In today’s digital world, programmatic advertising has become a key tool for effective interaction between brands and audiences. This method of automated advertising space purchase allows businesses to optimize budgets, set up precise targeting, and achieve high conversion. There are several types of programmatic advertising, each of which opens up new opportunities for marketers. In this article, we will analyze what programmatic advertising is, how it works, and its types. You can learn more about the specifics of programmatic advertising at https://smartyads.com/blog/improving-ctr.

What is Programmatic Advertising?

Programmatic advertising is an algorithmic online advertising that is shown automatically to certain users on various websites. The advertising system selects a suitable advertising banner for each specific Internet user according to pre-set parameters. Thus, it helps to optimize advertising campaigns online by adjusting a large number of parameters.

Thus, the advertiser can select the target audience that he needs to distribute information about the promoted and sold product, service, or website. When ordering programmatic advertising, such parameters as gender, education, age, location, interests, preferences, hobbies, and marital status can be adjusted.

How Does Programmatic Advertising Work?

The technology of programmatic media advertising is aimed at automating the process and increasing the overall relevant qualities of online advertising. To launch it, two parties are required: buyers, which are DSP platforms (Demand Side Platform), and sellers registered on SSP platforms (Sell Side Platform).

The interests of buyers are represented by DSP advertising systems, thanks to which it is possible to place customized programmatic advertising. Sellers are various platforms on the Internet. Information about future viewers of advertising is collected by DMP or data management platform. They segment different network users (for example, dog lovers, women, perfume lovers, artists, etc.) in order to show them suitable advertising.

When sellers and buyers are determined, bidding begins. For example, an RTB auction.

To participate in the bidding, the one who wants to order programmatic advertising (advertiser) must:

•       select the sites he likes and are suitable;
•       create advertising messages (creatives);
•       set up targeting (adjust the settings of future advertising), setting cross-frequency;
•       calculate a forecast;
•       track the ad impression.

Correctly performed steps for setting up, purchasing, and showing advertising make it relevant, and therefore interesting and necessary for a specific viewer (an Internet user who sees an advertising clip or banner). To show the desired advertising after the user enters the WEB page, an automatic auction is held among the ads available for display.

The resource opened by the user in the browser transfers the collected information about him to the advertiser platform. The received information is analyzed, which includes the subject of the site, and behavioral and personal data of the user. After this, the advertisement that can be shown to this person is automatically selected. The advertiser whose rate (payment) is higher receives the right to display programmatic advertising. In this case, only 100 milliseconds or 0.1 seconds pass from the bidding to the display.

Programmatic eliminates any negotiations between the advertising customer and the owner of the site provided for its placement. Learn more about how programmatic advertising works at https://smartyads.com/blog/improving-ctr.

Programmatic Advertising Methods

Let’s consider the most common type of programmatic advertising – RTB (Real Time Bidding).

It can have one of three subtypes:

•       Fixed (there is no auction, and the price is set at a certain level);
•       Preferred Deals (a specific advertising space is used at a fixed price);
•       Private Marketplace (functions as an open auction, where only the highest bids win).

RTB directly refers to the last of the listed programmatic advertising methods, which is an online auction.

Advantages of RTB Programmatic Advertising

The following factors are among the positive aspects of using RTB programmatic advertising:

•       the presence of direct intermediary access to the advertising system;
•       saving time on negotiations with advertising agencies, which can be spent on creating engaging creatives to promote a product, service, or website;
•       the search for the desired programmatic advertising viewer is carried out according to numerous settings, including territorial location, income, previously visited pages, devices used to log in to the network, age, gender, and so on;
•       the assignment of advertising rates is carried out individually since targeting is adjusted to each of the visitors to the site on which programmatic advertising is shown;
•       payment is made directly for the impression;
•       the purchase of programmatic impressions can be made on different sites within the framework of one advertising campaign.

Risks of RTB Programmatic Advertising

Despite the convenience of the new concept of programmatic advertising, there are several risks associated with ordering this advertisement. First of all, this is the so-called click fraud, that is, the viewer clicking on the skip ad, covering the pop-up banner.

The second risk is the implementation of the display on an undesirable site, which can spoil the reputation of the advertiser. It is difficult to predict, because when setting up programmatic, you do not choose the resources on which it will run, but the audience for which the advertised product is intended. Despite the fact that DSP platforms try to track unreliable sites, adding them to the ban list, the probability of getting to a “bad” resource still remains high, because such portals are constantly changing their location and their number is only increasing. The last significant risk is the possibility of discrepancies in the advertiser’s and DSP platform’s statistics. To avoid most of the listed problems, you can prepare for the purchase of ad impressions in advance, having found out all the target information. In addition, it is recommended to first launch a test campaign and check the statistics more often. For cooperation, it is better to choose only well-known, so-called white programmatic platforms.

Conclusion

Programmatic advertising continues to evolve, offering companies new ways to attract audiences and increase user engagement. Different types of programmatic advertising allow brands to find the most suitable solutions depending on the goals of the campaign and the characteristics of the target audience. However, to achieve maximum efficiency, it is important to pay attention to such parameters as personalization, creativity, and data analysis. If you are looking for a reliable programmatic advertising service provider, we recommend paying attention to SmartyAds. Learn more about the features of programmatic advertising in the company’s blog https://smartyads.com/blog/improving-ctr.