Programmatic is a system of ways to buy online advertising, which uses automated tools (robotic) and special algorithms to decide on a deal without involving people (buyers) in this process. Programmatic is based on behavioural data about visitors to the site and the advertiser. This method significantly improves the effectiveness of targeting and allows you to move from buying advertising space and impressions after the fact to buying the target audience.
How programmatic technologies work: basic principles
A site visitor visits a page and sees an ad. While this page is loading, the system analyzes site visitors, compares this information with the targeting of the client, and selects the desired ad format.
After that, the auction begins, where advertisers take part, whose target audience corresponds to a specific visitor to the site and who plans to show him the prepared advertisement.
During the auction process, the highest bid is selected, after which it is discounted down to the lowest bid needed to win. As a result, this leads to the fact that the cost of showing the ad was lower than the bid itself. As a result, the advertisement of the auction winner is loaded on the site and shown to the visitor. The entire process described above takes only a few milliseconds (100 to 200), and such work is fully automated.
Technically, only 2 parties are involved in the process:
- The seller is sell-side.
- Buyer (or advertiser) – buy-side.
The sell-side has a Supply/Sell Side platform (SSP), a system that sells ad units on publisher resources, Ad Networks (advertising networks) and Ad Exchanges (ad exchanges). On the buy-side side, there is the Demand Side Platform (DSP), a platform that allows you to buy ad space.
Knowing all of the above, the process can be described as follows:
- The visitor comes to the site from a search engine or follows a link on another resource.
- While the page is loading, Programmatic sends data to the ad exchange, where DSPs are bidding, and to ad networks.
- For analysis, the received data is transmitted to the Supply / Sell Side platform, which calculates the browser, key request, referral source, etc.
- The Supply/Sell Side platform then creates an auction, which the bidding trading program learns about.
- Having picked up the highest bid, the Supply/Sell Side platform makes 1 cent more for the second bid and displays ads at the new price.
- The site visitor sees the ad that won the auction.
