What is Programmatic Advertising and 4 Major Components of Programmatic ?

What is Programmatic Advertising

Programmatic advertising is the use of automated technology for media buying (the process of buying ad space) as opposed to traditional (often manual) methods of digital advertising. Programmatic media buying uses data insights and algorithms to deliver ads to the right user at the right time and at the right price.

To understand programmatic media buying, you need to know the terminology related to this process. First, programmatic media buying 

4 Major Components of Programmatic Advertising

Data Management Platform (DMP) -:For programmatic to work, the system must match the appropriate advertising inventory to the ad space. This is where a Data Management Platform (DMP) comes into play.DMP is an independent platform that acts as a centralized data warehouse to collect, manage and analyze data from multiple sources. It creates comprehensive user profiles used by programmatic algorithms to match the most relevant advertising to the visitor to the publisher's site. Both advertisers and publishers use DMPs to improve targeting, generate reports, and create Lookalike Audiences.

Sell-Side Platform (SSP): This is software that allows publishers to automatically sell display, mobile and video ad impressions to potential buyers in real time. This includes ad exchanges, networks and DSPs (see below). This gives publishers more control over their inventory and CPM.

Demand-Side Platform(DSP): It is a software that enables agencies and advertisers to purchase advertising inventory cross-platform.

Ad Exchanger: This is how the supply side ad feeds the inventory into the exchange. The DSP connects to the Ad Exchange, enabling advertisers, agencies, networks and publishers to buy and sell ad space. Inventory prices may be agreed through a bidding process.

Advertising inventory is typically purchased through a real-time auction. By using programmatic channels, advertisers can buy per impression, thus targeting the right audience. Since the process is automated, programmatic media procurement guarantees speed and efficiency that is not matched in traditional media procurement.


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