By Anastasiia Lushyna
Display advertising comes in a variety of formats, and launching such ads programmatically is the most convenient way for businesses to reach their target audiences. But what exactly is programmatic display marketing? What are its benefits? In this post, we will guide you through the nuances of programmatic display buying to answer these and other questions.
What is Programmatic Display Advertising?
Display advertising on its own is an umbrella term covering such formats as banner, video, native, interstitial, and other ads.
As for the programmatic approach, it leverages the power of technology to automate the media buying and selling process and make it virtually immediate. Instead of finding publishers manually, marketers can simply specify all the parameters and then join real-time auctions (and not only) to reach exactly those users who are most likely to get interested in their products or services.
For publishers, programmatic technology is beneficial as well since it automates the process of selling ad inventory.
How Programmatic Display Advertising Works
Programmatic advertising, whether it is display or not, involves four key participants: demand-side platforms (DSPs), supply-side platforms (SSPs), ad exchanges, and ad servers. DSPs are used by advertisers and SSPs — by publishers, while the remaining components perform as intermediaries. Let’s review their roles in detail.
Demand-Side Platforms
DSP solutions allow marketers to manage their campaigns across multiple websites from a single interface. By utilizing such a platform, advertisers set up the campaigns, control their budgets, track the performance, and then use the collected insights to fine-tune their strategies. Basically, for marketers, a DSP plays the role of an entrance into the programmatic environment.
Supply-Side Platforms
An SSP performs the same role for publishers. Via a supply-side platform, publishers join programmatic auctions, manage their inventory, set up price floors, and optimize the entire process. For instance, many SSPs enable publishers to create white and black lists of advertisers to control which of them can actually access their inventory and ensure ad quality.
Ad Exchanges
An ad exchange is a place where DSPs and SSPs meet and real-time auctions happen. This virtual marketplace allows advertisers to connect to the right publishers and vice versa.
Ad Servers
Ad servers are responsible for managing, storing, and exchanging ad content between advertisers and publishers.
So, how do all these components work together? Here is the process explained:
A user visits an app or website, and an impression becomes available.
An SSP sends a request to a DSP along with the bid floor and all the information available about the user (for instance, geo and gadget OS).
Bids go to the ad exchange, and the real-time auction starts.
The exchange processes the bids and identifies the winning one.
An ad server is notified about ad delivery.
The winning programmatic display ad (or ad in any other format) is delivered to the publisher and shown to a user.
This may look rather complex and time-consuming, but auctions happen within a very short period of time — usually, it takes less than a second for the process to be completed. The main thing for advertisers and publishers to do is to set everything up; the rest will happen automatically.
Types Of Programmatic Advertising
While display advertising itself is about the format of the ads, programmatic technology answers the question, “How are display ads delivered to users?”. You already know about DSPs, SSPs, and other key components of the programmatic ecosystem; however, it is also important to understand different types of this advertising model. This matters for both advertisers and publishers since the knowledge of nuances is a way to enhance their strategies and reach better results. So, here are the types of programmatic advertising you should be aware of.
Real-Time Bidding
Real-time bidding (RTB) is the most common type of programmatic digital display advertising (and not only display). The process of buying and selling ads is automated, while the auctions happen in real time on ad exchanges. The step-by-step process we described above is exactly about RTB.
The RTB model offers several types of auctions: first-price and second-price. In the case of a first-price auction, the highest bid wins, and the winner pays the exact amount they bid. As for a second-price auction, the highest bid still wins, but the winner must pay only $0.01 more than the second winning bid, which is beneficial for advertisers but slightly affects the income of publishers.
Header Bidding
Header bidding is a subcategory of RTB, but it ensures a fairer and more transparent environment for advertisers. During a header bidding auction, multiple demand sources compete for ad inventory simultaneously. As a result, publishers often experience higher demand and competition, while marketers gain equal rights and can access premium ad space.
Header bidding solves the inefficiencies of the waterfall approach, where everything happens sequentially, and advertisers get an opportunity to bid only when an impression reaches their tier.
To learn more, check out our comparisons of header bidding with RTB and the waterfall model.
Private Marketplaces
Private marketplaces (PMPs) also operate on RTB technology, but auctions are not open to everyone. Instead, they are invite-only, and ad inventory is available only to the advertisers selected by a publisher. Typically, this model is used to buy and sell premium inventory.
