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What Is Programmatic Advertising and Media Buying?

What Is Programmatic Advertising and Media Buying?

6 Min Read

It might sometimes feel like it’s impossible to keep up with the ever-changing world of advertising. And one of the areas that has seen the most growth over the last few years is programmatic advertising. But what is programmatic advertising and how does it work?

Let’s get started by covering the programmatic advertising definition.

Programmatic Advertising Definition

Programmatic advertising (also known as programmatic media buying) is the automated buying and selling of online advertising space.

To break it down into simpler terms, advertising usually involves two parties: the advertisers who want to run an ad, and the publishers who own the platforms and websites where those ads can be run. Like with other methods of advertising, through programmatic advertising, publishers will sell their inventory and advertisers will buy that inventory and place ads on the publisher’s site or platform.

But rather than requiring the two parties to interact directly, programmatic media buying takes this human-based system and turns it into a software process that occurs in milliseconds. This makes buying and selling ads more efficient and cost-effective through an ecosystem of platforms and algorithms. 

Important Terminology to Know

Before we break down programmatic advertising further, here are some important terms that you should understand. 

  • Demand-Side Platform (DSP): A DSP is an automated buying platform where advertisers can purchase digital ad inventory. Advertisers who use a DSP will buy ad impressions from an ad exchange for a predetermined bid price. Demand-side platforms can be used to purchase inventory across digital, mobile, and Connected TV
  • Supply-Side Platform (SSP): The other side of a programmatic transaction is an SSP, which allows publishers to add their inventory to an ad exchange. Publishers will set a floor price, also known as the minimum amount the inventory can be sold for to still make a profit. 
  • Ad Exchange: This is where DSPs and SSPs can buy and sell ad inventory, respectively. This marketplace is available to everyone from a small business to an agency, and offers inventory for display, mobile, Connected TV, and more. Ad exchanges make it easier for publishers to list their ad space, and for advertisers to ultimately buy that inventory, all without having to contact each other directly. 
  • Real-time bidding (RTB): Real-time bidding is a type of programmatic advertising process by which ad impressions are bought and sold. When an ad impression loads on a users’ device, an auction takes place where the advertiser willing to pay the highest price will win the ad space. This all takes place in the time it takes for a web page to load.
  • Private Marketplace (PMP): A private marketplace gives publishers more control over who can buy their inventory than an ad exchange. Rather than letting anyone bid on their ad space, publishers use a private marketplace to offer that inventory to a select handful of their preferred clients or agencies.
  • Programmatic Direct: A method of programmatic advertising where advertisers can buy guaranteed ad impressions in advance from publishers for a fixed price. This is different from real-time bidding, which involves an auction process. 

Learn More: DSP, SSP, and Ad Exchange: What’s the Difference?

Benefits of Programmatic Media Buying

So now you may be wondering, “why is programmatic advertising important, and is it effective?

Programmatic advertising has changed the game for advertisers looking to make the most out of their ad campaigns. The number one reason that programmatic advertising is so effective is that it’s an extremely efficient way to buy and sell ad space. Instead of relying on humans, advertisers and publishers alike can rely on an algorithm that determines how ad space can be best bought and sold. This makes the whole process more cost-effective for everyone involved.

Another benefit of programmatic is that any brand can advertise this way, from small to medium-sized businesses. However, that means that lower-quality ads could populate on a premium publisher’s site, which is why some publishers choose to work with a private marketplace. 

Getting Started With Programmatic Advertising

Now that you understand the benefits of programmatic advertising, it’s time to explore how you can get started running ads through programmatic.

You should start by determining your campaign goals along with deciding on the channels where you want to run your ad campaign. Once you have done that, it will be easier to determine what DSP you want to work with, as each tends to focus on different areas in the world of programmatic advertising.

For example, for paid search you may want to work with Google Ads Platform, and for social maybe Facebook Ad Manager. Another (easier) option is to work with a platform or agency that can help you get started with programmatic advertising, and then will work with you to better understand the performance of your campaigns after the fact. 

What Platforms Sell Programmatic Display Ads?

There are a number of platforms that sell programmatic display ads, each with its own features and benefits. Here is a list of some examples:

  • SmartyAds
  • TubeMogul
  • Simpli.fi
  • MediaMath
  • Pubmatic

How Much Does Programmatic Advertising Cost?

Like most other forms of advertising, the cost of programmatic advertising will vary based on how many impressions are traded and the quality of those impressions.

Programmatic advertising is usually traded on a CPM basis (that is, cost per 1,000 ad impressions). So when determining costs, it’s important to be aware that the more selective you are about audiences and the more users that you seek to target, the more it will end up costing. However, as compared to past methods of buying and selling ad inventory, programmatic does end up being more cost-effective.

How Performance TV Changes the Game

Now that you know more about the world of programmatic advertising, you may be wondering about MNTN Performance TV. Similar to a DSP, Performance TV works with quality SSPs to streamline the ad buying auction process, specifically for Connected TV ads. And there are a number of benefits to utilizing Performance TV:

Living Room Quality: As discussed above, not at programmatic ads are created equal. But with Performance TV, MNTN ensures something called Living Room Quality, meaning that any OTT ads that run through our platform are served directly on TV screens, to exclusive top-tier networks like ESPN or ABC. These ads are also non-skippable and high-definition, and are automated to be served on inventory that will drive the best performance. 

Transparent Reporting: Performance TV also allows you to see detailed reporting that breaks down your performance into the metrics that matter most to you. Unlike standard programmatic, which can often be very blackbox, we will provide you with a TV Network report—giving you insight into the publishers and channels that generated the best performance for your campaign. With this information, you’ll know for sure the kind of content your audiences are engaging with. MNTN also allows you to measure your CTV performance across the whole household. Cross-device Verified Visits allows you to know for sure when someone sees your ad, what device they convert on, and whether your campaign was the reason why. 

Creative-as-a-SubscriptionTM: But what does trackable performance matter on a premier network if you don’t have a high-quality ad to run? Enter Creative-as-a-Subscription, or CaaS, which allows you to bundle your creative and media costs together in one easy package. This means that not only are you able to get custom, high-performing TV creative, but you can run them through a CTV campaign all for the same cost you would already be spending on media.  

Final Thoughts on Programmatic Advertising

Ultimately, programmatic advertising is making it easier than ever for advertisers to easily reach their target audiences by automating the ad buying process. And by working with a platform like Performance TV, you can go one step further and serve your ads on the powerhouse channel of Connected TV.