Programmatic Advertising: What It Is, How It Works And Its Challenges

It is a reality that programmatic advertising, also known as programmatic marketing, is now more familiar than it was a few years ago. There are more and more advertisers who use it to achieve their objectives.

Therefore, today, we will talk about it on our blog in case you want to know it more in-depth. It is a curious and exciting process that is increasingly established in the day-to-day life of any digital marketing agency.

Context of programmatic advertising

Before defining what programmatic advertising is, it is important to place ourselves in its context to understand better how it works since it is a process in which numerous elements, agents and figures intervene. That is important to know so as to stay aware of the situation.

So, we will explain these before the meaning and functioning of programmatic advertising.

The data

As we know, they are user information items, and there are different types: first-party, second-party, and third-party. Etc These in digital marketing are necessary to measure, segment, make decisions and much more.

The cookie

It is an anonymous element that allows us to recognize the user in order to impact them online, not only with programmatic ads but also with other types of digital advertising.

As additional information, “cookieless” becomes effective in 2024, which is not the death of the cookie itself. But the disappearance of the third-party cookie, those that we can accept or reject when entering a web page.

Also Read: Advertising On Google How And Why Use Google Ads?

Figures of Programmatic Advertising

Advertisers. People, companies, SEM positioning or digital marketing agencies that want to broadcast their ads in digital media.

Publishers. They are those digital media that offer advertising space for sale on their website.

Agents of programmatic advertising

Data Management Platform (DMP)

It is the Data Management Platform. It is responsible for collecting, storing, processing, and grouping user data in order to personalize the ad message.

AdServer

It is a server that allows you to broadcast a set of advertisements in the advertising spaces of different websites.

Trading Desk

It is a platform that manages data in an advanced way, optimizes in real-time, connects with DSPs, SSPs and DMPs and provides detailed analysis and reports.

Demand Side Platform (DSP)

They are the platforms where advertisers buy the inventory where they can display their ads.

Sell-Side Platform (SSP)

They compose and manage the advertising inventory of thousands of digital media. Therefore, its function is to send each impression to the best buyer.

Ad Exchange

It is a platform that facilitates the buying and selling of advertising inventory collected from different sources. They manage the relationship between SSPs and DSPs.

How does programmatic advertising work?

Once we know the agents and the context, we can better understand how programmatic marketing works.

As we can see in the diagram when starting a programmatic campaign, a two-way communication process begins where the DMP has a fundamental role in providing data to both parties: advertisers and publishers.

Then, the publisher puts the impression of its website up for auction through the SSP.

Advertisers bid or directly purchase this impression through the DSP.

The print is served to the indicated user on the indicated medium

This is how programmatic works in a very summarized way. It really is a longer and more complex process than explained.

Ways to Buy Advertising Inventory in Programmatic Marketing

There are mainly two ways:

• Direct purchase. You talk to the publisher, and for a fixed price, this inventory reserve is guaranteed through the agreement reached.
• You are bidding in real-time. There are public and private auctions (by invitation) where the highest bidder wins.

What is Programmatic Advertising?

Finally, we come to the definition; as you have noticed, it is a long process that depends on many figures, elements, agents, etc.

It can be defined as the following:

Programmatic advertising is the purchase of online ads that are usually carried out through real-time bidding or Real real-time bidding to impact the right users in a suitable medium.

Challenges of programmatic advertising

• Advertising fraud or Ad Fraud: any deliberate activity that prevents the proper delivery of advertisements to humans.
• Ad Blocking: elimination of advertising content on a web page.
• Click Fraud: it is fraudulently inflating the number of clicks on an ad; in this way, they can cause you to spend your entire budget on a programmatic ad, and the campaign will be of no use to you.
• Brand Safety: it is necessary to ensure the safety of your brand to protect it and ensure that your ads do not appear on particular websites or that they are the advertisement prior to a controversial video on YouTube.
• Ad collision: several ads from a campaign are published in the advertising spaces of a website at the same time.
• Ad Viewability: It is complex but necessary to measure the accurate visibility that your online ads have.

Also Read: What Is Native Advertising? Advantages, Features And Types