What is Programmatic Advertising? How Does it Work?

Programmatic advertising is the use of automated technology to streamline the ad-buying process. This tactic is widely used by publishers and advertisers to sell and purchase digital advertising space across the web, mobile, apps, video and social at scale.

How does programmatic advertising work?

Programmatic advertising has several working parts — and a quick Google search can be enough to make anyone’s head swim. At its most basic level, programmatic advertising can be broken down into the following steps:

1. The consumer clicks on the publisher’s website. This triggers the supply-side platform to automatically put an ad impression up for auction on behalf of the publisher.
2. A demand-side platform determines if the impression is worth bidding for based on the criteria set by the advertiser. If it is, the DSP automatically bids for the impression on behalf of the advertiser.
3. An auction takes place, and the supply-side chooses the winning bidder to give the impression to.
4. The supply-side platform displays the ad on the website.

This data-driven process happens in milliseconds.

What are the benefits of using programmatic advertising?

From creating RFPs to conducting negotiations, selling and purchasing ad inventory can be a time-intensive process. Programmatic advertising resolves this by automating most of the ad-buying process. The result? Advertisers and publishers have the bandwidth to tend to other high-priority tasks.

Programmatic advertising is not only time-efficient, but also cost-efficient. Ad-buying platforms offer massive reach, connecting advertisers to an incredibly diverse audience. Advertisers can then target specific segments with pinpoint accuracy, thanks to the platforms’ advanced targeting capabilities. This means that ads can be served to the most relevant audiences, cutting down on wasted ad impressions.

Ad-buying platforms also offer real-time measurement, giving advertisers the ability to optimize their campaign’s performance. Better still, advertisers and publishers have the flexibility to make changes at any point during a campaign.

While programmatic advertising platforms certainly have their benefits, there’s still room for improvement. These platforms are built for the world of digital advertising, rather than CTV and streaming TV advertising.