digital-business

A beginner’s guide to programmatic

Twenty-two years since the first banner ad ran on HotWired.com, the digital advertising industry has been revolutionised by the advent of programmatic technology. A major force in UK advertising, it is in turn a hugely positive force for publishers. According to 2015 research from eMarketer, programmatic display ad spend (for online advertisements, such as banner ads featuring text, logos or pictures) will swell to £2.5bn in 2016. To put that in perspective, programmatic’s share of display ad spend has rocketed from 24% to 70% since 2013.

While the majority of the media spectrum – publishers as well as advertisers – is aware of programmatic technology, only a comparatively small portion has a concrete understanding of how this technology works. Indeed, AppNexus’ 2015 Global Programmatic Trust Study revealed that while 71% of the digital advertising ecosystem recognised programmatic knowledge as a critical capability moving forward, 47% of publishers said they had very little to no understanding of how programmatic works. Given programmatic’s vital role in today’s advertising economy, especially publishers’ revenue streams, this statistic is cause for concern.

The purpose of this guide is to help publishers shine a light into the digital darkness that is programmatic and encourage publishers to unlock the true value of the technology behind the jargon.

So what exactly is programmatic? 

In its simplest form, programmatic technology is designed to ensure that the right ad is seen by the right person at the right time. It is the automated digital ad selling by publishers and ad buying by advertisers through data-driven software in real-time.

While the technology does not entirely remove the human components of the workflow, it does do away with the previously lengthy process of manual ad buying. Taking an ad from creative conception to display used to involve numerous steps, from research to requests to pricing, availability, transactions and uploading. Programmatic has transformed this by making purchase decisions on the advertisers’ behalf through real-time auctions. By eliminating the tedious manual aspects of ad buying, programmatic has rendered the process more cost-effective, efficient and transparent. This is why increasing numbers of publishers are adopting programmatic technology to conduct their business.

Understanding the programmatic ecosystem

Programmatic is a notoriously jargon-filled landscape and trying to learn the difference between DSP, SSP and RTB can be enough to put any publisher off. Here is a quick jargon buster for the uninitiated:

  • Ad exchange – An ad trafficking system through which advertisers, publishers and networks meet and do business via a unified platform. An ad exchange allows advertisers and publishers to use the same technological platform, services and methods, and “speak the same language” in order to exchange data, set prices and ultimately serve an ad.
  • RTB – Programmatic is often confused with RTB, or real-time bidding. In fact, RTB is just one element of the programmatic ad trading process in which ads are bought and sold. This takes place via an auction process in an ad exchange, the purpose of which is to ensure that publishers are getting the best rate for every ad impression. The more coveted the ad space, the more expensive it is likely to be; for example, on a premium publisher’s website or based on the position of the ad on the page – space at the top of a page is seen as prime real estate because it is viewable without any scrolling.
  • SSP – Supply-side platforms help publishers manage and sell display, video and mobile ad impressions automatically, connecting their inventory with a large pool of potential buyers – advertisers – in real-time. And on the opposite side…
  • DSP – Demand-side platforms enable advertisers to bid on and buy ad space from ad exchanges.
  • DMP – Much of this buying and selling activity is supported by data management platforms, which are data warehouses that advertisers can use to manage and centralise audience segment data. Advertisers can use the data from DMPs to target specific users and optimise online advertising experiences for consumers.
  • Ad network – An ad network is a company that serves as a broker between a group of publishers and a group of advertisers. Networks traditionally aggregate unsold inventory from publishers in order to offer advertisers a consolidated and generally less expensive pool of impressions, but they can have a wide variety of business models and clients.

Benefits for publishers & advertisers

Programmatic technology presents an unprecedented opportunity for advertisers to deliver quality ads more efficiently and accurately, and for publishers to optimise sales and streamline operations.

The problem of ad blocking

Programmatic has moved beyond the tipping point in terms of its adoption within the ad industry. Still, ad blocking presents a tremendous challenge, as internet consumers are increasingly employing the technology as a response to unwelcome and irrelevant ads.

The rise in ad blocking has highlighted the importance of delivering customised experiences that add genuine value. Marketers need to employ audience data and agile technology in order to deliver highly-targeted ads, which will augment rather than intrude on consumers’ experience.

Final thoughts

To keep up with today’s ever-changing internet landscape, it will be vital for publishers to embrace technology that helps them get the most out of their inventory and that reassures buyers that their advertising campaigns are being deployed effectively. The incredible potential for programmable technology cannot be underestimated.

By Nigel Gilbert, VP Strategic Market Development, EMEA at AppNexus