What Is Programmatic Advertising? Definition, Types, Channel, and Advantages

Programmatic advertising is the process of automating the buying and selling of ad inventory in real-time through an automated bidding system. Programmatic advertising enables brands or agencies to purchase ad impressions on publisher sites or apps within milliseconds through a sophisticat


Programmatic advertising has become one of the most preferred ways of running ad campaigns. But, the AdTech space is complex, and a lot of mystery surrounds programmatic advertising. Marketers are still unsure about the concept of programmatic advertising and its ecosystem. We aim to clear all this confusion in this primer. 

What Is Programmatic Advertising? Explained

Programmatic advertising is the real-time buying and selling of ad inventory through an automated bidding system. Programmatic advertising enables brands or agencies to purchase ad impressions on publisher sites or apps through a sophisticated ecosystem. Programmatic advertising includes ad slots for digital out-of-home (DOOH), online, streaming, TV, video and voice ads.

The traditional/offline advertising model is inefficient as the manual process between buyers (advertisers/brands) and sellers (publishers) tends to be time-consuming, expensive and involves extensive paperwork, request for proposals (RFPs), and negotiation. The biggest shortcoming of the offline method is the lack of functionality to measure the Return on Investment (ROI).

On the other hand, programmatic advertising introduces an elaborate system that relies less on humans and more on programs to complete this process and display ads across the internet.

Types of Programmatic Media Buying

Contrary to the traditional media buying process, programmatic advertising may not necessarily involve advertisers and publishers working on a one-on-one basis to serve ads. The ad delivery depends on the type of programmatic deal chosen.

Different types of programmatic deals dictate the rules when delivering ads on publishers’ websites. Let’s look at the key programmatic deals:

1. Real-Time Bidding (RTB)

Also known as open auction or open marketplace, real-time bidding (RTB) has become synonymous to programmatic media buying primarily because of its widespread usage.

The ad slots are open to everyone in RTB, and they’re sold through an open auction type of bidding. The highest bidder gets the spot. The whole process takes place in real-time, and advertisers can choose ad slots as they are made available.

2. Private Marketplace (PMP)

The private marketplace functions in similar veins as RTB except for the fact that it is available to advertisers on an invite-only basis. In private or closed auction, publishers usually set aside a premium ad inventory reserved only for select advertisers. Many DSPs have their own PMPs that are accessible exclusively to the DSP users/customers.

3. Preferred Deals

In preferred deals, advertisers get to choose the ad inventory at a fixed price even before it is made available on private marketplaces followed by on open auctions.

Also known as spot buying, the negotiation in preferred deals takes a refined approach as both the parties agree on the pricing, targeting, etc. beforehand.

4. Programmatic Guaranteed

Programmatic guaranteed, also known as programmatic direct or automated guaranteed, follows the traditional approach of media buying. Here, the advertiser and publisher negotiate the terms on a one-on-one basis.

Top 6 Programmatic Advertising Channels

In this section, we look at six commonly used programmatic advertising channels/formats. We will also look at some examples of programmatic advertising.

1. Display Ads

While the term ‘display ads’ is used to refer to any form of online visual ads, in the context of programmatic ads, only the ads placed at the header, footer, or sidebar are considered display ads.

2. Video Ads

The popularity of programmatic ads continues to grow as video continues to become one of the most preferred mediums of content consumption. Digital video ad spend in the US alone is predicted to grow up to $22.18 billion in 2021.

4. Audio Ads

We can identify three key reasons for the growing adoption of programmatic audio ads:

While popular podcasts still follow the traditional sponsorship model to place ads, programmatic audio can amplify revenue generation efforts.

5. Native Ads

Native ads follow the form and feel of the medium they’re being served on. In programmatic native advertising, advertisers work with a DSP to choose which impressions to buy and their price, while publishers sell their ad slots through an SSP.

6. Digital Out-of-Home (DOOH)

Digital out-of-box is the digital and analytically superior evolution of the traditional out-of-home advertising. The traditional DOOH sales consisted of advertisers getting in touch with the network and agreeing on audience targeting, pricing, screen selection, etc., manually.

5 Advantages of Programmatic Advertising

Besides the efficiency brought in by the reduced need for human intervention and AI-driven algorithms, here are five advantages of using programmatic advertising.

  1. Real time insights
  2. Enhanced Targeting Capabilities
  3. Greater Transparency
  4. Better Utilization of the Budget
  5. Tackle Ad Frauds Effectively

Source: https://www.martechadvisor.com/articles/ads/what-is-programmatic-advertising/