a.k.a. programmatic ad, programmatic buying, programmatic marketing platform (PMP)
Programmatic buying describes online display advertising that is aggregated, booked, flighted, analyzed and optimized via demand-side platform interfaces. Generally, programmatic buying is similar to programmatic stock trading insofar as buying happens as the result of a computational proxy bidding on behalf of human masters. Basically what happens is several bidders bid against your space and it goes to the highest bidder.
A programmatic marketing platform (PMP) is a recent addition to the ad tech landscape. A PMP allows marketers to better organize their data and execute highly targeted marketing campaigns. A PMP combines the data management capabilities of a DMP (data management platform) with the media buying capabilities of a demand-side platform (DSP).
Here's how automated ad buying works, if you're a buyer:
- Choose your buying platform - This is where you choose the software through which you'll execute your campaign, called a Demand-Side Platform; examples include Turn, MediaMath, Trade Desk, and Google's DoubleClick Bid Manager.
- Define your audience - You can go basic, targetingmen, ages 25 to 54, for example. Or more advanced, such as baseball fans who live in New York and have recently purchased sports tickets.
- Collect your audience data - Your first-party data can be a goldmine. Add tracking pixels to your site via a Data-Management Platorm (DMP), to learn more about yuour webiste visitors and reach them with ads. Examples include BlueKai, Lotame, Adobe, X+1, Exelate, and Quantcast.
- Plug in third-party data to find out more - Purchase additional data to build larger audiences and create new clusters of people you think will be receptive to your message.
- Choose your inventory sources - It's time to choose the pipes you'll use to access inventory. This is where you will connect to publisher-side technologies such as Supply-Side Platforms (SSPs) like Rubicon Project, or ad exchanges like AppNexus and Casale Media.
- Add a verification vendor - You probably want to be sure your ads are shown to people and not bots. To do this, you can add a verification vendor like Double Verify or Integral Ad Science.
- Set bid - It's time to figure out how much you want to pay for your ads. Typically, ads are bought on CPM basis but you can also tell your DSP to optimize for certain goals, such as sales or clicks.
- Success - Campaigns can now go live depending on your DSP or schedule. You'll only win a percentage of your bids, but once you do, the system will automatically serve your ads.
Here's how automated ad buying works, if you're a publisher:
- If you want to sell ads - If you're looking to make some money off the inventory your sales reps can't sell, or perhaps you want to sell premium inventory to buyers without the pain of executing a direct buy, then here's what to do.
- Choose supply-side platform - First, you'll need a technology partner that can list your ads in the programmatic marketplace. Pick an SSP like Pubmatic or an ad exchange like Google's AdX.
- Set a price floor and blacklist - Don't t want to sell your inventory below a certain price? Don't want certain advertisers gaining access to it (your top direct clients, for example)? Set up these controls within your Supply-Side Platform.
- Send bid request to exchanges and DSPs - When an ad is available to be sold, your technology partner will send a bid request to the marketplace, selling the ad to the highest bidder.
- Publisher sets aside inventory - A publisher such as Hearst sets aside ad inventory that programmatic buyers can unlock using a unique code called Deal ID.
- Buyers unlock inventory with ID - The publisher sends a Deal ID to the buyer, who enters i into his or her Demand-Side Platform to unlock inventory.
- The buy - Advertisers set up their campaigns within their DSPs, upload their creative and set the campaign live.
Advertisers can also buy from specific publishers programmatically through private marketplaces. It's simpler, but the inventory is often more expensive.
- As reported in Advertising Age.
Historical perspective: According to MediaPost, the programmatic market will increase 91% in 2014 over 2013 and by 2017, programmatic selling and buying will be the primary method for display transactions according to Forrester Research. Chango was the first company to launch a PMP in the United States and was closely followed by other companies. And in 2014, American Express announced it would like to transform their Display Media Channel to become 100% programmatic, which caused jaws to drop around the industry.