Programmatic advertising is a fascinating buzzword in the digital advertising industry. It is still shrouded in a lot of confusion and misconceptions. Today, we are going to decode every component of the programmatic advertising ecosystem for you, with an aim to give you some clarity on what programmatic is all about and how exactly it works.
Programmatic advertising is a sub-branch of digital advertising. It automates the entire ad buying process with the help of codes and algorithms, making it faster and more efficient. Different programmatic buying techniques are used for different types of transactions. You can read more about these techniques in our blog here. In this blog, we will focus on how Real-Time Bidding (RTB) works.
A visitor visits the website is the audience for the ads. He/she browse through the content offered by the website. Advertisers try to leverage this opportunity to get their attention in order to influence these visitors to buy their products or increase brand awareness.
A publisher is the owner of that website. Publishers provide advertising space to advertisers to advertise the product or service on their site and drive the users to the advertiser’s page. This is the revenue model for many of the websites that provide free content. When the visitors visit the publisher’s website or app, he/she broadcasts their publisher profile, so that relevant advertisers can bid for showing ads to this visitor.
Some publishers associate themselves with an Ad Network, which helps them sell their inventory in bulk. An Ad Network is a company that buys the traffic from publishers in bulk and sells to advertisers or DSPs.
A Supply-Side Platform (SSP) is connected to multiple publishers, either directly or through an ad network. It simultaneously connects the publishers’ inventory to multiple ad exchanges and demand-side platforms, thereby allowing publishers to sell their inventory to the best demand source.
An advertiser is a person, organization or company that places their ads on the publisher’s website(s) in order to target the customers. Their goal is to advertise the brand using the digital medium and reach the maximum audience.
Advertisers use Advertising Platform to set the campaign on particular DSPs. Advertisers can choose their targeting according to their specific requirements. This platform will receive broadcasted ad request from publishers /SSPs. If this ad request matches the targeting then the platform will automatically bid for that ad request.
Now, just as SSPs help publishers to manage their inventory via a single platform, similarly Demand Side Platforms (DSPs) help advertisers and agencies to manage their media buying via a single platform. DSPs support real-time bidding. They also optimize & check campaign performance from one centralized interface. They also allow to plug in data collected by third-party data providers (typically a DMP).
The DSPs are connected to multiple DSPs using a Trading Desk. Trading Desk is an interface for the advertisers to advertise. They are specialized media buying groups working within (or for) advertising agencies. They buy and optimize media campaigns on the inventory sources they are connected with.
The actual bidding happens on the ad exchange. An Ad Exchange accesses inventory by being connected with multiple SSPs, which are, in turn, connected to multiple ad networks or multiple publishers. This is a technology platform that facilitates the programmatic buying & selling of the ad inventory. Advertisers bid on ad impressions, like an auction, and buy them in real-time.
In simple terms, a Data Management Platform (DMP) is a technology platform that collects, stores, processes, analyzes and packages the consumer data it receives from various Data Suppliers. This data is used to create targeted audience segments & optimize campaign performance. Advertisers, as well as Publishers, can use DMPs to optimize their performance.
Another important component is the Creative Management Platform (CMP). A CMP is a platform where advertisers can build multiple creative designs in a jiffy! It enables advertisers to mass-produce creatives. It improves the performance of an Advertiser’s creative by enhancing the ad unit’s feature set.
The data from DMPs can be used for targeting as well as retargeting. A technique called Dynamic Creative Optimization (DCO) can be highly effective in successfully targeting and retargeting prospects. DCO serves different permutations to varying audiences depending on their run-time preferences, past browsing patterns, likes, dislikes and so on. One of the ways you might have experienced DCO is when you visit an e-comm platform and show interest or buying intent in a particular product. You might have seen the same or similar product creative is shown to you on other websites. That is done through DCO.
That’s basically how the entire ecosystem looks like. Now that you have understood the individual components of the ecosystem, you are ready to understand the actual working of the RTB process, which we will cover in our next blog. In the next one, will also talk about transparency in the programmatic system.