to optimize ad placements by targeting specific users in real-time., because that’s handled by ad networks, publishersIn programmatic advertising, the publisher owns a website, app, or other digital property, and they are willing to sell ad placements to advertisers. When consumers visit the publisher's site, for example, they might see ads from other websites in these placements., and ad exchangesVirtual marketplace where advertisers and publishers connect to buy and sell ad placements. Most often the transactions are done via real-time bidding auctions., having a grasp of the terminology and the nuts and bolts does help you prepare for one important aspect of digital advertising that we’ll discuss in the next Topic.
Key takeaway #1: Advertisers bid to get their ads on publisher sites
An advertiserAdvertisers have products, services, and brands that they want to promote through digital ads. They participate in auctions hoping to get their ads to consumers in relevant contexts around the web. is someone who has a product to sell. They create the ad copy, choose the keywords and target audiences, and then bid on ad opportunities to get their ad to display to the visitor. They key currency is “impressions”, so typically advertisersAdvertisers have products, services, and brands that they want to promote through digital ads. They participate in auctions hoping to get their ads to consumers in relevant contexts around the web. pay for views of the ads rather than clicks. PublishersIn programmatic advertising, the publisher owns a website, app, or other digital property, and they are willing to sell ad placements to advertisers. When consumers visit the publisher's site, for example, they might see ads from other websites in these placements. are sites and digital properties that have placements and spots available to show ads. They offer these placements to the ad auction, which then determines which ad is the best for that particular placement.
Key takeaway #2: Real-time bidding is the heart of programmatic advertising
Real-timeReal-time analysis refers to analysis of data that is currently being collected. For example, a publishing media might use real-time data to see how many people are consuming content at any given time. "Real-time" is never really real-time – there's always a latency of at least some milliseconds, usually seconds or even minutes. bidding is the automated system that associates publishers’ ad placement opportunities with the advertisers’ ads. The RTBReal-time bidding is a fully automated auction process for buying and selling digital ad impressions. Both advertisers and publishers use it to optimize ad placements by targeting specific users in real-time. process happens within milliseconds, during which the ad placement is bid on by willing advertisersAdvertisers have products, services, and brands that they want to promote through digital ads. They participate in auctions hoping to get their ads to consumers in relevant contexts around the web. with hopes of winning the bid and getting the ad to display to the user.
Key takeaway #3: Acronyms for inventory control
Demand-side platformsAdvertisers can use DSPs to negotiate with different auctions and ad exchanges automatically. The advertiser would create their ad campaign in the DSP and then have the DSP determine which auctions to participate in. (DSPAdvertisers can use DSPs to negotiate with different auctions and ad exchanges automatically. The advertiser would create their ad campaign in the DSP and then have the DSP determine which auctions to participate in.) operate on behalf of the advertiserAdvertisers have products, services, and brands that they want to promote through digital ads. They participate in auctions hoping to get their ads to consumers in relevant contexts around the web.. They manage the advertiser’s participation in ad exchangesVirtual marketplace where advertisers and publishers connect to buy and sell ad placements. Most often the transactions are done via real-time bidding auctions. and ad auctions, and the advertiserAdvertisers have products, services, and brands that they want to promote through digital ads. They participate in auctions hoping to get their ads to consumers in relevant contexts around the web. can also use a data management platformAdvertisers use DMPs to upload additional information about their consumers and potential target audiences. This information can be used to add further granularity to the cohorts that should be targeted with the advertiser's ads. (DMPAdvertisers use DMPs to upload additional information about their consumers and potential target audiences. This information can be used to add further granularity to the cohorts that should be targeted with the advertiser's ads.) to add additional information about target audiences for the ads. Supply-side platformsPublishers can use SSPs to manage their ad placements and available ad spaces. By managing inventory in an SSP, the publisher can access different auctions, ad exchanges, and advertisers automatically. (SSPPublishers can use SSPs to manage their ad placements and available ad spaces. By managing inventory in an SSP, the publisher can access different auctions, ad exchanges, and advertisers automatically.) help the publisherIn programmatic advertising, the publisher owns a website, app, or other digital property, and they are willing to sell ad placements to advertisers. When consumers visit the publisher's site, for example, they might see ads from other websites in these placements. manage ad placements and ad opportunities for ad auctions.