Simply put, programmatic ad buying is the buying
and selling of ads through machines. Programmatic
ad buying is similar to online stock trading in that an
advertiser uses software to buy ad impressions. All of
the magic happens through machines.
Digital advertising used to be bought and sold
manually. Ad networks bought ad impressions
ahead of time from a lot of different sites and apps
and repackaged them to be sold to advertisers
with no transparency. This process involved
salespeople, RFPs, and a whole bunch of human
error. The process was inefficient and unreliable.
With programmatic advertising, digital ad buying
is faster, more efficient, and less expensive. Also,
advertisers now have more granularity into their
advertising campaigns by paying for impressions
individually and using a dashboard to strategically
manage and target their ad campaigns.
Programmatic ad buying typically happens
through real-time bidding (RTB).
Real-time bidding is a live auction that
happens through an advertising exchange.
Just like a real auction, demand-side
platforms bid on ad impressions on
advertisers’ behalf. Whoever has the highest
bid price, gets their ad shown to an end user.
The publisher, in this case Words
With Friends, has already given its ad
inventory to ad exchanges, which are
responsible for having an auction.
During the auction, potential bidders (the advertisers)
receive information in the form of a bid request about
the user who has just opened Words With Friends. The
information may be something like device type, IP address,
operating system, and information about the app itself.
Device: Samsung Galaxy S5
IP Address: 99.999.999.70
Operating System: Android
Advertisers look at the bid request from Words With
Friends and then send their bid price back.
After receiving all of the bids, the ad exchange determines
who the highest bidder is for the impression on Words With
Friends, and the winner’s ad is served on Words With Friends.
Remember, all of this happens within a tenth of a second!
The programmatic buying and selling of advertising
is rising rapdily. However, mostly online and mobile
ads are bought and sold programmaticly.
U.S. REAL-TIME BIDDING (RTB) DIGITAL DISPLAY AD SPENDING, 2010 - 2016
Source: eMarketer, Nov. 2012
Interested in mobile advertising for your business and want to see
programmatic ad buying in action? Check us out at decisive.is.