Programmatic advertising is the use of automated technology for media buying on the Internet. But it’s not as simple as it may seem. To clearly understand what programmatic is and how it works, the ecosystem and its market participants needs to be considered.
How the ad displays in the programmatic ecosystem
- The user enters a query and clicks on a link. Before loading the page, the site sends the connected network (Ad Network) a request to display a banner, as well as available data about the user.
- Ad Network transfers user data to SSP.
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SSP classifies the request according to the maximum number of parameters: the page the user loaded, user data, visit time. SSP exposes a lot which includes information about the site and the received data about the user.
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Before that, Trading Desk, an advertiser and/or an agency set the bids, the required amount of impressions or clicks, collect audience data and load this information into DSP.
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This information is analyzed, compared with the audience information available in the auction and enriched with additional data from DMP. Then DSP makes bids, trying to buy impressions for the right audience as cheaply as possible.
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SSP processes information from all advertisers who made a bid, chooses the highest one, discounts it to the second price and raises (most often) the bid by 1 cent.
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The winner announcement is sent to the user's browser as the response to the advertisement request.
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The ad is loaded on the page and shown to the user.
All bets are made in real time aссording to the RTB protocol, which we described in detail in our previous article.
Parts of Programmatic ecosystem
Publisher / Supplier
The owner of the advertising platform where advertisers place their ads. Most often, a website, an information platform, an online publication, an application and so on acts as a publisher. Any resource on the Internet that provides its platform for placing automated advertising can be a publisher.
Supply Side Platform/Sell Side Platform (SSP)
A platform that trades advertising inventory on Internet sites (publisher). SSP aggregates offers from sites, collects residual traffic and also sets the minimum cost at which the site is ready to sell an impression. SSP holds an auction with DSP, selling the publisher's inventory as profitably as possible.
Initially, SSPs worked with ad networks to sell residual inventory that could not be sold through direct sales. With the advent of ad exchanges and the spread of RTB, they turned into independent services that provide auction sales based on targeting. Publishers work with SSP without a predetermined CPC, based only on the highest rate.
Ad Exchange
A digital marketplace that enables advertisers and publishers to buy and sell advertising space, often through real-time auctions. The main function is to set the floor price – the minimum price for an advertising place from which the market repels.
Nowadays Ad Exchange works most often using RTB, when the purchase and sale of advertising space occurs while the page is being loaded. Ad Exchange is at the center of the ecosystem and is integrated with SSPs and DSPs as publisher and advertiser representatives.
Ad Network or Ad Exchange?
Ad Network is a platform that connects multiple sites and sells their inventory, while Ad Exchange is a marketplace that sets pricing.
The term Ad Networks came from the Online Advertising Network which means a banner network on the Internet. The clarification about online was introduced not to mix it up with other expressions, and now the correct term is just Ad Network.
Ad Server makes the main difference between Ad network and analog media. The ad server allows targeting, tracking and reporting on each impression in the banner network.
Biggest Ad Exchange:
- AppNexus
- AOL’s Marketplace
- MoPub
- OpenX
- Rubicon Project Exchange.
- Smaato
- DoubleClick, был приобретен Google в 2008
Demand-side platform (DSP)
Demand-side platform is a software that gives an opportunity to automatically purchase inventory. Historically, more publishers and advertisers have wanted to standardize the process of buying and selling ad places and gain access to a single marketplace instead of making direct deals with limited traffic. DSP reduces costs and helps to optimize teams.
Data management platform (DMP)
Data management platform is a platform responsible for collecting, processing and storing data to create audience segments.
In programmatic DMP is often used along with the Demand-Side Platform (DSP) on the advertiser's side or with the Supply-Side Platform (SSP) on the publisher's side.
DMP collects user data, enriches it, sorts and builds predictions, forming user audience segments.
The programmatic ecosystem consists of many interconnected participants, and using the RTB protocol, they realize the main goal, i.e. to help brands find their target audience on the Internet.
