Programmatic is ultimately the automation of buying ads largely powered with data, which is primarily done through ad platforms. This is an extension of the traditional direct buys done over the phone or in a non-digital form as it becomes data driven & real time via an auction process the same you see on Google / FB. It is largely bought on a dynamic CPM basis. Personally for me, anything automated through an auction process for buying ads is programmatic, so search/social can by definition considered "programmatic" but is often grouped in its own channels because of some legacy things, especially bidding types where its still common to buy on a CPC basis. Ultimately everything is becoming programmatic. First it was banners (display), then it became video / Mobile App & now you see all emerging channels like audio / native / CTV / OOH all offer programmatic buying. The only things that aren't will be traditional offline pieces like print. Platforms exists within the programmatic world and are normally labelled as a DSP or a Demand Side Platform. Google has DV360 as their enterprise solution & is the largest DSP globally: imagine Google Ads but on steroids with more than just Google inventory / tools. Amazon DSP exists and is fast becoming no.2. Other popular platforms include TTD (The Trade Desk), MediaMath, Adobe Advertising Cloud & Xandr Invest. If you want to learn more about programmatic, aside from trying to understanding r/adops or r/programmatic , there are decent courses on the Google Skillshop (choose the GMP ones) and TTD made their Edge Academy free 2 weeks ago. That is actually quite nice in understanding programmatic if you ignore some of their sales push. Answer from goodgoaj on reddit.com
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warroominc.com › blog › what-is-programmatic-display-advertising
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Reddit
reddit.com › r/ppc › eli5: how does programmatic advertising work?
r/PPC on Reddit: ELI5: How does programmatic advertising work?
April 24, 2020 -

I hear about programmatic all the time, but it's still an enigma to me.

I understand it's digital advertising across multiple channels. Are there specific softwares that are used for this kind of advertising? Are there some companies that do it particularly well? What makes it different than running FB, Google, and other similar ad platforms.

Thanks!

Top answer
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Programmatic is ultimately the automation of buying ads largely powered with data, which is primarily done through ad platforms. This is an extension of the traditional direct buys done over the phone or in a non-digital form as it becomes data driven & real time via an auction process the same you see on Google / FB. It is largely bought on a dynamic CPM basis. Personally for me, anything automated through an auction process for buying ads is programmatic, so search/social can by definition considered "programmatic" but is often grouped in its own channels because of some legacy things, especially bidding types where its still common to buy on a CPC basis. Ultimately everything is becoming programmatic. First it was banners (display), then it became video / Mobile App & now you see all emerging channels like audio / native / CTV / OOH all offer programmatic buying. The only things that aren't will be traditional offline pieces like print. Platforms exists within the programmatic world and are normally labelled as a DSP or a Demand Side Platform. Google has DV360 as their enterprise solution & is the largest DSP globally: imagine Google Ads but on steroids with more than just Google inventory / tools. Amazon DSP exists and is fast becoming no.2. Other popular platforms include TTD (The Trade Desk), MediaMath, Adobe Advertising Cloud & Xandr Invest. If you want to learn more about programmatic, aside from trying to understanding r/adops or r/programmatic , there are decent courses on the Google Skillshop (choose the GMP ones) and TTD made their Edge Academy free 2 weeks ago. That is actually quite nice in understanding programmatic if you ignore some of their sales push.
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ELI5 version: when someone visits a website that has an ad unit on it (such as a google display banner), an auction occurs in real time to see who’s ad serves that person. There may be here hundreds or thousands of potential advertisers who could have their ad serve, but only one can win (because there is only one ad unit for this one ad impression). Using data such as IP address, locations, device type, browser, etc, each advertiser bids how much they are willing to pay to win the impression. The highest bid wins and has their ad served. This all happens in microseconds. The longer version: a great deal of display, native, and mobile app ad inventory is now available to buy programmatically. This means that instead of being exclusively available on a single ad network that handles both the buying and the selling, you have a vendor called a Supply Side Platform that handles the selling on behalf of the publisher, and a vendor called a Demand Side Platform that handles the buying on behalf of the advertiser. Let’s use one of the most common SSPs as an example: Google (this used to be called DFP). A publisher puts Google display inventory on their site via Google’s SSP. Now any DSP with access to Google SSP can bid on ad impressions on this publisher. So a user comes to this publisher, and now when the page loads they need to see an ad. Dozens of DSPs representing hundreds or thousands of advertisers get notified that this person needs to see an ad. This notification is called a bid request. It contains data useful to the DSP in determining how much that impression is worth for each is their advertisers. Such data includes IP address, device type, operating system, location, etc. their may even be cookie data that further helps the DSP look up additional info on the user. In any case, each DSP will take the data in this bid request and determine how much they are willing to bid for each of their advertisers. The highest bid will be accepted by the SSP, and the ad for that bidder will be served. This all happens in microseconds. It is a giant, high-speed auction. How is this different the big ad networks you are used to? In many ways. A traditional ad network would handle both the buying and the selling of ads. Generally they buy huge chunks of impressions from publishers at fixed CPMs, and then separately they fill those impressions with ads from their advertisers at higher CPMs, making money off the difference. Or if it is a CPC as network, making money off the difference between how much CPC they were pairs from the advertisers minus the CPM they paid the publisher. Google and Facebook are very different. To my understanding, google search doesn’t have much of any of an “auction.” Rather it looks at a shitload of data including CPC bid, keywords, qualify of the landing page, etc etc and then determines for each search what order it will serve its paid results in. Facebook claims to have an auction very similar to programmatic. However there are some critical differences. Most critically, Facebook handles both the buying and selling, so they determine both who needs to see an ad, and the CPM bid for each potential advertiser. The way they determine that CPM bid, supposedly, has to do with the click thru rate of the ad, plus some mysterious engagement and quality scores of each ad. The idea being that they are trying to align bids with ads that a most relevant to both the advertiser and the ad viewer. But who knows what the fuck is even real on Facebook, it’s all a black box and we have to take them at their word. This is my personal experience, but with one exception I have never been able to make programmatic ad buying work for a performance campaign. You will only be as good as your DSPs ability to correctly bid on the right impression, and I don’t see that happening. Usually the click thru rate is dog shit and the CPM is higher than I would pay on a normal direct ad network buy. The only time I’ve made a DSP work was when I worked for a mobile app developer that built its own DSP in-house. Because they owned the DSP, they ended up with an absolutely enormous graph of device IDs that they could cross reference with player lifetime value data in their game. In mobile app bid requests, device ID is an available data point and is way better at uniquely identifying a specific user than the data available via website bid requests. Because of this we could confidently predict the value of each bid request and make smart bids.
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