What is Programmatic Advertising?

Programmatic advertising refers to the automated buying and selling of online advertising space. But, it’s much more than that.

The market for digital inventory is run by ad exchanges, who operate computerized auctions that bring together both parties of the transaction: Advertisers, who want to buy ad space on the internet, and publishers, the website owners with inventory to sell.

Programmatic advertising uses software that handles the sale and placement of ad impressions–in a fraction of a second.

Why does programmatic advertising matter?
Efficiency. Before programmatic ad buying, digital ads were bought and sold by human ad buyers and salespeople, who can be expensive and unreliable. Programmatic advertising technology promises to make the ad buying system more efficient, and therefore cheaper, by removing humans from the process wherever possible. Humans get sick, need to sleep and come to work hungover. Machines do not.
So, robots are replacing people? Great.
Yes and no. Technology is being used to replace some of the more tedious tasks that humans have had to handle, like sending insertion orders to publishers and dealing with ad tags, but they are still required to optimize campaigns and to plan strategies.
Is programmatic buying the same as real-time bidding, then?
No – RTB is a type of programmatic ad buying, but it isn’t the only one. RTB is the purchase of ads through real-time auctions, but programmatic software also allows advertisers to buy guaranteed impressions in advance from specific publisher sites, which is called “programmatic direct”.
Could programmatic be the future of ad buying?
It’s hard to tell what portion of advertising is now traded programmatically, but it is escalating. Some agencies now say they’re keen to buy as much media as possible through programmatic channels, and some major brands have even built in-house teams to handle their programmatic ad buying as they spend more of their marketing budgets. Currently, it’s mainly online ads that are traded programmatically, but even media agencies are exploring ways to sell “traditional” media this way, like TV spots and outdoor ads.
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