The 2021 Guide to
PROGRAMMATIC
ADVERTISING
TABLE OF CONTENTS
What is Programmatic Advertising?..........................................2
How Does it Work?............................................................................2
DSPs and SSPs.....................................................................................3
Types of Programmatic Targeting................................................4
RTB vs. Programmatic Direct.........................................................5
The Advantages of Programmatic................................................5
Current State and Future Potential...............................................6
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WHAT IS PROGRAMMATIC ADVERTISING?
No matter how interesting, persuasive, or U.S. Programmatic Digital Display Ad Spending,
innovative an advertisement is, it won’t lead to 2019-2023:
sales if the right people never see it. This is why the billons, % change, and % of digital display ad spending
placement of advertisements has always been 88.1% 89.3% 90.2% 91.1%
86.4%
critical to their success. The online advertising
$133.04
space allows for a greater number of consumers $115.23
to be reached than ever before; however, the
need to reach the right consumers at the right $96.89
time remains. Traditionally, the amount of effort
$75.09
required to reach the right audience among the
$61.38
countless ad spaces available was time consuming
and labor intensive. Time was spent on researching,
requesting proposals and quotes, as well as a 27.4% 29.0%
22.3%
significant amount of human negotiation. 18.9% 15.5%
Relying on the use of advanced algorithms, 2019 2020 2021 2022 2023
programmatic advertising mediates the placement Programmatic digital display ad spending
and sale of digital ad space while taking into % change % of total digital display ad spending
(source: eMarketer)
account consumer data and online traffic all
within the time it takes a website to load. This Because the technology is so efficient it’s been
approach greatly increases exposure to the best growing in popularity every year. By 2023, 91.1%
possible audience, and leads to considerable return of all U.S. digital ad spend is expected to be
on investment for both publishers and advertisers. bought programmatically.
HOW DOES IT WORK?
The buying and selling of online ad
space occurs on exchanges. Exchanges allow
advertisers access to multiple ad networks at the
same time. Traditionally exchanges were used by
publishers to offer their unsold inventory to the
highest bidder. Multiple publishers would place
their “leftovers” up for auction in the hopes that it
would be purchased. Programmatic ad buying has
increased the utility of exchanges by facilitating
more precise targeting and more efficient
transactions through real-time auctions.
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HERE IS HOW THIS PROCESS PL AYS OUT:
• A visitor clicks on a website
• The publisher of that website puts the digital ad space they have available up for auction on an exchange through
an SSP (supplier side platform). An SSP connects the publisher’s inventory to one or more ad exchanges.
• Advertisers offer bids for that ad space through a DSP (demand side platform). A DSP connects buyers to
the inventory that is available on ad exchanges in a targeted manner.
• The bidding process takes place in a real-time bidding auction. Algorithms are used to place the bids as
well as to determine the highest bid.
• The ad space on the website is allocated to the highest bidder and the ad is placed on the website for
the visitor to view.
• Ideally, the website visitor clicks on the ad and that click leads to a transaction.
A deeper understanding of SSPs, DSPs, and how they use information to make decisions about ad buying
and selling is helpful when thinking about programmatic advertising and real time bidding.
Ad
Advertiser DSP SSP Publisher
Exchanges
HOW DOES AN SSP WORK? HOW DOES A DSP WORK?
Supply Side Platforms are for publishers to A Demand Side Platform is the other
place inventory on ad exchanges. Instead side of the automated advertising coin.
of individual salespeople reaching out to It allows advertisers to purchase the ad
advertisers to entice them to buy online space made available on ad exchanges. If
ad space, an SSP makes the entire process there are ads that are a good fit for what
fully automated. A seller will use an SSP a publisher is offering, the DSP will begin
to let ad exchanges know what inventory placing real time bids in competition with
they have available. That inventory then is other advertisers to win the spot. The DSP
auctioned off through a real time bidding uses algorithms to place bids based on
process. Algorithms monitor the bidding and data about the website visitor. The stronger
award the ad space to the highest bidder. the potential that the website visitor is a
Using data about the advertisers, the job of likely client, the higher the bid the DSP will
an SSP is to sell inventory for the highest place. The DSP determines strong potential
price. To do this, an SSP will use multiple ad customers by applying audience targeting
exchanges to increase access to the number preferences. Advertisers can set parameters
of potential buyers. It also allows publishers based on age, geographic location, website
to set parameters and controls on inventory users’ online habits, and language. DSPs
by dictating specific channels, buyers, or help advertisers buy highly effective ad
minimum price points. space for minimal cost.
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HOW DO SSPS AND DSPS MAKE THEIR DECISIONS?
As mentioned above, both SSPs and DSPs use data and algorithms to make automated buying and
selling decisions. Both platforms need to get information for making those decisions from somewhere.
This is the role of a DMP (data management platform). A DMP collects, stores, and sorts information
about users and manages incoming cookie data. DMPs are where DSPs get the information they use
to place bids on ad spaces that are most likely to reach their target audiences.
TYPES OF PROGRAMMATIC TARGETING
With the information DMPs provide, there are a variety of programmatic targeting strategies that
advertisers can implement:
Contextual Geotargeting
Contextual targeting involves Geotargeting is again based on
placing ads that match the user data. Ads are only placed
context of the website. An on websites for users in specific
example would be placing ads for locations. For instance, if a
clothing on a fashion website or business has brick and mortar
ads for yard care services on a gardening website. stores throughout the Midwest, they would not want
ads served to users in London.
