The word “programmatic” itself means “automated" or "scheduled”, so programmatic advertising is the automated process of ad buying, as opposed to being purchased directly and manually inserted on a website.
Though closely linked, programmatic advertising and real-time bidding are not the same thing. While programmatic is merely the method used for ad buying, RTB is a technology using programmatic where it creates an online auction to sell and buy ad spaces.
[Infographic on real-time bidding]
When a user tries to access a website page, upon page load, a request will be sent to an ad exchange, where the ad slots will be made available along with information on the user (interests, gender, location and more). Advertisers interested in targeting that user will then enter an auction to win the right to serve the ad. The winning bid will then be served to the user when the page is fully loaded. This process usually takes around 0.2 seconds.
Auctions can occur at first-price or second-price - find out how they differ!
As we have seen, programmatic simply means "automated", so mobile programmatic advertising is the programmatic delivery of campaigns on mobile devices. The marketing opportunities this represents are great, as 62.9% of the population worldwide owns a mobile device. Mobile programmatic optimizes the delivery of campaigns in terms of scale but also in the precision of audience targeting.
However, the rise of mobile advertising has posed some challenges for publishers and advertisers, as the physical surface of mobiles is much more limited than on desktop.
In an effort to create better user-experience and generate more engagement, we have seen loads of new innovative and interactive formats, like touch and swipe, being developed specifically for mobile.
There are several ways programmatic buying and selling can work. As we have seen earlier, Real-time bidding (RTB) is one of them and must not be confused with programmatic, as it is just one of its subsets. Here are other ways programmatic advertising works:
[Infographic on PMP]
Private Marketplaces are invite-only RTB auctions where a publisher's inventory is offered only to select buyers. It could be seen as a middle ground between RTB and Programmatic Direct, as the ad delivery is still done in real-time, but is not open to everyone, thus removing the need for an ad exchange.
This type of programmatic buying is preferred by many advertisers with specific marketing objectives, as it ensures premium placements, more transparency (as they know which website their campaigns will run on) and altogether, a closer relationship between the buyer and the seller.
[Infographic on Direct]
Programmatic Direct resembles the traditional advertising buying model, where a deal is made between the buyer and the seller on a number of impressions and a fixed CMP for a campaign. This method guarantees ad placements on a specific website, which allows the advertiser to access premium placements, target a more precise audience and overall, benefit from more brand safety. Direct buying remains programmatic - however, it is more manual than RTB.