In simple terms, programmatic advertising is the term to define using automated technology for media buying, as opposed to traditional methods of digital advertising. Programmatic media buying utilizes data insights and algorithms to serve ads to the right user at the right time, and at the right price.
Programmatic media buying can be categorized into different types: RTB or Open auction, Private Marketplace (PMP), and Programmatic Direct.
Typically, the programmatic ecosystem involves three main components: a DSP, SSP and an Ad Exchanger. Usually, ad inventory is bought via a real-time auction. Using programmatic channels, advertisers can buy per impression, thereby targeting the right audience. Since the process is automated, programmatic media buying guarantees speed and efficiency that is not matched in the traditional media buying.
An Example of How Programmatic Advertising Works:
Advertiser Nepali Sun wants to sell more sunscreen lotion:
It hires a programmatic advertising platform that is able to identify online consumers by things like:
– demographics (male / female / 18 – 45),
– geography (hot areas),
– interests (swimming, rafting, beach, tan),
– behaviors (consume sun protection content on their lunch break),
– time of day (6-9 PM)
– weather (sunny)
– device (smartphones)
The platform then uses real-time data to identify the best online audience(s) for the campaign and buys digital ad inventory through an auction based on everything available across multiple devices, in places the audience cares about. Advertisements are personalized based on each consumers unique interests and behaviors. Intelligent connections are made, insights are generated, and performance is optimized.
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