Digital Marketing

What Is Programmatic Advertising? How Does It Work?

Programmatic advertising has been a buzzword in the marketing industry for quite some time. But what do bots actually do? How is it different from traditional image marketing?

Read on to learn everything you need to know to be successful in programmatic advertising.

What is automated advertising?

Programmatic advertising uses automated technology and algorithmic tools to buy media. The term “automated” relates to the process of how ads are bought and sold in the ad space.

Programmatic advertising differs from traditional media buying methods in its use of automation.

It analyzes numerous user signals to ensure that ads serve the right person, in the right place, at the right time.

Think of programmatic ads as the umbrella in this category, as different types of automated buying are categorized under it.

What is the difference between automated ads and display ads?

It’s easy to confuse display ads with automated ads, especially with the big strides Google has made in its automatic and real-time bidding capabilities.

The biggest difference between programmatic ads and display is:

  • Program refers to How do Ads are bought.
  • View refers to a file Formula About how ads appear.

The second biggest difference between display ads and programmatic ads is the ability to buy ads across platforms.

Display ads are most commonly referred to when ads are placed within a specific ad network, such as the Google Display Network.

On the other hand, programmatic advertising takes display media to the next level.

Several automated advertising platforms exist, such as sell-side platforms (SSPs) and demand-side platforms (DSPs), which allow advertisers to purchase ad inventory via an open network of platforms.

With both automated and display ads, advertisers typically control the following:

  • public.
  • Bidding strategy.
  • income.
  • Creativity and assets.
  • placements.

Programmatic advertising platforms

Automated technology has made great strides over the years.

There are many types of automated platforms.

The three main types of platforms are:

  • Sell ​​side platform. Also known as a ‘supply-side platform’, this platform allows publishers to sell their ad impressions to advertisers in real time. This platform includes both DSPs and ad exchanges.
  • Demand side platform. This platform allows advertisers to purchase ad inventory across multiple platforms simultaneously.
  • Advertising exchanges. This is how SSPs flow their ad inventory to DSPs. DSPs connect to an ad exchange, where ad rates fluctuate based on the competitiveness of that inventory.

To get a sense of the different types of platforms, let’s take a look at some of the major players in each category.

Sell-side platforms

A comprehensive list of SSP for publishers includes:

  • Google Ads Manager.
  • Amazon Publisher Services.
  • OpenX.
  • Google AdMob.
  • Yahoo Ad Tech.
  • Triple Lift.
  • PubMatic.
  • Verizon Media.
  • Xander (Microsoft).
  • exchange pointers.
  • Suffern.
  • Magnet.
  • Krito.

If you’re looking for SSP video, some of the leading companies include:

  • Spotix.
  • Teds.
  • AdColony (now DigitalTurbine).

While there are many companies available to publishers, these are companies you may have heard of but may not have associated with automated technology.

demand-side platforms

Similar to SSPs, these company names may ring a bell and introduce DSPs.

Some of the best DSPs include:

  • Display and video 360 space (Google).
  • Trade office.
  • Amazon DSP.
  • liveramp.
  • Adobe Advertising Cloud DSP.
  • stacadapt.
  • amoebi.
  • Yahoo Ad Tech.
  • AdRoll.
  • Basis (formerly Centro).
  • one rhythm.
  • to break.
  • Bright Roll.

Some of the largest DSPs for connected TV and video include:

  • TubeMogul.
  • One View (Roku).
  • Media Math.

Again, there are many DSPs available to advertisers. It is important to choose a DSP with the features and stock you are looking for.

Some DSPs offer self-serve ads, while others offer fully managed, self-serve ads (potentially for large advertisers or agencies).

Advertising exchanges

Some of the most popular ad exchange programs available to publishers include:

  • Xander (Microsoft).
  • Verizon Media.
  • OpenX.
  • PubMatic.
  • Google Ad Exchange.
  • exchange pointers.
  • Magnet.
  • Smaato.

Not all ad exchanges are equal.

It is important for publishers to research options carefully and choose platforms that align with their goals.

How much does programmatic advertising cost?

Simply put, programmatic advertising can cost as little or as much as your budget allows.

It’s a common misconception that small businesses can’t take advantage of automated technologies – but we’re here to correct that.

Auto ads are usually purchased on a cost per thousand impressions (CPM) basis.

CPM is usually between $0.50 and $2.00.

However, CPM can be much higher based on factors such as:

  • Which DSP you choose.
  • your target audience.
  • level of competitiveness.

A good rule of thumb for programmatic ad cost is: the more specialized your audience is, the more CPM you’ll pay.

