What is Programmatic Advertising? How to scale revenue with it?

AdTech Industry Definitions
Last updated: March 12, 2024 | by Aleesha Jacob
what-is-programmatic-advertising

This post was most recently updated on March 12th, 2024

There’s no denying that programmatic advertising is here to stay despite AI. In 2024, programmatic advertising is projected to grow even faster than before, with spending estimated to surpass $150 billion. This means that programmatic advertising is not going anywhere. Take advantage of your share of this lucrative market. Embrace programmatic advertising and see the benefits it can bring to your business.

In this article, we will explore the various aspects of programmatic advertising and provide a comprehensive understanding of this important topic.

What is Programmatic Advertising?

Think of programmatic advertising like a high-tech, super-fast auction for online ad space. As a publisher, when someone visits your website, your ad space is instantly put up for auction. Advertisers then bid in real-time to place their ads on your site. The highest bidder gets their ad shown to your visitor. This whole process happens in milliseconds, using sophisticated algorithms, making sure your ad space is sold for the best possible price every single time someone visits your site. It’s like having a lightning-fast, automated salesperson working for you 24/7.

MonetizeMore helps publishers unlock the power of programmatic advertising. Their PubGuru platform streamlines ad setup, even for complex networks, while IVT blocking maximizes revenue. See why publishers experience an average growth of 50-300% within just six months!

How does Programmatic Advertising work?

Programmatic advertising is an intricate process that involves automated exchanges of digital ad inventory. Here’s how it generally works:

  1. A user engages with a publisher’s website or video content.
  2. The publisher then puts up available ad space for auction through a supply-side platform (SSP).
  3. Advertisers utilize demand-side platforms (DSPs) to bid in real-time auctions with their ad creatives.
  4. The winning bid, usually the highest one, secures the ad placement.
  5. The ad is displayed to the end-user on the publisher’s website or video.
  6. This entire process unfolds within a fraction of a second, with various technologies like video header bidding facilitating simultaneous bids from multiple sources.

There can be instances where a publisher may have a prearranged agreement with an advertiser, known as a preferred deal. Here, the advertiser bids at a predetermined cost per thousand impressions (CPM). However, this bid competes alongside other bids from different demand sources, ensuring fair competition and optimal placement.

How it got started: A brief history

What is Programmatic Advertising? How to scale revenue with it? MonitizeMore

 

Before we get into the technical details, it’s best to show you how programmatic got started in the first place. Let’s rewind to the early stages of the internet. Buying an ad space online was a much simpler process than it is today. It originally started with a relationship between publishers and advertisers.

The advertiser is also known as the buyer and the publisher as the seller.

The goal of the Advertiser normally was to reach their target market or audience and to influence them to perform some action. This action could be to make a purchase, build brand awareness, promote an event, etc.

The goal of the Publisher was to build a web property that contained intriguing, entertaining and useful content to attract an audience the advertiser would want to reach with their marketing campaigns.

Agencies then started helping advertisers to achieve their marketing goals and communicate with their target audience. It was the job of media planners to create media plans to target the right audiences and subsequently to communicate with the publishers that had access to those audiences. However, the internet started to grow at an unprecedented rate, and a massive oversupply existed.

It resulted in a tonne of ad inventory left unsold and not being monetized. Publishers grew at a much quicker rate than advertisers and it was getting harder for advertisers to consume the supply available to them.

Next, a new group within the advertising ecosystem emerged and called themselves Ad Networks. What this group did was categorize a publisher’s unsold ad inventory making it easy for media planners to consume, access and include it within their media campaigns.

It resulted in online media evolving into premium and remnant ad inventories. Premium ad inventories were sold the original way with a direct relationship between advertisers and publishers. Remnant ad inventories were the unsold or leftover ad space of a publisher that got sold through ad networks.

With this new development, the selling process became more complicated for publishers, and they had to find a way to manage who was gaining access to their inventory for resale to agencies and advertisers. That is how an SSP or Supply Side Platform was invented.

An SSP helps publishers maximize their revenue earned through ad networks by acting as a layer between publishers and third-party advertising networks. Supply Side Platforms give publishers control over their ad inventory and help them dictate how it is sold and delivered to ad networks. With SSPs, a bidding environment was created to help publishers extract the most revenue possible for their ad inventories.

At the other end of the spectrum, DSP’s or Demand Side Platforms started to emerge to assist agencies and advertisers with the buying side. A DSP is defined as an infrastructure that enables advertisers and agencies (buyers) to manage their media buying via a single platform.

DSPs and SSPs developed and improved their technology leading to an infrastructure integrating both platforms and allowing buyers and sellers to perform programmatics with real-time bidding or RTB.

