WHAT IS PROGRAMMATIC DISPLAY

The best definition of Programmatic Display is the use of software to automate the buying of advertising impressions in real time.

Sounds simple right?

There are lots of components in the chain though to facilitate that.

DSP

The piece of software that controls where the adverts are bought from is called a Demand-side platform or DSP for short. This is where your budgets are controlled, the criteria for your campaign is kept and where all of the reporting you need to assess how well your campaign is going comes from. As it’s name suggests it fundamentally controls the demand from Advertisers to buy adverts to show people.

But where do these ad impressions come from? That’s where our Publishers come in.

Publisher

Publishers are probably the easiest piece of the chain to describe. You’ll have been on a website and seen an advert either right at the top, on the side, in the middle or at the bottom. This is where your ads literally connect with people. There are millions of publishers. Programmatic advertising at its core was designed to create a way for Advertisers to connect with all of the millions of publishers and equally for publishers to connect with the millions of advertisers.

So how does that happen? This is where the Ad Exchange comes in.

Ad Exchanges

The ad exchange is the focal point of the ecosystem. It connects the millions of buyers with the millions of sellers. It has a simple function: facilitate the buying and selling of advertising at scale. Over time this function has matured into the buying and selling of targeted and legitimate advertising, fairly, at scale.

So what does that mean? Let’s examine.

Fairest

The physical act of buying advertising where there are millions of advertisers looking to buy the same advertising slot lent itself to an auction method. Just as it’s the same when you go to an antiques auction to buy a piece of art or furniture, the fairest way to determine the price for this is through an auction. Most ad exchange auctions occur on a second-price model.

What on earth is that?

A second-price auction is where the highest bidder pays only the cost of the second highest bid. In an example with three bidders where Advertiser A bids 1, Advertiser 2 bids 2 and Advertiser 3 bids 3, Advertiser 3 would win but only pay 2.

Targeted

As we’ve seen, ad exchanges facilitate the connection between buyer and seller. However, like in most things, us buyers have a particular thing in mind that we want. We may for example wish to only buy an ad slot in a specific location. The ad exchange is tasked with preparing and reporting (amongst many, many other things) where a potential advertising impression is coming from. This is in the form of what is known as a bid request. Essentially these large strings of data determine everything we can possibly know about that ad impression just before it becomes available.

Legitimate

You may have heard of ads.txt. This is an initiative to combat the unauthorised reselling of publisher’s inventory. Most ad exchanges have adopted this method of legitimising their ability to sell a publisher’s inventory on their behalf. DSP’s can (usually) select whether they buy only from sources where ads.txt is present and correct or buy both: where it is present AND where it is not.

N.B This is not adoptable on mobile app inventory.

Scale

The most impressive aspect of programmatic advertising is that everything that has been described above is happening in real time. Literally right now, billions of auctions are taking place where advertisers are bidding on potential adverts to show people. Ad exchanges are facilitating this. 24/7. All day, all night, everywhere.

Pretty cool.

So - we see that the ad exchanges function is defined in order to allow publishers to get the best adverts for their users and for advertisers to show their ads to the users that they want to.

Good stuff.

So how does this all fit together?

Let’s go through it. An advertiser configures their DSP with the settings and requirements that they want alongside the adverts they want to show people.

At the same time, the publisher’s content is being viewed and an advertising slot is about to become available.

The data of that impression is sent to the ad exchange where the DSP matches that data with the criteria the Advertiser has requested and makes a bid.

That bid is successful and the DSP is asked for the creative it wishes to show in that slot. This is sent and the ad is in place ready for the user on that publisher’s piece of content to be seen.

Rinse. Repeat.

So there we are! A quick rundown of what Programmatic Advertising is and how it works.

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