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Programmatic Advertising 101: What It Is, How It Works … and How It Can Benefit Your Brand

If you’re a regular online shopper (like most 21st century consumers are), chances are you’ve received an email or two about an item you left in your online shopping cart. You’ve also likely seen banner ads for products you recently performed a Google or Alexa search for, and perhaps a carousel ad featuring a few items you just checked out at your favorite online boutique. In fact, the odds are good that you’ve experienced each of these — all of which are prime examples of programmatic advertising — on multiple occasions.

What is programmatic advertising?

At its core, programmatic advertising is the automation of online ad buys. So instead of buying ads through humans and insertion orders, you buy programmatic ads using software.

It’s not a radical concept — and in today’s digitally driven marketing world, it’s become commonplace. Remember when you had to pick up the phone and call a travel agent to book a trip? You can still do that today, but most of us don’t. We pay airfare and book rooms directly from the airlines and hotels we want to use. This same fundamental shift toward process automation has taken place in the world of media buying today.

Types of programmatic advertising

Now that we have the basics down, let’s dive into the four main types of programmatic advertising:

1. Real-time bidding

Real-time bidding (RTB) is a method of buying and selling digital ad impressions through an instantaneous auction that takes place in the time it takes a webpage to load. This process happens in real time, allowing advertisers to bid on individual ad impressions as they become available. Ad buyers are effectively buying inventory from ad exchanges without knowing exactly where their ads will appear, but with enough targeting parameters applied to have confidence that they will be served to the right consumers.

2. Private marketplace

Private marketplace (PMP) ads in programmatic advertising refer to a curated and invitation-only auction environment where publishers offer premium ad inventory to a select group of advertisers. Unlike the open exchange, PMP ads provide a more controlled and targeted approach, enabling advertisers to benefit from exclusive access to high-quality impressions and a more transparent and direct relationship with publishers. Further, with PMP ads, advertisers can know exactly where their ads will appear.

3. Preferred deals

Preferred deals in programmatic advertising involve a direct arrangement between publishers and advertisers to sell ad inventory at a fixed or pre-negotiated price before it becomes available to the open market. In this model, advertisers have the advantage of securing premium ad placements without going through an auction, ensuring a guaranteed volume of impressions at an agreed-upon rate. Preferred deals offer a middle ground between the flexibility of real-time bidding and the certainty of direct placement, providing a more controlled and efficient way for advertisers to access high-quality inventory.

4. Programmatic guaranteed

Taking a more traditional approach to media buying, programmatic guaranteed ads involve a direct, automated buying method where advertisers and publishers agree upon a fixed number of impressions at a predetermined price, typically through a platform or ad exchange. Because a specific volume of ad impressions and specific ad location are guaranteed, this type of advertising provides advertisers with high levels of assurance in terms of reach and placement. Ultimately, this approach combines the efficiency of programmatic advertising with the certainty of a reserved, direct buy, offering a more controlled and predictable advertising solution for advertisers and publishers.

Programmatic ad formats

Programmatic advertising supports various ad formats to cater to different campaign goals and audience preferences, and choosing the right one(s) can depend on campaign objectives, target audience, and the nature of the product or service being promoted. A well-rounded programmatic strategy may involve a mix of formats to maximize reach and effectiveness.

Some of the most common types of programmatic ad formats include:

  • Display ads: Among the most common types of digital ads, display ads are static, image- and copy-driven ads that typically appear on a webpage’s header, footer or sidebar.
    – Advantages: Display ads, including banners and rich media, are visually engaging and can be easily customized. Programmatic display ads allow for precise targeting based on user behavior, demographics and interests.
    – Disadvantages: Banner blindness can be a challenge, as users may overlook display ads. Ad blockers can also impact the visibility of these ads.
  • Video ads: Enabling the placement of video footage/content, video ads can appear instream (seen before a user views content in a video player, for example, before a user-selected YouTube video begins). Or they can appear outstream (appearing between two articles or within the copy of an article on a webpage, or as pop-up or drop-down videos on a webpage), or in-display (seen as thumbnails on a video panel, for example, within video search results or in the recommended videos panel on YouTube).
    – Advantages: Video ads offer a highly engaging and immersive experience to users. Programmatic video ads allow for effective targeting and can be an impactful way to convey brand messages.
    – Disadvantages: Video production can be costly, and there may be concerns about viewability and completion rates.
  • Native ads: These ads can appear anywhere on a third-party website, and they are often strategically placed to fit with a webpage’s overall flow, lending a non-intrusive and organic feel.
    – Advantages: Native ads blend seamlessly with the content of the platform, enhancing the user experience. Programmatic native ads allow for automated, targeted placements.
    – Disadvantages: Creating high-quality native content can be time-consuming. Maintaining a balance between advertising and the user experience is crucial.
  • Audio ads: Also known as voice ads, these ads are heard in audio content such as podcasts, digital radio broadcasts and music streams.
    – Advantages: Programmatic audio ads can reach users in various environments (e.g., podcasts, music streaming). They offer a unique way to engage users without relying on visual elements.
    – Disadvantages: These ads offer limited space for detailed messaging, and advertisers need to ensure their ads align with the auditory experience.