So, whether you’re a multi-million dollar advertiser or a small business just starting out, chances are your advertising budget will fit automatically.

What are the benefits of programmatic advertising?

There are many benefits to incorporating programmatic advertising into your marketing strategy.

Some of the top benefits include:

  • Broad audience reach.
  • Effective and low cost awareness.
  • Real-time data and analytics.
  • The ability to benefit from first and third party data.
  • Opportunities for campaign strategies across devices.

Reach a broad audience

Arguably the biggest benefit of programmatic advertising is the ability to grow and scale.

Programmatic advertising is the best way to buy ad inventory to reach audiences because of the abundance of inventory across platforms.

Effective and low cost outreach

In connection with the aforementioned benefit of expanding reach, programmatic ads are one of the most cost effective types of ads available today.

Earlier, we discussed the average CPM for an automated average of $0.50 to $2.00.

Even with a small budget, your marketing money can go far to reach your target audience and increase awareness of your product or service.

Data and analysis in real time

Because automated platforms rely on real-time bids, advertisers benefit from receiving data in near real time.

Why is this important?

Real-time data means you can make faster decisions and pivots. It also puts you in a proactive – rather than reactive – mode.

Use of first and third party data

Another benefit of automated advertising is the type of data segments available to advertisers.

For example, advertisers can securely upload proprietary first-party data and target those people directly, using real-time bid signals.

Taking this a step further, DSPs have many third-party segments that advertisers can choose to target if they don’t have first-party data.

Another type of third-party data advertisers can take advantage of is transforming first-party data into third-party data by creating Lookalike Audiences for their customers.

This way opens the door to finding new customers who are similar to existing customers.

Cross-device campaign strategy

It is important to note that programmatic advertising is often seen as an outreach technique.

For this reason, companies that only look at last click success often overlook the true potential of programmatic advertising.

So how do programmatic ads fit into a cross-device campaign?

The key is to capture this initial awareness of users through automated ads.

It is likely that the user will not purchase a product or service after the first interaction with the brand.

Once a user’s interest peaks, you have the ability to remarket to them on other platforms based on his or her interaction with that initial ad.

Integrating this data together from the first interaction to the final purchase is key to determining the success of your automated strategy.

Types of program advertisements

There are different types of automated ads.

These should not be confused with the automated platforms themselves.

Automated ad types are simply the way an advertiser purchases ad inventory.

The four most common types are:

  • Bidding in real time. This type of bid is available to all advertisers, as ad auctions take place in real time. This is also known as the “open market”.
  • private market. This bidding occurs when publishers have agreements with a limited number of advertisers. These sites usually offer premium prices due to the coveted ad space.
  • Favorite deals. A lesser known type of programmatic advertising. Advertisers select ad spots before they are released on the private or open market. This is also known as a “spot buy”.
  • Automatically guaranteed. Similar to Favorite Deal, but no auction bidding. The publisher and advertiser agree on a fixed price for ad inventory.

Examples of programmatic advertising

Automated ads come in all shapes and sizes.

The beauty of using programmatic ads is that you tailor your content to your chosen target audience.

Some well-executed automated campaigns include:

Amanda Foundation

The Amanda Foundation is a nonprofit animal hospital and rescue shelter in the Los Angeles area.

She created a campaign to help endangered animals find a home during their final days.

Specifically, it leveraged automated signals such as location, demographics, and browsing behavior to tailor specific animal images to its audience.

If the user is interested in big dogs, he will be presented with a banner ad with big dogs instead of small dogs.

As you can see, the messages and images are tailored to the behavior and interests of the individual.

Photo courtesy of the Amanda Foundation, August 2022

Geco Insurance

You’ve likely seen or heard a copy of Geico’s ad.

Have you ever thought about the different ads that Geico targets for you?

Geico uses ad formats such as TV ads, website banner ads, social media ads, and more to create a true cross-platform awareness campaign.

The brand carefully selects its content based on the platform it serves, target audience and demographics, and more.

Its commercials are so popular, in fact, that Geico has dedicated a Resources page on their website where users can watch their favorite commercials.


The basics and benefits of automated advertising can help guide your existing programmatic strategy, or if you’re just starting out, create a new one that includes automated ads.

Understanding the functions and features of each platform will be an important component of your programmatic success.

More resources:

  • The Complete Guide to Mastering B2B Programmatic Advertising
  • Programmatic advertising for small businesses: what, why and how?
  • Top 10 Pay Per Click Trends To Know In 2022

Featured image: ArtemisDiana/Shutterstock

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