Programmatic advertising is the process of buying and selling online ads via machine automation. Publishers and advertisers establish initial parameters — what ad spaces they have for sale, what kind of sites they want to display ads on — and then they let software technology do the work of sorting it all out.
Ad buyers compete head-to-head, via this technology, in a near-instantaneous auction that occurs on every pageview. This allows publishers to earn more money than ever by offering optimized ad placements on a high-quality site.
Programmatic advertising has evolved over time
In the early days of the internet, advertisers had to work directly with a website owner to negotiate a deal to put an ad on their website. These advertisers sought out sites with content that matched their product or service, so they could reach consumers who might have an interest in what they had to offer.
Over time, the system became more efficient — ad networks were created to represent a portfolio of websites with similar scope and content to handle ad sales in bulk.
Now, with the latest technology at our fingertips, digital advertising is more efficient than ever. Advertisers use computer learning and automated systems to customize their preferences for where to display their ads. Through header bidding, publishers can offer ad spaces to many advertisers at once and accept the highest offer.
Cookies and other user identifier technologies can provide information about the readers visiting a site — so advertisers can gear their ads toward the readers themselves, reaching their target audience rather than targeting a site based solely on its content. A reader who has recently visited an advertiser’s website, or a competing brand’s website, would be extra valuable to that advertiser. They can target them and show them an ad, even if it doesn’t directly relate to the content they are reading.
How programmatic advertising works
The programmatic advertising ecosystem is complex, with a lot of information being passed back and forth along the digital lines of communication.
To go from advertiser to viewer, an ad makes several stops along the way. This chart shows a simplified version of how it all works:
DSPs, SSPs, and ad exchanges
Advertisers (or ad agencies that represent multiple advertisers) buy advertising spots through systems called demand-side platforms (DSPs). Google AdWords is one example of a DSP.
Publishers work with supply-side platforms (SSPs), either directly or through an ad management company (like AdThrive!). SSPs are where publishers offer the ad spaces they have available, optimize ad placements, and more.
DSPs and SSPs meet up in the middle, often via an ad exchange, to bring advertisers and publishers together to handle supply and demand.
Benefits of programmatic advertising
When programmatic advertising was developed, it was mainly a last-ditch effort to fill leftover ad impressions that hadn’t been sold via a direct deal or the publisher’s main ad network. But programmatic proved to be incredibly valuable to everyone involved: advertisers, publishers, and consumers.
- Advertisers can use programmatic buying to target their most desirable customers and get more transparency about how their ads are performing.
- Publishers benefit because advertisers are willing to spend more money to reach these sought-after customers.
- And consumers are pleased because the ads they are shown are more customized, interesting, and useful to them.
At AdThrive, we pair the programmatic bidding system with our highly-engaged sales team who negotiate premium direct advertising campaigns. This powerful combination is how we provide the highest revenue for the best content creators on the web.
A high-quality, popular website is valuable digital real estate for online advertising, as lots of virtual traffic means lots of potential customers. If you’re interested in learning more about running ads on your site and working with an ad management firm like AdThrive, we’d love to chat!