What is Programmatic Advertising, Its Advantages and How It Works

Programmatic advertising consists of automating the purchase of advertising space and publishing ads in the digital environment. This type of advertising is also characterized by showing relevant ads to the audience considering their preferences, purchasing patterns and past visits. It works with a real-time bidding system, and the highest bidder wins, which is the one who will end up showing their ad.

According to the latest data, 38% of investment in display advertising was allocated to programmatic advertising. And in the case of video ads, it accounted for 39% of the total. This shows that this type of digital advertising is no longer just a trend but the reality of the environment in which we operate.

Suppose you want to include this type of advertising in your marketing strategy. In that case, we will tell you everything you need to know. How programmatic advertising works, what advantages it has and how to implement it are some things you will find in this article. Let’s get started!

Advantages of programmatic advertising

• It targets people, not advertising spaces. Unlike conventional display advertising, programmatic advertising allows us to target each user based on their profile and behaviour, making ads much more relevant to them.
• It allows you to go further in personalization. With programmatic advertising, we can create different versions of the same advertisement that respond to other user characteristics, achieving maximum personalization.
• Avoid human errors. Programmatic advertising systems can manage a large amount of advertiser and user data practically in real-time to make the best decision at all times, maximizing efficiency and reducing human errors.
• Simplify and automate systems. The programmatic advertising process brings together different actors, such as advertisers, ad servers, platforms and media. They all participate in the campaign in the same place, simplifying and automating execution and saving time and effort for everyone involved.
• Increase your reach. We can reach users worldwide through online programmatic advertising platforms since we operate in a globalized market with a broad supply and demand. In addition, today, we can offer these services on various media.
• Increase conversion rate. Greater personalization, intelligent algorithms, and the ability to make real-time changes combine to create highly effective advertising and improve results.

How does programmatic advertising work?

Programmatic advertising involves using software algorithms to purchase digital advertising.

Traditional online advertising systems involve much human intervention when requesting advertising space and negotiating prices. This system is done automatically, saving time and resources and achieving more targeted and efficient ad placement.

Programmatic digital advertising buying uses Big Data and Real Time Bidding. There are different actors involved in the process, who are located between media buyers and sellers of advertising space:

• Ad exchanges or marketplaces, where auctions are held.
• Demand-side platforms optimize prices using big data about users.
• Data partners who provide this data.
• Trading desks, which collaborate with the advertiser during auctions.
• Supply-side platforms maximize the advertising space available to media outlets.

Programmatic Advertising Platforms

Programmatic advertising platforms are where brands and advertising space owners come together. It is with these tools that buying and selling takes place.

However, we can find two types of platforms: DSPs (demand-side platforms) and SSPs (supply-side platforms).

DSPs are platforms designed for brands that want to advertise to manage and automate everything related to this type of advertising.

On the other hand, SSPs are platforms created to help website owners manage programmatic advertising and maximize their revenue.

In this section, we recommend both types.

Ad-Roll

This is a DSP platform, so if you are a brand that wants your ads to appear on particular pages, this would be an option to consider.

It is one of this type’s best-known and most widely used tools, specializing in social ads. In other words, it is a perfect platform for those brands that want to focus their programmatic advertising on social networks.

But without a doubt, if it stands out for anything, it is for its great segmentation possibilities and ease of use.

Display & Video365

It is Google’s DSP-type programmatic advertising platform. One thing that stands out is its scalability, one of the most popular tools. It also offers an exact and in-depth analysis of data.

Adobe Advertising Cloud

We continue with the DSP-type platforms, in this case, with the tool designed by Adobe. It is an omnichannel tool, offering television spaces, making it one of the most complete options.

Although it is not as intuitive as Google’s tool, it offers compelling security and anti-fraud measures that will help you prevent your ads from appearing on unwanted websites.

MediaMath

The last DSP tool we want to recommend is this one. It stands out above all in data integration and is known for being one of the first platforms of its kind on the market.

Like Adobe’s tool, MediaMath is one of the few platforms offering an omnichannel service.

Magnite

Don’t worry; we still remember SSP tools. In this case, we have opted for one of the best platforms worldwide, Magnite.

It enables the automation of agreements between media and brands. It is already trusted by large companies such as Spotify, Samsung, Warner Bros and Yahoo!.

Tips and Best Practices in Programmatic Advertising

This section will give recommendations to help you get the most out of programmatic advertising. If you apply them, your results with this type of advertising will skyrocket.

Include a simple and powerful CTA.

Remember that programmatic advertising appears to users when they view any content. They can see it while reading their favourite travel blog or news story. Therefore, we must grab their attention and clarify what we want them to do when they see the ad.

In addition to an attractive design, including a clear and concise call to action in the ad creatives is essential. This must tell the user precisely without beating around the bush what they will get by clicking on the ad.

This will increase your chances of success, as when the public needs clarification about what an ad is intended to do, they tend not to click on it.

Choose landing pages related to your niche

As we have said before, programmatic advertising appears to the user while browsing the Internet. To increase the chances of the public clicking on the ad, one of the best strategies is to choose advertising spaces on pages related to our sector.

This way, we will know that the person who sees them already has a minimum interest in that area. In short, they are more likely to be our target audience.

For example, if we sell sportswear, we may be interested in appearing in sports media or blogs about football, basketball, gymnastics or athletics.

You can choose this in the programmatic advertising platform you choose to run these ads.

Change whatever is necessary

As with any type of advertising, such as social ads, it is essential that you periodically analyze the results of the different ads in your programmatic campaigns.

Those that perform well can be left as is until you exhaust their effectiveness. However, those you find need to be fixed are better modified or replaced entirely. Remember that, especially at the beginning, everything will be a trial and error test until you find the right one.

In this sense, we recommend you conduct the so-called A/B tests to check which ad version works best and why.

It may even be the placement of your ad that is failing, so consider changing the page if it isn’t working.

And don’t forget also to consider changing ad formats, as some will work better for you than others.

Types of programmatic advertising

Although we have mentioned that programmatic advertising works through a bidding system, this is only the most common and well-known way of carrying out programmatic advertising. The world of programmatic advertising is complex and has many nuances. There are various ways of working from which the different types of programmatic advertising emerge.

Below, we want to explain each of them so you can see the great diversity of possibilities.

• Real-time bidding: This is the one we have focused on throughout the article. It is the most commonly used. They are based on open auctions in real-time in which advertisers bid, and the highest bid is the one that wins and appears in the advertising space.
• Private marketplaces: This works like real-time bidding, but the auction is not open. Advertising space owners offer their sites to a limited number of brands. This gives publishers greater control over the ads that appear on their sites. However, this means that prices are higher.
• Preferred markets: We could consider this type even more select and exquisite than the previous one. In this case, the owners offer their space to a group of determined brands at a fixed price before putting it on the private market or at an open auction.
• Direct programmatic advertising: In this case, the negotiation occurs directly between the advertising space’s owner and the brand.