👨🏼‍💻Programmatic Advertising Ecosystem
Hi everyone,
In the Guide for showing Huawei Ads with Applovin Mediation article, I mentioned a little about programmatic advertising, now I am going to explain it in more detail.
Introduction
Programmatic advertising simply means buying and selling advertisements via automated software without human interference.
Terms to know;
- Data-driven marketing: Brands need the target audiences’ information(e.g. behavior, preferences, and hobbies) for showing them personalized ads, getting new potential customers who can interact with the brands, increasing sales, and optimizing their campaigns. Data-driven marketing means analyzing the data and creating strategies for the advertising campaign.
- Ad buying: It is a process of purchasing ad inventory on digital platforms.
- Return on Investment(ROI): The metric is how much money the advertisers gained from their ad campaigns compared to the costs on them.
- Fill rate: The metric measures the ad network performance and is calculated by the formula below:
- Ad impression: It is counted whenever the ads are viewed by the users on the website or app.
- CPM: It stands for Cost per mille and advertisers pay the publishers for one thousand impressions and calculated by this formula;
How does Programmatic Advertising work?
To illustrate the whole process think of a company/brand as an advertiser, that wants to promote its products or services to reach potential customers, improve brand awareness, and boost sales. The company needs to find ad spaces on different websites or applications to show its ad campaign. In this scenario, the Ad Exchanges come up as a marketplace for buying and selling ad inventories. Advertisers can utilize them to reach numerous publishers that have a partnership with the ad exchange.
Publishers and advertisers can not directly connect to Ad Exchange platforms. They use two types of marketing tools provided by Ad Exchanges:
- Demand Side Platforms(DSP): Advertisers can log in to these platforms to set up their ad campaign and budget, upload creatives (e.g. text, images, or videos), and buy ad inventory from Ad Exchanges.
- Supply Side Platforms(SSP): Early on, before programmatic advertising, publishers would assign ads to ad inventories manually. However, the rise of digital platforms and audiences, and increasing competition between advertisers for the ad slots made this method got unfavorable. Now, publishers use these tools to monetize their apps or websites by selling and managing their ad inventories in a single dashboard. On the SSP, the configurations can be different but the publishers can perform it as a platform-specific. Basically, they can add their application, then create and manage the ad units with different formats(e.g. banner, splash, native, rewarded). Also, they can set a minimum eCPM value which means how much they want for one thousand impressions from advertisers.
There are several ways of programmatic media buying:
- Programmatic Guaranteed Advertising (PG): This way is also called as a programmatic direct or automated guaranteed based on traditional one-to-one deals and does not depend on the bidding process. Advertisers buy the ad slot directly from the publisher and negotiate at a fixed price for a fixed number of impressions.
- Private Marketplace (PMP): In this mode, publishers only show ads of specific advertisers. They can have a policy about that then create a proposal and send it to advertisers.
- Real-time Bidding(RTB) / Open Auction: The ad slots can be sold to all advertisers without any restriction. All process happens in real-time auctions.
Whenever a user visits the publisher’s website which includes an ad slot there is a process that happened before the ad is shown to the user. A request that includes user data is sent from the users’ browser to the SSP. The data is passed to the DSP and advertisers bid on the ad slot automatically based on the preset CPM. The highest bidders win the competition and their ad is shown.
Data Management Platforms(DMP)
In this whole advertising process, there is one more important point. For instance, it does not make sense that Adidas is showing its ad campaign to all users. Their campaign should be shown to users who are searching for shoes. In this case, Data Management Platforms (DMP) come into play. These platforms gather and organize the audience’s data across different sources such as cookies from websites/mobile apps and device IDs. Then, advertisers activate the data when they create campaigns to target only specific audiences. Furthermore, publishers can utilize user data to show them personalized ads. As an example, on the e-commerce website, female and male visitors can see different products on the banner.
One of the biggest DMP is Oracle Bluekai.
Conclusion
To sum up, with programmatic advertising the whole process is automated from the creation of the ad campaign to its showing to users. The campaign can be more effective by targetting audiences according to their location, age, gender, and interests. In this way, advertisers can get a better return on investment. Furthermore, publishers can get more revenue by selling ad inventories placed on their websites or applications for the highest price.
Thank you.