Keyword
This is a more specific form Demographic Targeting
of contextual advertising. Demographic targeting is when
Advertisers set a list of key advertisers specify one or more
words related to their product “type” of user they would like
or service. Ads for the product to see their ads--ones who are
or service will be placed on websites that most likely to desire the product
contain those keywords. An example of this or service they offer. This can be based on gender,
would be a business that repairs cars placing age, or interests. It can also be based on online
an ad on websites containing a list of pertinent habits, like users who are perusing content over
car parts. Advertisers can also provide a list of their lunch break. If a business offers services like
words that disqualify a website. For instance, if food delivery, they might want ads placed more
they sell motorcycles they might want to target heavily during typical lunch and dinner times. Type
websites that contain the word “bike” but not if the of device can also be specified, like only targeting
website also includes terms like “pedals” or specific users on smartphones.
bicycle brand names.
All of this data is taken into account automatically
Retargeting and used to place bids for ad space before a
Retargeting is based on an website even loads.
individual’s browser ID or cookie.
So, if a user visits a business’
website about cleaning services,
that individual will be served ads
for that business even when they are on unrelated
sites, say for salon services.
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RTB VS. PROGRAMMATIC DIRECT
Programmatic ad buys are usually conducted through a real-time bidding auction (RTB). With RTB,
individual ad spaces on the open exchange can be bought and sold quickly and in a highly targeted
manner. But advertisers also use a different buying strategy, called programmatic direct, to buy large
numbers of ad spaces on specific sites. The purchase of these spaces are not in real time, so the
audience targeting is limited; however, it does guarantee advertisers a certain number of spots on
preferred publishers websites. This approach is usually saved for “premium” types of ads like full page or
takeover ads. Most buyers use a combination of these two methods of obtaining online ad space.
Programmatic Advertising has a number of advantages for advertisers, publishers, and consumers.
ADVANTAGES FOR ADVERTISERS
Quality Advertisements: When sales decisions are Higher Click to Conversion Rate: By accessing a higher
made automatically, businesses can free up time quality audience for products and services, ads placed
and personnel that were dedicated to sales and via a DSP are more likely not only to be clicked on,
reallocate those resources to improving ad content. but are also more likely to lead to conversions.
Humans are still key in developing compelling
Data Driven Decisions: The amount of information
advertisements. When more people are focused on
generated through DSPs allows advertisers to
the creative process, rather than ad placement, the
make data driven decisions, eliminating human
quality of ad materials will improve.
error and any guesswork involved in buying ad
Reach: DSPs can easily interact with multiple space. This efficiency allows advertisers to focus on
ad exchanges and therefore reach thousands successful campaign strategies and avoid bidding
of potential customers in seconds. This allows on underperforming inventory.
businesses to advertise on a much larger scale,
Relevancy: The audience targeting available through
without devoting additional time.
RTB makes ads more relevant to consumers than
Data Insights and Reporting in Real Time: ever before. Businesses can ensure that only web
Real time access to data about the placement users in their target audience view their ads.
of ads and the activity on websites increases
Cost Effective: Using salespeople to buy ad space
transparency, allowing advertisers to assess
is time intensive and therefore more expensive.
the efficacy of their ad placements and make
Computer systems can make better decisions in less
adjustments to campaigns easily.
time for less money than humans can.
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ADVANTAGES FOR PUBLISHERS ADVANTAGES FOR CONSUMERS
Publishers enjoy many of the same advantages The advantages to consumers can be summed up
that advertisers do using programmatic systems. in one word: relevancy. Consumers are more likely
Publishers can maximize profits by ensuring they to experience ads that pertain to their life, needs,
get the highest bids for their inventory. They also and interests. Not only will they see the right
save money by reducing human sales staff. In ads, they will see them at the right time, increasing
addition, the real time data reporting lets publishers the chances that they find products and services
understand the activity on and the audience of their that fit their immediate needs. They will not be
websites. Publishers can use data to ensure that subjected to ads that they are uninterested in or
the brands advertising on their sites align with the even potentially offended by.
image their organization would like to maintain.
CURRENT STATE AND FUTURE POTENTIAL
Programmatic advertising is highly effective and is here to stay, with U.S. spend expected to reach $97B
this year. It is doing so well that many companies are increasing their programmatic capabilities in-house
with self service platforms. In 2018 45% of brands did their own programmatic buying and that number is
expected to grow to 62% by 2022. Self-service platforms are also allowing smaller businesses to market in a
way that would have been out of reach before.
Not only is it growing now, it is likely to keep improving. Advances in AI will make automated decision
making more and more effective. In the future other spaces like out of home digital channels such as
billboards, bus stations, and malls, may be bought and sold automatically. This will allow advertisers to
streamline their campaigns across multiple medias and platforms for maximum reach.
In terms of its impact, Tim Webster, co-founder of The Exchange Lab, says it best. Writing on AdExchanger,
he states: “The effectiveness of programmatic advertising cannot be disputed. Programmatic allows us to
understand the media journey better than ever before and have one-to-one conversations with individuals.”
REFERENCES:
https://www.outbrain.com/blog/programmatic-advertising/
https://digitalmarketinginstitute.com/blog/the-beginners-guide-to-programmatic-advertising
https://www.match2one.com/blog/what-is-programmatic-advertising/
https://www.acuityads.com/blog/2017/12/15/what-is-programmatic-advertising/
https://www.emarketer.com/content/forecast-2021-us-programmatic-digital-display-ad-spending-15-billion-higher
Email info@cybba.com to learn more about Cybba’s digital marketing solutions.
www.cybba.com | (857) 284-7000 6
Email info@cybba.com to learn more about
Cybba’s digital marketing solutions.
www.cybba.com | info@cybba.com | (857) 284-7000
Cybba is a performance-driven technology company that enables
online businesses to exponentially increase revenue and lower the cost
of acquisition by optimizing every stage of the customer journey.
Email info@cybba.com to learn more about Cybba’s digital marketing solutions.
www.cybba.com | (857) 284-7000 7
