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Understanding Programmatic Advertising, Its Trends, and The Ad Tech Leaders

For decades, advertising on the Internet has been rather disparate. Publishers chose to offer their own ad spots directly to advertisers or inserted ad real estate for ad marketplaces to bid and buy them. On Martech Zone, we utilize our ad real estate like this… utilizing Google Adsense to monetize the articles and pages with relevant ads as well as inserting direct links and display ads with affiliates and sponsors.

Advertisers used to manually manage their budgets, their bids, and research the appropriate publisher to engage and advertise. Publishers had to test and manage the marketplaces they wished to join. And, based on the size of their audience, they may or may not be approved for it. Systems advanced over the last decade, though. As bandwidth, computing power, and data efficiency vastly improved, the systems were better automated. Advertisers entered bid ranges and budgets, ad exchanges managed the inventory and winning bid, and publishers set the parameters for their ad real estate.

What is Programmatic Advertising?

The term Programmatic media (also known as programmatic marketing or programmatic advertising) encompasses an array of technologies that automate the buying, placement, and optimization of media inventory, in turn replacing human-based methods. In this process, supply and demand partners utilise automated systems and business rules to place advertisements in electronically targeted media inventory. It has been suggested that programmatic media is a fast-growing phenomenon in the global media and advertising industry.


Programmatic Advertising Components

There are several parties involved in programmatic advertising:

  • Advertiser – The advertiser is the brand which wants to reach a specific target audience based on behavior, demographic, interest, or region.
  • Publisher – The publisher is the supplier of the ad real estate or destination pages available where the content can be interpreted and targeted ads can be dynamically inserted.
  • Supply-Side Platform – The SSP indexes the publishers’ pages, content, and ad regions that are available for bidding.
  • Demand-Side Platform – The DSP indexes the advertisers’ ads, target audience, bids, and budgets.
  • Ad Exchange – The ad exchange negotiates and marries the ads to the appropriate real estate to maximize the advertiser’s return on ad spend (ROAS).
  • Real-Time-Bidding RTB is the method and technology by which advertising inventory is acuctioned, bought and sold on a per-impression basis.

Additionally, these platforms are often integrated for larger advertisers:

  • Data Management Platform – A newer addition to the programmatic advertising space is the DMP, A platform that merges the advertiser’s first-party data on audiences (accounting, customer service, CRM, etc.) and/or third-party (behavioral, demographics, geographic) data so that you can target them more effectively.
  • Customer Data Platform – A CDP is a central, persistent, unified customer database that is accessible to other systems. Data is pulled from multiple sources, cleaned, and combined to create a single customer profile (also known as a 360-degree view). This data may be integrated with programmatic advertising systems to better segment and target customers based on their behavior.

Programmatic advertising has come to age by incorporating machine learning and artificial intelligence (AI) to normalize and evaluate both the structured data associated with the target and the unstructured data associated with the publisher’s real estate to identify the optimal advertiser at the best possible bid without manual intervention and at real-time speeds.

What Are The Advantages of Programmatic Advertising?

Aside from the reduction in manpower necessary to negotiate and place ads, programmatic advertising is also beneficial because:

  • Evaluates, analyzes, tests, and produces targeting based on all data.
  • Reduced testing and advertising waste.
  • Improved return on ad spend.
  • Ability to instantly scale campaigns based on reach or budget.
  • Improved targeting and optimization.
  • Publishers can instantly monetize their content and achieve higher monetization rates on current content.

Programmatic Advertising Trends

There are several trends that are driving double-digit growth in the adoption of programmatic advertising:

  • Privacy – Increased ad-blocking and reduced third-party cookie data is driving innovation in capturing real-time behavior of users with the target audiences advertisers are looking for.
  • Television – On-demand and even traditional cable networks are opening up their ad spots to programmatic advertising.
  • Digital Out-Of-HomeDOOH are connected billboards, displays, and other screens that are located out-of-home but are becoming available to advertisers through demand-side platforms.
  • Audio Out-Of-HomeAOOH are connected audio networks that are located out-of-home but are becoming available to advertisers through demand-side platforms.
  • Audio Ads – Podcasting and music platforms are making their platforms available to programmatic advertisers with audio ads.
  • Dynamic Creative OptimizationDCO is technology where display ads are dynamically tested and created – including the imagery, messaging, etc. to better target the user that sees it and the system its published on.
  • Blockchain – While a young technology that’s computing intensive, blockchain hopes to improve tracking and reduce the fraud associated with digital advertising.

What are the Top Programmatic Platforms for Advertisers?

According to Gartner, the top programmatic platforms in Ad Tech are.

  • Adform FLOW – Located in Europe and focused on the European market, Adform offers both buy-side and sell-side solutions and has a large number of direct integrations with publishers.
  • Adobe Advertising Cloud – broadly focused on combining DSP and DMP functionality with search and other components of the martech stack, including customer data platform (CDP), web analytics and unified reporting. 
  • Amazon Advertising – focused on providing a unified source for bidding on exclusive Amazon-owned-and-operated inventory as well as third-party inventory via open exchange and direct publisher relationships. 
  • Amobee – broadly focused on converged advertising across TV, digital and social channels, providing consolidated access to linear and streaming TV, inventory and real-time programmatic bidding markets.
  • Basis Technologies (formerly Centro) – the DSP product is broadly focused on media planning and operational execution across channels and deal types.
  • Criteo – Criteo Advertising continues to focus on performance marketing and retargeting, while deepening its full-funnel solutions for marketers and commerce media through integrations on the buy and sell side. 
  • Google Display & Video 360 (DV360) – this product is broadly focused on digital channels and provides exclusive programmatic access to certain Google-owned-and-operated properties (e.g., YouTube). DV360 is part of Google Marketing Platform.
  • MediaMath – products are broadly focused on programmatic media across channels and formats.
  • Mediaocean – growth-by-acquisition product portfolio spans media planning, media management and aspects of media measurement. 
  • The Trade Desk – runs an omnichannel, programmatic-only DSP.
  • Xandr – products are broadly focused on providing best-in-class platforms for programmatic media and audience-based TV. 
  • Yahoo! Ad Tech – provide access to open web exchanges and the company’s highly trafficked owned media assets across Yahoo!, Verizon Media, and AOL.

Epom, a leading DSP, has created this insightful infographic, The Anatomy of Programmatic Advertising:

programmatic advertising infographic diagram

Douglas Karr

Douglas Karr is the founder of the Martech Zone and CEO of DK New Media. Douglas has helped dozens of successful MarTech startups, has assisted in the due diligence of over $5 bil in Martech acquisitions and investments, and continues to assist companies in implementing and automating their sales and marketing strategies. Douglas is an internationally recognized digital transformation and MarTech expert and speaker. Douglas is also a published author of a Dummie's guide and a business leadership book.

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