Using all these automated and data-driven techniques resulted in a programmatic way to buy and sell digital media. Which created the term programmatic to categorize the industry.

Real-time bidding (RTB)

RTB is an integral ingredient within the programmatic industry. Originally advertisers would buy impressions in bulk, but it was hard to differentiate one particular type of audience from another. If the advertiser was promoting a travel product aimed at the senior market over 50, but within the impression range, there were also audiences within the 20-30-year-old range not interested in traveling it would mean that the whole audience would see the same ad.

You can imagine that this is not a very efficient way to spend your advertising budget.

With Real-time bidding, an auction environment was created where advertisers can show specific ads to a particular set of audiences based on data points about that audience. As a result, the advertiser can now programmatically display his travel ad only to senior audiences older than 50 and who is interested in traveling instead of losing impressions on an uninterested or non-targeted audience.

In other words using data, machine-learning technology and a set of tools RTB makes sure that ads are delivered to the right audience via programmatic inventory.

You can also watch this video from the IAB to learn more about Real Time Bidding.

Different types of programmatic advertising explained

Before we expand on different types of programmatic explained, let’s take a quick look at the benchmarks defined by the (IAB) which is also known as the Interactive Advertising Bureau.

Reserved inventory

This is when a particular area within a web property gets allocated to a publisher for a settled rate. This could include an agreed-upon ad size, a frequency of ad display and time frame.

Unreserved inventory

This is the exact opposite of reserved inventory where a publisher makes a particular location on his website available for ad spots since inventory is only sold directly. The unreserved or remnant inventory gets sold through third-party ad networks and other ad exchanges via Real-time bidding (RTB).

Fixed price

Originally fixed price was the way to go through human interactions and negotiation. Even though programmatic rules in the online media buying industry fixed price negotiations still exist.

Auction pricing

This is when RTB comes into play, and the ad inventory of a website is categorized and set up for sale to advertisers.

Now that you understand the standard of industry criteria let’s take things further and dive into the different types:

Programmatic direct

This is also called automated guaranteed and happens when a buyer gets a hold of a publisher’s ad inventory at a fixed price. This inventory also happens to be reserved and is very similar to the old way of trading inventory where a direct sales team is involved. Third-party companies and a particular set of platforms are required to add control and ensure delivery.

Preferred deals

Preferred deals are also referred to as unreserved fixed rates and relate to the ad inventory not being reserved, but the price agreed upon beforehand. As with programmatic direct, there needs to be a direct line of communication between the advertiser and the publisher. You can read more about this programmatic ads example classification here: Private Marketplace or Preferred Deals Explained.

Exclusive Auctions

This is also referred to as invitation-only auctions and covers private marketplace deals where inventories are sold by a group or single premium publisher. An auction takes place between exclusive advertisers that only gain access by invitation.

Open auction RTB environment

This is when a technology-based bidding environment is created for advertisers to bid on remnant ad inventories of publishers. This option can give advertisers and agencies quick access to a wide range of publisher inventories on a global scale.

Programmatic video, mobile, and native advertising

What is Programmatic Advertising? How to scale revenue with it? MonitizeMore

 

Programmatic advertising has come a long way since its early days of being primarily associated with display advertising. In 2023, programmatic advertising diversified into mobile, video, and native advertising.

This is a testament to the power and versatility of programmatic advertising. By using data and automation, programmatic allows advertisers to deliver personalized, relevant, and engaging ads to their target audience at scale.

Native programmatic advertising allows brands to deliver relevant content seamlessly within the publisher’s website or application. Programmatic native advertising continues to grow its reach, with more publishers enabling native ads on their websites. This advertising channel is affected by ad blockers much less than display advertising, which greatly benefits the programmatic industry.

Video programmatic advertising has become increasingly popular, and with the rise of streaming platforms and connected TV, it’s expected to continue to grow in the coming years. Programmatic mobile advertising is also a hit as consumers spend more time on mobile devices, and brands are turning to programmatic to reach them effectively.

Mobile video ad spending is expected to continue growing in the coming years. As consumers spend more time on mobile devices and the availability of high-speed mobile internet continues to expand, mobile video is becoming an increasingly popular format for both advertisers and consumers.

What is Programmatic Video Advertising and why is it worth it?

Programmatic video advertising automates the ad buying process, making it more efficient and targeted, which in turn enhances the overall effectiveness of advertising campaigns.

Think of programmatic video advertising like a super-smart robot that finds the perfect spots for your video ads. Instead of manually picking websites or apps, this robot uses data and fancy algorithms to figure out exactly who would be most interested in your ad and shows it to them at just the right time.

