The advertising world has been evolving, thanks to the rise of social media and other internet channels that have provided advertisers with an unimaginable reach. Yet, recent innovations such as programmatic advertising have emerged as one of the most effective ways to target customers cost-effectively and quickly.
It’s predicted that over 80% of total ads by the end of 2021 will be done by utilizing programmatic advertising techniques. So, if you don’t want to lose out on all the profit, make sure to read this article carefully. We’ll explore different types of programmatic advertising and see what it’s all about. Let’s start:
What Is Programmatic Advertising?
Programmatic advertising is a wide field that is emerging as one of the most interesting advertising strategies in 2021. But what exactly is programmatic advertising, and why should you consider implementing it into your strategy?
Programmatic advertising employs artificial intelligence software to buy ads in real-time instead of manual labor and negotiations. That means that you use automated bidding instead of mechanical, allowing more time and cost-efficiency.
The software chooses which ads to bid on by analyzing hyper-specific data, such as:
- Customer interests
- Customers’ locations
- Customer’s age
- Customer’s career
What separates programmatic advertising from traditional is the fact that you’re letting artificial intelligence make all the important decisions for you. All you need to do is enter specific parameters, and the rest will be done.
So, for example, if the algorithm concludes that Instagram is the best place for a particular ad, it will post it there. It uses advanced algorithms and metrics to determine the best bid and yield the most results. Let’s learn more about different types of programmatic ads and tools.
Real-Time Bidding (RTB)
Real-time bidding is a part of programmatic advertising, though it’s not exclusive, meaning that not all programmatic needs use RTB. Real-time bidding represents selling and purchasing ad space in real-time. So, when a customer visits your website that sells jewelry but doesn’t purchase anything. Then, they visit another website, and boom – they see a jewelry ad.
That’s how real-time bidding works. The thing is that these ads are very quick to sprout because everything works in real-time. It takes less than 100ms to place an ad straight after the customer ends the visit to your website and moves on to the next.
Demand-Side Platform (DSP)
The Demand-side platform lets advertisers purchase different ad placements automatically. Traditionally, you would have to go through the whole bidding and negotiating process with salespeople, making the whole process very time-consuming and expensive. However, DSP shortens this cycle and yields the best results for a fraction of the cost.
So, for example, if someone visits a website connected to a specific ad exchange, the exchange receives a signal and then asks the demand-side platform whether it has any active ads that are suitable for the placement. If the answer is yes, then DSP enters a real-time bidding war with other advertisers.
Supply-Side Platform (SSP)
Supply-side platforms work very similarly to demand-side platforms, with a couple of minor but key differences that set them apart. So, we use DSP to manage advertisement buying, while we use SSP to manage our display space.
SSP is connected to the ad exchange, and it notifies it about the inventory that’s currently available. Once it’s live, it’s available for real-time bidding, and the winner takes the ad space. Its main function is to sell the ad space for the highest price possible. Moreover, you can tweak settings like minimum and maximum purchasing allowance or choose specific channels or buyers.
Data Management Platform (DMP)
Lastly, we have data management platforms – software that gathers, stores, and organizes the information. In programmatic advertising, DMPs are usually used in conjunction with either SSPs or DSPs to yield the best results in programmatic advertising. Data management platforms collect useful data about the customers you’re trying to target and then feed it to demand-side and supply-side platforms. This makes the targeting process much easier, more precise, and more effective.