The benefits of programmatic advertising

Programmatic advertising offers a range of benefits that contribute to its popularity in the digital marketing landscape — and to its soaring growth. (Spending on programmatic digital display advertising is expected to top $168 billion in the U.S. in 2024, up from just over $50 billion in 2018.)

In theory, this type of advertising is faster, easier, less prone to human error and more cost-effective than traditional advertising formats. How is that, you may ask? A rundown from the International News Media Association explains it perfectly: “If your 50-year-old Daily Telegraph reader also happens to be an avid Candy Crush player on the commute home, it’s just as easy and probably less costly to reach him via an ad between levels of Candy Crush than it is to reach him with a banner on the Telegraph’s mobile site.” 

Some of the key advantages of programmatic advertising include:

  • Efficiency and automation: Programmatic advertising streamlines the ad-buying process by automating the purchasing of ad inventory. This efficiency allows marketers to focus more on strategy and creativity rather than manual transactions.
  • Precise targeting: Programmatic platforms leverage advanced targeting options, including demographics, behaviors and interests. This precision ensures that ads are delivered to a highly relevant audience, increasing the likelihood of engagement.
  • Real-time optimization: Real-time data analysis enables marketers to adjust campaign elements on the fly. This includes optimizing bids, targeting parameters and incorporating creative content based on performance metrics, helping ensure efficient use of ad spend.
  • Enhanced personalization: Programmatic advertising allows for personalized messaging at scale. Advertisers can tailor content based on user characteristics, providing a more customized and relevant experience for individual consumers.
  • Data-driven insights: Programmatic advertising generates valuable data insights. Marketers can analyze user interactions, conversion rates and other metrics to refine future campaigns, making data-driven decisions for better overall performance.
  • Contextual advertising: Contextual advertising involves placing ads in environments that align with the content on the webpage or app. Programmatic platforms can analyze the context of the content in real time and serve ads that are contextually relevant to the user’s current online experience. For example, a sports brand might have its ads displayed alongside sports-related content.
  • Better return on investment (ROI): The combination of precise targeting, real-time optimization and data-driven insights contributes to a better return on investment for brands. Programmatic advertisers can allocate budgets more effectively, focusing on the strategies and channels that deliver the best results.
  • Cross-channel consistency: Programmatic advertising allows marketers to maintain a consistent brand message across various channels and devices. This cohesive approach enhances brand recognition and the user experience.
  • Transparent reporting: Programmatic advertising platforms typically offer transparent reporting, providing advertisers with a clear view of where their ads are being shown, who their audience is and how their budget is being utilized. This transparency helps enhance trust and accountability in the advertising ecosystem, and it lets advertisers know exactly what they’re getting for their ad spend.

Programmatic advertising has revolutionized the digital marketing landscape by combining automation, precision targeting and data-driven insights. For brands, the inclusion of contextual advertising in their marketing plan can enhance the relevance and effectiveness of their ad placements, creating a more personalized and engaging experience for users.

Get expert help with your targeted marketing campaigns

Ready to leverage programmatic advertising to boost your brand? The data-driven marketing professionals at Brandon are always keeping up with the latest programmatic advertising trends, and we’ve got the experience and know-how needed to harness them to reach the right consumers at the right time — and boost your business and your bottom line.

Further, as a fully integrated marketing firm, our team of certified brand strategists can cover the full spectrum of your brand’s marketing needs. From e-commerce, influencer marketing, email marketing and SEO to social media, digital marketing, media, creative, analytics, public relations, brand strategy, web design and more, we can meet all of your brand’s marketing requirements in one place. To get started with help ranging from a simple website analysis to a comprehensive strategy tailored to boost the performance of all your marketing campaigns, contact us today.