Programmatic Buying Made Easy: What Advertisers (and Non-Advertisers) Ought to Know

Admit it, the sound itself does not sound friendly to hear at all. It sounds robotic, too automated, and too automatic. Generic to hear, but still, sounds complex to understand. Two words that, if wrapped up with a handful of words to make it understood, still sparks further discussion from the advertising community, and follow-up questions from the non-advertising community. The coined term is somehow known, but few really understood its meaning and power.

Perhaps the word program, combined with automatic, makes it sound straightforward, yet still ambiguous. While the follow-up word buying added to the confusion since a lot of things may be brought. But what exactly? Breaking down the discussion will put things into perspective.

From the aforementioned phrase, programmatic buying is about buying advertisements scattered throughout the Internet. It’s about the execution of media buying, and/or ads placement online, with media buyers, the people who negotiates the price and the placement, doing all the action.

Think of an actual auction, now put it in an online perspective. This is called real-time bidding (RTB). Be wary though. Majority of the people, including from the advertising-marketing community, equates programmatic buying with RTB.  RTB is only one of the many ways to buy ads programmatically. But the action does not stop there. Beneath the online auction lie advanced algorithms, where much of the media buying is being processed.

RTB is just one of the many terms related with programmatic buying. And some of the terms associated with programmatic buying are laid out on the info graphic below for further discussion.

infographic on associated terms with programmatic buying

The chart shows the process on how programmatic buying works. Some of the terms will be explained for further clarification.

Demand-side platform (DSP) allows advertisers and ad agencies easily and efficiently access and buy advertisement inventory, since it combines inventory from a multitude of ad exchanges.

Meanwhile, an ad exchange is an open online advertising marketplace that connects publishers and advertisers. It is the opposite of the ad network, which is a closed advertising marketplace wherein the network owner eliminates the publisher via sourcing, selling, or reselling ad inventory to buyers.

The infographic may look complex, but at its core, programmatic buying is all about getting ads online to targeted markets at a fraction of a price. People think that opting for programmatic buying instead of traditional methods of placing ads costs a lot, when in fact, it saves money. The automation system enables the transaction to run efficiently.

According to Joanna O’Connell of Forrester Research, Inc., who co-authored with Michael Green on the September 2011 report, “The Future of Digital Media Buying,” programmatic buying has four key benefits. They are explained in the info graphic below.

four key benefits of programmatic buying

The only reason programmatic buying is not getting much attention these days is because it is still hiding behind the unknown area of advertising, as media buyers and others in the advertising-marketing community still prefer the traditional methods. They say that programmatic buying is the future of advertising. Perhaps with this discussion, the matter is somehow brought into the light.