What Is Programmatic Advertising And How To Use It

Programmatic is an advertising format on third-party resources, where placement is done automatically through special advertising platforms where advertisers purchase advertising space from sellers’ websites.

You do not negotiate with the site owner, media, or blogger directly, but work through a service where a robot buys space for banners and videos on advertising platforms. If you are interested in the intricacies of programmatic advertising and are looking for a white-label programmatic solution, this article is for you.

What Is Programmatic Advertising?

The most clear example of how programmatic works is placing a campaign in Google AdWords. You write an ad, and the system places it where the target audience is. However, the term programmatic mainly refers not to contextual advertising services, but to new tools for the automated purchase of advertising space.

What is programmatic and how does this type of advertising differ from targeted and contextual advertising? It is important to note that advertising campaigns in Google Ads and targeted advertising on social networks are also programmatic because you automatically purchase advertising by specifying the necessary criteria.

But marketers, answering the question “programmatic advertising – what is it?”, say that programmatic has a deeper level of settings that allows you to create an accurate portrait of the target audience: socio-demographic characteristics, preferences and hobbies, gender, age, profession, income, marital status and presence of children. More precise targeting results in higher response.

So, programmatic advertising is a format for purchasing targeted advertising on a large number of sites. Everything is done in real-time and automatically.

What Programmatic Advertising Looks Like

The standard format is a banner, video, or native ad, consistent with the presentation and design of the site where the advertisement is placed. The technology is also relevant for mobile devices.

The Difference Between Programmatic And SMM

SMM is working with communities where content and communications come first, and the second place is the purchase of targeted advertising through advertising accounts on social networks. Programmatic is only the purchase of advertising. There is also a difference in the objectives of advertising campaigns. In SMM, the goals are engagement, subscriptions, reach, reposts, and not always direct sales. For programmatic advertising campaign goals are website traffic and conversions.

Advantages, Disadvantages, And Risks Of Programmatic Advertising

Programmatic advertising has become an important tool in digital marketing, allowing companies to more effectively reach their target audience and measure the results of their advertising efforts.

Benefits of programmatic advertising

  1. Direct access to the advertising network.
  2. Payment is only for real impressions.
  3. Many settings options for deep targeting.
  4. Very flexible betting system.
  5. A huge number of seller sites in the advertising network.
  6. The ability to purchase space on different platforms within one advertising campaign.

Disadvantages of programmatic advertising:

  1. You need to understand the technical nuances and quality of traffic.
  2. You need to have a ready-made portrait of the target audience. Not every business knows well who it can and wants to sell to.
  3. A good result is obtained only after repeated testing.
  4. Not all programmatic advertising services are available to small businesses or small agencies.

Programmatic Advertising Methods

Previously, advertisers collaborated with platforms directly by concluding an agreement. Nowadays, even integrations from bloggers and micro-influencers can be ordered through the service without direct contact. The convenience of programmatic advertising methods, which were originally built as an automated purchasing system, is obvious.

The most common method of working in the programmatic ecosystem is the RTB auction. It begins with the advertiser assigning bids for ad impressions to specific users. If your bid is the highest, then the seller’s site displays your ad. It is clear that detailed targeting is done for advertisements in the auction and the site selects the most relevant users.

How does the RTB auction work:

  1. The user opens a website that is located in an advertising network;
  2. The publisher site sends a request to the programmatic platform: “There is such a visitor, what ad should I show him?”;
  3. The platform selects the most relevant ad with the highest bid;
  4. The seller’s website shows an ad to the visitor.

Everything happens in a split second in real time. There are other options for working in the programmatic ecosystem:

  • fixed price – the display is paid at pre-approved rates;
  • priority transactions – the advertiser pays for the necessary positions outside the auction;
  • private bids are also an auction, but closed: you can only participate by invitation.

Programmatic Advertising Ecosystem

Sellers and buyers of programmatic advertising form a so-called ecosystem that regulates the interaction of platforms and services on both sides.

Here’s what the ecosystem participants are called and what they do:

  1. Ad Networks – advertising networks through which banners are displayed, and clicks and impressions are counted;
  2. Ad Exchange is an exchange where impressions are displayed and bids are accepted from advertisers;
  3. DSP (Demand-Side Platform) – a system for organizing auctions for advertisers;
  4. The SSP (Supply-Side Platform) platform trades with DSP, where site owners, also known as publishers, offer advertising space to brands from the DSP platform;
  5. The advertiser manages trading operations through the Trading Desk tool. This is an add-on over the DSP platform, in fact, an office where campaign settings are made.

If you are interested in working with programmatic advertising, we recommend paying attention to the white-label solution from SmartHub.

What Are The Risks When Working With Programmatic Advertising?

In the world of programmatic advertising, there is a problem with a lack of transparency regarding exactly where and how your ads are being placed. This can create difficulties in measuring the effectiveness and monitoring of campaigns.

Let’s look at the main risks:

  1. Clicking – protection from click fraud is provided in programmatic technology, but the budget can still be clicked.
  2. Bad sites – sometimes the system can place your advertising on sites that are undesirable from the point of view of brand reputation because the selected target audience visits them. To prevent this from happening, study the targeting settings in the selected service before starting your advertising campaign.
  3. The numbers do not match – it happens that the statistics of the site where your advertising hangs and the statistics of the DSP platform (the system through which you place advertising) differ. This may mean that the DSP pad is gray and giving you incorrect statistics. Work only with large and well-known sites.

Final Thoughts

Programmatic advertising systems provide huge coverage, elimination of negotiations with website owners, and tangible conversion. In the future, a significant increase in the share of programmatic advertising in the total flow is predicted. If you are looking for a white-label programmatic solution for development in the world of programmatic advertising, we recommend contacting SmartHub, which offers an effective product for launching and developing ad exchange.

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