Digital advertising helps a business develop, find new customers, and increase sales. However, it is not always possible to achieve the desired result. The reason lies in the wrong choice of target audience and placement site. Programmatic advertising can help a business avoid such problems. If you want to learn more about programmatic advertising or the feasibility of developing a white label SSP platform, then this article is for you.

What Is Programmatic Advertising?

Programmatic advertising refers to an automated system for buying, selling, and advertising. Ads are seen only by those users who are interested in purchasing a specific product or service. The key difference from standard formats is that the advertiser does not need to independently negotiate with the owner of the web resource. The transaction is concluded through a special platform, which is based on advanced algorithms.

One of them is audience segmentation. The system analyzes the following parameters:

• geographical – place of residence, most frequently visited establishments, nationality, travel geography;
• economic – solvency, places of purchase, average bill amount;
• psychographic – character traits, hobbies, habits, interests;
• demographic – gender, age group, education, marital status, place of work.

This approach allows you to quickly buy and place advertising. The main work is done by the program, so the parties to the transaction do not need to discuss the terms, negotiate, and sign documents.

How Does Programmatic Advertising Work?

Automated procurement of targeted advertising is based on the interaction of three platforms:

• DSP is a system through which bids are placed at an auction and traffic is purchased. In other words, it is responsible for creating demand. With its help, advertisers can choose the platform on which the ad will be placed.

• SSP is a platform that creates an offer. It is used to sell advertising space on web resources. Thus, website owners can monetize them by selling placements at the best prices.

• DMP is a platform that collects information from the two above-mentioned systems, analyzes it, and decides who should be shown which advertisement. 3In fact, it manages all incoming data, also taking into account the interests of the audience. Special algorithms that process information from various sites help the system learn about them.

Programmatic advertising is increasingly attracting the attention of businesses, and despite the multi-component nature of the system, high-quality development of SSP and DSP solutions is possible thanks to white label offers.

Why Does a Business Choose Programmatic Advertising?

With programmatic advertising, advertisers do not need to look for a suitable resource and independently negotiate with its owner. These problems are solved by the platform, or rather the algorithms by which it works. At the same time, various formats are available for placement.

Also, standard formats do not provide for audience targeting, that is, advertising is shown to all visitors to the resource. This makes it very difficult to get a large number of responses. The only way out is through thematic sites and forums where the bulk of the target audience is concentrated.

The transition to programmatic advertising began after the emergence of advertising networks. They were the first to propose a concept according to which only those advertisements that were shown to a specific audience were paid. This mechanism still works today, but auctions have become much faster. Today, transactions are concluded in just a few seconds, since most manipulations are performed by robots. The advertiser who offers the best price conditions wins the auction.

Benefits of programmatic advertising for business:

• transparency of procurement mechanisms;
• the ability to launch an advertising campaign without intermediaries;
• the concentration of statistics from all platforms in one window;
• the ability to cover several different sites at once;
• the efficiency of transactions;
• savings on advertising campaigns;
• precise optimization of the target according to several indicators;
• the ability to purchase residual traffic at a reduced price.

Differences Between Programmatic Advertising And Contextual Advertising

Programmatic differs from contextual advertising in the methods of using keywords. Formed demand, expressed through user key queries, is what the context works with. The user only needs to enter “Zara T-shirt” into the search engine once, and he will see relevant advertisements for several months.

Programmatic works a little differently. It gets involved in the work even during the formation of demand, that is, at the very top levels of the sales funnel. An advertisement for a Zara T-shirt will not appear after a request of the same name but at the stage of searching for information about brands that produce stylish summer clothes. The ad will be shown not because of the keyword combination, but based on the information received by the systems (the person’s gender, age, and income level).

If in the case of contextual advertising, the differences are not obvious at first glance, then with SMM things are much simpler. Programmatic advertising involves purchasing advertising, and SMM also involves working with content and maintaining communication with users. The goals of advertising campaigns also differ. In the first case, you need to increase conversions and provide the resource with traffic; in the second, you need to improve engagement rates, expand coverage, and increase the number of subscriptions and registrations.

How Programmatic Advertising Works

The functioning of the system is determined by the principles underlying it. In this case, we are talking about a real-time auction. It is held on a special platform where owners of web resources register and are ready to place advertisements on their websites. Next, the purchase and placement process occurs according to the following algorithm:

• the user visits a page with free advertising space;
• the ad impression is put up for auction;
• during bidding, advertisers compete for impressions.
• the one who offered the maximum bid wins;
• the winner’s advertisement is shown to the visitor;
• an interested client follows the ad to the advertiser’s website, which converts it into profit.

The process may seem complicated and lengthy, but thanks to the help of robots, it only takes a few seconds. There is another placement method, the so-called programmatic direct. It is much simpler because it does not involve trading on exchanges. Advertising spaces are purchased on specific sites that the advertiser selects in advance.

Wrapping It Up

Programmatic advertising is a method of purchasing targeted digital advertising, which allows you to automatically purchase advertising on a large number of sites in real time. Programmatic advertising has a fairly large ecosystem, including DSP and SSP solutions. If you want to enter the programmatic advertising industry, we recommend paying attention to white label DSP and SSP solutions from TeqBlaze.