Chapter 2: How Does Programmatic Work?

Everything you need to know about programmatic advertising, but were afraid to ask.

The inner workings of programmatic technology can get overwhelming and confusing. DSPs, SSPs, ad exchanges, oh my! If we try to explain the whole process starting with the first step of a client setting up a campaign to the very last step of how their ad gets chosen for a particular website, we would get lost in the nitty gritty of the acronyms of IT jargon. And that’s simply no fun.

 

In a nutshell, online technologies have algorithms that collect and analyze a visitor’s web behaviour allowing for real-time campaign optimizations that help advertisers target audiences that are more likely to convert. With the data that companies are collecting about users, programmatic campaigns are able to pinpoint where and when to serve ads to individuals who are exhibiting your ideal prospect behaviour. Programmatic companies have the ability to gather this audience data to then target online users more precisely, with the access of ad inventory on the open market.

 

All of that ad space available online is called inventory. Ad exchanges that work with specific websites decide which websites have the highest quality ad spots (or inventory) and by having access to thousands of websites they are able to accrue data from them as well. Through the Real Time Bidding (RTB) network, different ad exchanges, agencies and companies have a chance for their ad to be chosen for an ad placement. In a matter of seconds there is a mini bidding war that occurs between the different players that are vying for that spot, and whoever wins gets to have their “impression” in front of their prospects' eyes. Programmatic advertising makes online ad inventory and consumer data available for advertisers to buy highly-targeted ad impressions that are then served to specific people rather than on specific websites.

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