Programmatic video advertising is like having a marketing sniper instead of a shotgun. It might seem a little techy at first, but it’s definitely worth learning about if you want your video ads to actually make a difference.

Benefits of Programmatic Video Advertising include:

What is Programmatic Advertising? How to scale revenue with it? MonitizeMore

  • Laser-focused targeting: You’re not just blasting your ad to anyone and everyone. You can target by location, interests, and what people are searching for… you name it! This means your ads are way more likely to be seen by people who actually care.
  • Saves time and money: The robot handles all the boring ad-buying stuff, so you can focus on making awesome videos. Plus, since your ads are super targeted, you waste less money on people who won’t click.
  • It gets results: More relevant ads mean people are more likely to watch them, click on them, and maybe even buy your stuff.
  • Increased Revenue: Get the most out of your ad inventory with higher fill rates, competitive bidding among advertisers, and better-matched ads.
  • Time Savings: Automated processes mean less time spent on manual negotiations and ad placements.
  • Transparency and Control: Gain insights into your audience, view campaign performance, and have granular control over which ads appear on your platforms.

What are the drawbacks of programmatic video advertising?

While programmatic video advertising has many benefits for publishers, here are some of the potential drawbacks to consider:

  • Technical Complexity: Setting up and managing programmatic video advertising can be complex, especially if you don’t have in-house expertise.
  • Loss of Control: Automation means giving up some control over the types of ads that appear on your site and the prices at which they’re sold.
  • Ad Fraud: The programmatic landscape can be susceptible to fraudulent activity like bots and fake impressions, leading to wasted ad spend for advertisers and lower income for publishers. Combat Ad Fraud by using reliable ad fraud mitigation tools like Traffic Cop.
  • Data Dependence: Effective programmatic advertising relies on data. If your first-party data collection is limited, targeting and optimization could be less precise.
  • Fees and Commissions: Supply-side platforms (SSPs) and other intermediaries often take a cut of your revenue in exchange for their services.

How can one serve video ads programmatically on a website?

Serving video ads programmatically on your website involves a few key steps. First, you’ll need quality video content to advertise. Then, partner with a Supply-Side Platform (SSP) to connect you with the world of programmatic advertising. An SSP helps you manage your ad inventory and tap into ad exchanges where ad space is bought and sold in real-time.

Integrate a video player into your website that’s optimized for ad serving (like VAST or VPAID compliant). Finally, the SSP, along with audience targeting data and real-time bidding processes, will automatically determine the most relevant and highest-paying ads to be dynamically displayed on your website to your visitors.

What are the most common types of Video Ads used in Programmatic Advertising?

In programmatic advertising, some of the most common types of video ads include instream video ads, outstream video ads, and in-banner video ads.

What is Programmatic Advertising? How to scale revenue with it? MonitizeMore

In-Stream Video Ads:

These are the classic video ads that play within other video content.

  • Pre-roll: Plays before the main video starts.
  • Mid-roll: Pops up during a break in the main video.
  • Post-roll: Appears after the main video finishes playing.

Out-Stream Video Ads:

These ads are a bit more independent and can show up in various places.

  • In-Read: These autoplay silently as you scroll through an article or website. The sound kicks in if you engage with them.
  • In-Banner: Video ads cleverly tucked inside standard banner ads.
  • Interstitial: These take over the screen temporarily, often as you transition between pages of a website or app.

Other Noteworthy Types

  • Linear Ads: These are like regular TV commercials – unskippable and play for a set duration.
  • Non-linear Ads: These run alongside content, letting the viewer interact with them (think small banners or overlays)
  • Companion Ads: These are smaller ads (banners, text, etc.) that hang out with the main video ad, reinforcing the message.

How can a publisher get started with programmatic video advertising?

Here’s a breakdown of how publishers can dive into the world of programmatic video advertising:

The Essentials:

  1. Video Content: You need something to advertise! If you don’t have your videos, you can partner with content creators or license existing videos.
  2. Ad Space: Where will your videos play? This could be your website, app, or even partnering with other websites that have video sections.
  3. A Video Player: You’ll need a good video player that supports ad formats. This player allows those cool video ads to pop up before, during, or after your content.

Getting Technical (but not TOO technical):

Find an SSP: SSP stands for Supply-Side Platform. These platforms are like your connection to the world of programmatic advertising. They’ll help you list your ad space and connect you with potential advertisers.

Ad Exchange Power: Ad exchanges are the digital marketplaces where the magic happens – ads get bought and sold in a flash. Your SSP will connect you to the best options.

Choose an Ad Server (Optional): If you’ve got a ton of videos and ad space, an ad server helps you manage everything smoothly. Think of it like a super organized filing cabinet for your ads.

