Programmatic Advertising – how does it work?
Programmatic Advertising (PA) or programmatic advertising comes from online marketing. It is a software-based method for automatically booking, customizing, and optimizing display ads. Unlike traditional display advertising, programmatic advertising focuses not on the advertising environment but on the individual user with their specific interests and needs.
Programmatic Advertising is an opportunity to tailor your advertising campaigns and messages in real time to the needs and communication channels of your consumers, addressing them individually – in their respective contexts. Thanks to Programmatic Advertising, you can target your online campaign much more effectively, making your advertising spend significantly more efficient.
Difference between Programmatic Advertising and Real-Time Bidding
Programmatic Advertising and Real-Time Bidding are often used as synonyms. However, this is not entirely correct: Real-Time Bidding (RTB) is a component of Programmatic Advertising, as Programmatic Advertising involves not only bidding for good ad placements but also integrating data-driven targeting into the ongoing campaign.
1st-, 2nd-, and 3rd-Party Data
Without appropriate information about advertising users, Programmatic Advertising is not controllable. The information about individual interests and needs can come from different data sources: 1st-, 2nd-, and 3rd-party data.
- 1st-Party Data These are data collected directly by a company (both offline and online).
- 2nd-Party Data These are data acquired from another provider. These are mainly non-personal data like purchase interest, gender, age, and information about interests.
- 3rd-Party Data These are specialized data sets or large amounts of specific data purchased or rented from data vendors.
Ad Exchange as a Platform for Programmatic Advertising
In Programmatic Advertising, both advertisers (publishers) and operators place supply and demand on an ad exchange (marketplace for advertising opportunities). From here, existing ad spaces and ad materials are matched and traded in real-time. Based on pre-established performance metrics, transactions are processed, allowing online users to automatically see the right ads at the right time.
On the ad exchange, there is a distinction between the Sell Side Platform (SSP) and the Demand Side Platform (DSP). On the Sell Side Platform, platform owners can offer their ad space for sale and set a minimum price. In return, the Demand Side Platform analyzes all the datasets, allowing bids to be placed. The highest bidder wins.
Process of Programmatic Advertising:
- A user enters a website.
- The ad exchange reports: “I need an ad material” and sends a bid price to various DSPs.
- On the DSP, anyone looking for online inventory that matches the user’s profile can place bids.
- The highest bidder wins.
- The ad material is displayed.
Your contact for Programmatic Advertising
If you have questions about the process or are interested in a Programmatic Advertising campaign, feel free to contact our online specialist Tanja Hensler (hensler@trebbau.com, Tel.: 0221/37646 – 330) for more information. She will provide you with a non-binding offer and answer your questions about the topic.