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What is Programmatic Advertising?

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In the digital marketing landscape, programmatic advertising has become a powerful tool that’s reshaping how businesses approach online advertising. And if you’re curious about this innovative approach or looking to enhance your digital marketing strategy, you’ve come to the right place! Let’s take a look at what programmatic advertising is,  and explore why it’s become such a key part of modern marketing.

How Does Programmatic Advertising Work?

Programmatic advertising automates the process of buying and selling digital ad space. Put simply, rather than relying on human negotiations and manual insertion orders, this system uses sophisticated algorithms and real-time bidding to purchase ad impressions across the web, mobile, and apps. The process happens in milliseconds, allowing for highly targeted and efficient ad placements.

This automation streamlines the entire ad buying process, making it faster and more efficient than traditional methods. It’s worth noting that programmatic advertising is just one of many different types of paid ads available to marketers online, each with its own unique advantages.

What is the Difference Between Programmatic Advertising and Display Ads?

While programmatic advertising and display ads are related, they’re not quite the same thing. Display ads refer to the visual advertisements you see on websites, which can include images, videos, or interactive elements. Programmatic advertising, on the other hand, is a method of buying and placing these display ads.

In essence, programmatic advertising is the ‘how’ of ad placement, while display ads are the ‘what’. You can think of programmatic as the sophisticated system working behind the scenes to ensure your display ads reach the right audience at the right time.

Key Components of Programmatic Advertising

To fully grasp how programmatic advertising works, it’s important to understand its key components:

Demand-Side Platforms (DSPs)

DSPs are the tools advertisers use to buy ad impressions from a wide range of publisher sites. These platforms allow advertisers to manage their ads, optimise their campaigns, and analyse performance data all in one place.

Supply-Side Platforms (SSPs)

SSPs are the publisher’s counterpart to DSPs, helping publishers sell their ad space to a wide range of advertisers while optimising the process to ensure they’re getting the best possible price for their inventory.

Data Management Platforms (DMPs)

Finally, DMPs are the data powerhouses behind programmatic advertising; they collect, organise, and analyse vast amounts of data from various sources, helping to inform targeting decisions and improve ad performance.

Types of Programmatic Advertising

Programmatic advertising isn’t a one-size-fits-all solution; there are several different types, each suited to different advertising needs:

Open Auctions

Also known as Real-Time Bidding (RTB), open auctions are the most common type of programmatic advertising. In this model, ad impressions are auctioned off in real-time to the highest bidder.

Private Marketplaces (PMPs)

PMPs are invitation-only RTB auctions where premium publishers offer their inventory to a select group of advertisers, allowing for more control over where ads appear and who can bid on them.

Programmatic Direct

This type of programmatic advertising doesn’t involve an auction. Instead, it’s a direct deal between a publisher and an advertiser, but with the ad serving and targeting still handled programmatically.

Benefits of Programmatic Advertising

So, why is this form of marketing so popular? The rise of programmatic advertising isn’t without reason, as it offers several significant benefits to advertisers:

Increased Efficiency and Accuracy

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By automating the ad buying process, programmatic advertising reduces the need for time-consuming manual work. This not only speeds up the process but also reduces the potential for human error.

Real-Time Optimisation

Programmatic platforms also allow for real-time adjustments to campaigns based on performance data; what this means is that you can continually refine your targeting and bidding strategies as the market evolves, leading to better results.

Access to Advanced Targeting

With the wealth of data available through programmatic advertising, you can also now target your ads with incredible precision. This goes beyond basic demographics to include factors like online behaviour, interests, and even the weather in the user’s location.

Pros and Cons of Programmatic Advertising

Like any advertising method, programmatic has its strengths and weaknesses:

Pros of Programmatic Advertising

  • Efficiency: Automates time-consuming manual processes
  • Precision targeting: Allows for highly specific audience targeting
  • Real-time optimisation: Enables immediate adjustments based on performance
  • Scalability: Can easily scale campaigns across multiple platforms and formats

Cons of Programmatic Advertising

  • Complexity: Can be challenging to understand and implement effectively
  • Potential for ad fraud: The automated nature can sometimes be exploited by bad actors
  • Brand safety concerns: Ads may occasionally appear alongside inappropriate content
  • Data privacy issues: Relies heavily on user data, which can raise privacy concerns

How Much Does Programmatic Advertising Cost?

The cost of programmatic advertising can vary widely depending on factors like your target audience, the platforms you’re using, and the level of competition for ad space. Generally, you’ll pay for impressions on a cost-per-thousand (CPM) basis, which can range from a few pounds to over £20, depending on how targeted and premium the inventory is.

It’s important to note that beyond the media costs, you’ll also need to factor in technology fees for the platforms you’re using, as well as any agency or management fees if you’re working with a partner.

Final Thoughts

Overall, programmatic advertising represents a significant shift in how digital advertising is bought and sold. Its ability to deliver highly targeted ads efficiently and at scale makes it an attractive option for many advertisers, however, like any marketing tool, it requires a solid understanding and strategic approach to use effectively.

If you’re considering incorporating programmatic advertising into your marketing strategy, it’s worth partnering with experts who can guide you through the process. And as an award-winning PPC management company in the UK, we at Clickslice have the expertise to help you navigate the complexities of programmatic advertising so you can make the most of your digital marketing budget. So don’t hesitate to reach out if you need assistance in developing a programmatic strategy that aligns with your business goals – helping businesses like yours grow online is what we do best, no matter how small or large your operations.

Article by:

Joshua George is the founder of ClickSlice, an SEO Agency based in London, UK.

He has eight years of experience as an SEO Consultant and was recently hired by the UK government for SEO training. Joshua also owns the best-selling SEO course on Udemy, and has taught SEO to over 100,000 students.

His work has been featured in Forbes, Entrepreneur, AgencyAnalytics, Wix and lots more other reputable publications.