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The ABCs of programmatic advertising

Programmatic advertising: what is it?

Programmatic advertising involves automated buying and selling of digital advertising. Programmatic advertising differs from traditional direct purchasing in that purchases are made in real time, and impressions are bought one at a time and, often, in an auction. One of the basic principles of programmatic buying is efficiency for the advertiser. In comparison to traditional direct purchasing, programmatic advertising takes advantage of computerised data.

In practice, the purchaser uses the demand side platform (DSP) and the publisher uses the supply side platform (SSP). Through these two systems, the publisher – or the vendor – and the purchaser meet in the ad exchange and begin an auction for impressions.

The most common forums for programmatic buying are the Open Marketplace and Private Marketplace. In the Open Marketplace, the publisher puts its ad inventory on sale for an initial price, which enables competitive auctioning of impressions for a number of purchasers. The Private Marketplace is a safer and more controlled trading environment for the purchaser and the publisher. In the Private Marketplace, the purchaser and the vendor make a private deal: The purchasers will know exactly where their advertising is visible, and the publisher will have control over the advertisers on its website. Alma Media currently uses both marketplaces.

Real-time bidding (RTB) is used for ad purchasing in both the Open Marketplace and the Private Marketplace. In programmatic buying, the publisher sets an initial price for its ad inventory at the ad exchange, where purchasers compete for impressions at an auction. The winner is the purchaser who bids the highest price for an impression. All Alma Media’s programmatic purchasing impressions are sold at auctions, and the winner always pays according to the second highest bid. This is known as the second highest bid practice. With the increased popularity of header bidding, first price auctions are now also more and more common.

When to apply programmatic advertising?

Traditionally, programmatic advertising has been considered a strategic advertising purchasing method. Today, programmatic buying is used for both strategic and brand campaigns. Programmatic buying is almost always a viable purchasing method. Alma Media offers similar inventory and advertising solutions for both closed auctions and direct purchasing.

Traditional direct purchasing is usually recommendable for campaigns aimed at extensive visibility at a specific time. Direct purchasing can also provide impressive special solutions. Read more about purchasing methods here.

Programmatic advertising and computerised data

Technology and automatisation are key concepts within programmatic advertising. Computerised data and related opportunities for advertising purchasers are even more crucial for the current popularity of programmatic buying.

Purchasers have three types of data at their disposal: advertisers’ data, publishers’ data, and third-party data from an external vendor. Through computerised data, purchasers can choose the correct audiences from among billions of impressions and, in the best case, increase the efficiency of their advertising remarkably.

Read more about programmatic buying in the IAB programmatic purchasing guide (in Finnish). 

See the Alma programmatic advertising products here.

Read our Programmatic buying blog on current trends (in Finnish)