PMPs help to ensure brand safety for all the parties involved. Thus, advertisers don’t have to worry that their ads will appear next to inappropriate content. In turn, publishers can be sure that the ads displayed on their websites or in the apps will be of high quality.
Programmatic Guaranteed
In the case of programmatic guaranteed, there is no auction happening. Instead, an advertiser and a publisher discuss such details as ad placements, specific time slots, guaranteed volume, and price. After they come to an agreement, an advertiser pays a fixed price for a certain amount of inventory, and their ads are displayed to users.
By following this model, marketers can be sure that their ads will reach their audience on a specific website or app. Additionally, the programmatic guaranteed approach also increases brand safety since an advertiser knows exactly where their ads will appear. The same applies to publishers — they know who they are working with and can be sure that their ad space will be filled.
Preferred Deals
The preferred deals model also directly connects advertisers and publishers. They agree on all the essential details, and when inventory becomes available, this specific marketer will be the first to check it. If an advertiser decides to buy the inventory, the ad is delivered to a user. If not, a publisher can sell it on an open auction or a private marketplace.
The model provides both marketers and publishers with additional flexibility and quality control. At the same time, advertisers are not obliged to purchase the inventory, so it may remain unfilled, which implies a risk of a missed opportunity for publishers.
Benefits of Programmatic Display Advertising for Enhancing Your Business
One of the key benefits of programmatic advertising is automation, which allows both marketers and publishers to save time and focus on their core tasks. However, that’s not the only advantage.
Enhanced Reach and Higher Demand
Programmatic advertising supports an entire set of traffic types, such as desktop, in-app, CTV, and others. Therefore, marketers are not limited to a specific channel or device type — instead, they can reach a wider audience and build brand awareness effectively.
As for publishers, they gain access to a wider pool of advertisers, which drives demand for their ad inventory and positively affects their income.
Advanced Targeting
Programmatic advertising offers precise targeting capabilities (like language, timezone, IAB categories, etc.). Therefore, by applying them, advertisers can easily reach users who are most likely to engage with their ads. For publishers, this means higher content relevancy and better user experience.
And that’s not only about reaching the right audience. For instance, by applying various filters along with white and black lists, marketers can aim exactly for those impressions that they need.
Cost Efficiency
When it comes to programmatic technology, advertisers have full control over their spending. They define the amount they are willing to pay per impression, which ensures that their budget is spent effectively.
Additionally, many demand-side platforms have features that help keep the bids competitive while preventing overspending. Marketers can also limit their daily spend or the number of daily impressions per visitor.
In turn, publishers set price floors (a minimal price per impression), which allows them to prevent unprofitable deals from happening.
Variety of Formats
Programmatic technology is not only about banners and display advertising. Many DSPs also allow marketers to launch CTV, audio, and even DOOH (digital-out-of-home) campaigns, which ensures the diversity of available formats and helps reach the audience in the most engaging way.
For publishers, this is a benefit as well since they can monetize various types of their inventory and, as a result, increase income.
Scalability and Flexibility
Programmatic campaigns are also easy to adjust and scale. For instance, by limiting the daily spend, advertisers can prevent overspending and scale steadily when they are ready for this.
Additionally, most DSPs are equipped with advanced analytical features. By applying them, marketers can adjust their campaigns quickly to improve their performance. Many solutions also offer optimization functionalities that can be used to drive better results.
6 Key Rules for Preparing Your Programmatic Display Ads
To address their target audiences effectively, advertisers need to prepare high-quality programmatic advertising display content. Here are several recommendations to keep in mind.
Keep it Simple but Catchy
The Internet is overloaded with various types of ads, so grabbing users’ attention may be challenging. However, complex design does not tend to bring the desired results. Instead, an ad should be simple but catchy at the same time. Use one image (instead of several images) per ad and utilize contrasting colors and negative space. Besides, it is important to keep ads branded — use your logo, brand colors, etc. This will help drive brand awareness and increase recognition. Also, use only custom content pieces for your ads. If you use stock images or videos, this will not help you to attract attention. Coming up with your own style is a much more effective approach.
Explain the Value
A display ad should not be overloaded with text, but it is still important to explain the value you advertise. Why do you stand out among your competitors? Why should a user click your ad? Make sure to address your audience’s pain points to keep your ads effective. In case you offer some additional benefits (like free shipping), mention this as well.
