The ABCs of programmatic buying

What is programmatic buying?

Programmatic buying refers to buying digital advertising in an automated manner. Programmatic buying differs from traditional direct buying in that it takes place in real time, and impressions are bought individually, often in an auction. One of the basic principles of programmatic buying is pursuing efficiency from the advertiser’s perspective. Compared to traditional direct buying, the role of data utilisation is particularly highlighted in programmatic buying.

In practice, the buying process itself takes place via platforms on both the buyer’s and the publisher’s side. The buyer’s platform is referred to as the DSP (demand-side platform) and the publisher’s platform is referred to as the SSP (supply-side platform). Using these two platforms, the publisher/seller and the buyer come together in an advertising marketplace and engage in bidding for impressions.

The most common forms of programmatic buying are Open Marketplace and Private Marketplace. In an open marketplace, the publisher puts its advertising inventory up for sale at set floor prices and then gives a large number of buyers the opportunity to bid for impressions. A private marketplace offers the buyer and publisher a marketplace that is more controlled and safe than an open marketplace. In a private marketplace, the buyer and seller reach a Private Deal. This means the buyer knows exactly where the advertisement will be displayed and the publisher maintains control over who advertises on its websites. Alma Media is currently using both of these forms of programmatic buying.

The actual buying of advertising takes place in both open and private marketplaces using Real Time Bidding (RTB). In programmatic buying, the publisher puts impressions up for sale in a marketplace in which various buyers bid for impressions in an auction. The impression is awarded to the buyer that makes the highest bid. An important aspect of the bidding process is that each impression is sold individually. This means that the price of each impression is determined according to the degree of competition. All of Alma Media’s programmatic buying impressions are sold in auctions, and the winning bidder always pays the amount of the second-highest bid made for the impression in question. This method is referred to as the second highest bid.

When to use programmatic buying?

Programmatic buying has traditionally been associated with tactical advertising. However, programmatic buying is now utilised in both tactical campaigns and brand campaigns. It could be said that programmatic buying is a buying method that suits almost all scenarios. In private auctions in particular, Alma Media offers nearly the same inventory and forms of advertising as it does through traditional direct sales. While certain special forms of advertising are not yet available through programmatic buying, they will be included in programmatic buying in the future.

Traditional direct buying should be utilised particularly when the advertiser seeks extensive campaign visibility during a specific period of time. Direct buying is also recommended for advertisers that require more extravagant special solutions.

The role of data in programmatic buying

The importance of RTB and automation is often highlighted when discussing programmatic buying. However, programmatic buying would never have achieved its current level of popularity if it were not for the opportunities it offers the buyer with respect to data utilisation. In fact, it could be said that data plays an equally important role in programmatic buying to automation and real-time bidding.

Programmatic buying typically allows the buyer to utilise three kinds of data: the advertiser’s own data, the publisher’s data, and third-party data from external sellers. By utilising data, the buyer can select the ideal impressions from billions of available options, which can help the buyer significantly enhance the effectiveness of advertising.

For more information on programmatic buying, please refer to the IAB programmatic buying guide