Deliver a Clear Message
The entire message of an ad should be clear to prevent misunderstanding but short at the same time. Include only essential details and avoid using complex terms unless you are absolutely sure that your target audience is familiar with them. Besides, your message should be easy to read, so choose the right fonts and colors. For instance, black background and red font usually do not combine very well.
Create Time-Sensitive Ads
Addressing customers’ fear of missing out can be an effective way to motivate them to click your ad and then convert. For instance, you may offer a discount and specify that this opportunity is valid only for a couple of days, mention the number of items left in stock, etc.
Use an Effective CTA
Additionally, your ad should have a short and motivating call to action. Make it easy to notice, use words of action, and add value along with some personalization. For instance, this can be something like “Get my free demo” or “Book my ticket now”.
Experiment with Formats
Don’t stick to the same format (for example, programmatic banner ads). Instead, experiment with them to define the options that resonate with your audience the best.
Keep in mind that it is also important to personalize your ad for every audience segment — this will also help you attract attention more effectively. As for programmatic technology, make sure to apply as many targeting settings as possible when preparing your campaign.
Challenges in Programmatic Display Advertising
Programmatic technology offers numerous benefits for both publishers and marketers. However, it also comes with certain challenges.
Data Privacy
The efficiency of digital advertising heavily relied on third-party cookies but their era is coming to an end. Marketers will have to switch to first-party data, and the earlier they initiate this process, the better — this will provide them with a competitive advantage when cookies completely fade away. Besides, it is crucial for marketers to keep their campaigns compliant with standards like CCPA and GDPR.
Ad Fraud
Ad fraud (for instance, fake clicks or malicious creatives) is another potential challenge. Utilizing fraud prevention tools and programmatic platforms with security features is a way to deal with it.
Complexity of the System
Most DSPs, SSPs, and other programmatic platforms come with a user-friendly interface. However, the entire system is still rather complex, and understanding it can be challenging, especially for those who are only entering the programmatic environment. Besides, programmatic technology keeps evolving, and it is crucial for anyone using it to keep an eye on this evolution.
Brand Safety
Advertisers want their ads to appear in a safe and relevant environment, while publishers strive to display appropriate high-quality content. To ensure brand safety, it is important to choose programmatic platforms that cooperate with reputable partners and offer advanced filtering capabilities.
Sustainability Issues
Programmatic advertising on its own is a significant contributor to carbon emissions. However, the industry is steadily going green, so all the parties involved should implement sustainability practices. For instance, shaping the traffic and optimizing bid requests can be a great help.
Transparency Challenges
In terms of programmatic, the transparency challenge comes in several forms. First of all, when collecting user data, it is crucial to inform them what types of data are collected and for what purpose. Secondly, the programmatic solution you choose should provide advanced analytics features and have no hidden fees. The payment terms should be absolutely clear, as well as other conditions.
How Much Does Programmatic Advertising Cost?
Programmatic advertising is very flexible in terms of spending, so, basically, it can be adapted to any type of budget. Ads are typically bought on a CPM basis, which stands for cost per mille (cost per thousand impressions). On average, this cost varies between $0.5 and $2, but premium inventory is usually more expensive.
The cost of a programmatic campaign depends on the following factors:
The quality of inventory
Ad format
The level of competition
The specificity of a target audience
Bidding strategy
The selected DSP
For advertisers, it is important to consider these points when allocating marketing budgets. Additionally, it is crucial to monitor the performance of the campaigns and apply budget-related features. For instance, limiting the daily spend would be helpful, especially for those marketers who are only starting advertising programmatically.
Consider Attekmi Your Trusted Partner
Programmatic display advertising is beneficial and effective for marketers and publishers. Thus, launching an ad exchange supporting display formats is a way to earn money on media trading.
However, building an exchange solution from scratch is not an easy task to complete, and that’s why we are here. With Attekmi solutions, you can enter the programmatic environment quickly and with no fuss. For instance, AdEx Basic is equipped with all the essential functionalities, while AdEx Plus is a more extended version. Both of them support banner, video, audio, native, pop, and CTV ads. And if you are in search of a fully custom solution, feel free to go for our White Label Ad Exchange.
Besides, Attekmi is not only about ad exchanges. Do you have an idea of an AdTech product? We would be happy to bring it to life.
Ready to learn more about Attekmi solutions? Let’s get in touch!