Software and tools

As a publisher, you’re in a unique position to benefit from the vast array of Ad Tech companies and programmatic advertising tools available today.

Some of the most widely used programmatic advertising software and tools are already trusted by industry leaders like MonetizeMore and many other advertising companies. One of the most popular and widely used is Google Ad Manager. This powerful platform offers a comprehensive suite of tools that can help you manage, optimize, and monetize your inventory and access a wide range of demand sources.

By leveraging these top-notch programmatic advertising tools, you can streamline your operations, increase revenue, and gain valuable insights into your audience. As a publisher, staying ahead of the curve and taking advantage of the best programmatic advertising tools available is essential.

To get access to Google AdX, Click here.

Programmatic Advertising Trends for 2024

What is Programmatic Advertising? How to scale revenue with it? MonitizeMore

  • Increased focus on privacy and data security: As privacy concerns continue to grow, brands and advertisers will place a greater emphasis on data security and compliance with regulations such as the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA).
  • Growth of OTT and CTV advertising: With the rise of streaming platforms and connected TV, over-the-top (OTT) and connected TV (CTV) advertising is expected to become increasingly popular among advertisers looking to reach audiences on these platforms.
  • Expansion of programmatic audio: Programmatic audio is becoming more prevalent as brands seek to reach consumers through new channels, including podcasts and streaming music services.
  • The emergence of 5G: The roll-out of 5G networks is expected to lead to faster and more reliable mobile connections, which will in turn drive the growth of mobile video and other forms of programmatic advertising.
  • Development of advanced targeting and personalization: As programmatic advertising matures, more advanced targeting and personalization techniques will be developed, allowing brands to deliver highly personalized ads to the right audience at the right time.
  • More programmatic in-game advertising: With the growth of mobile gaming, brands are increasingly turning to programmatic in-game advertising as a way to reach a highly engaged audience.
  • Investment in AI and Machine Learning: Advertisers and publishers are investing in AI and machine learning to improve the efficiency and effectiveness of their programmatic advertising campaigns, including automating the optimization process, audience segmentation, and ad delivery.
  • More transparency and accountability: Advertisers will be putting more pressure on platforms and vendors to provide greater transparency and accountability in the programmatic advertising ecosystem, including ensuring brand safety and viewability.

Conclusion

According to current trends and industry developments, it’s becoming apparent that advertisers and publishers who don’t use programmatic are either leaving money on the table or wasting time on ineffective practices. As the online advertising industry gets more technology-driven, it’s best to adopt these practices and get with the times or else your business might fall behind, stagnate or even go under because of it.

If you’re a publisher and want to see firsthand the advantages of an optimal programmatic advertising strategy, go ahead and sign up for a Profesional account at MonetizeMore and let our ad ops team help you get the most out of your ad inventory today!

Our CEO, Kean Graham’s tips on how you can double your programmatic ad revenue in 2024

What is Programmatic Advertising? How to scale revenue with it? MonitizeMore

Whether 2023 was challenging or exceptional for your business, it’s best to learn from experiences and move on. You can’t go back in time, but you can work towards making 2024 your best year yet. Here’s how:

  • Nail your viewability: Ensure your ads have a high chance of actually being seen. Optimize placements and work with your SSP to improve viewability rates.
  • Optimize Floor Prices: Use data to set minimum prices for your inventory. Don’t undervalue your ad space!
  • Test and Iterate: Programmatic success is all about testing. Try different targeting options, formats, and pricing strategies. Analyze your results and keep refining your approach.
  • Get Seasonal: Be ready to capitalize on high-spending seasons and holidays. Plan your campaigns and ad formats accordingly.

That’s why partnering with the best ad tech company in the industry will make all the difference. Get started here!


FAQ

What is programmatic revenue?

It is the ad revenue you get from selling your ad inventory programmatically to advertisers.

What is inventory in programmatic?

Inventory in programmatic refers to the ad inventory a publisher makes available programmatically on the open market. Advertisers bid on the inventory with the end goal of displaying their ads on publisher websites.

What is programmatic video advertising?

Programmatic video advertising is a video ad trading method that uses an automated program to make the process quicker, easier, and more affordable.

What manual configurations are necessary for serving ads and implementing ad tags in programmatic video advertising?

Publishers need to configure the video player to serve ads, implement ad tags, set the floor price, and embed the video player on their website. Additionally, tracking ad performance and optimizing ad yield are essential manual setup tasks.

What is the importance of setting a floor price in programmatic video advertising, and how can a publisher determine this price?

Setting a floor price is crucial in programmatic video advertising as it represents the lowest CPM accepted per impression. Publishers can manually set the floor price or opt for an automated price floor optimizer to maximize revenue.

What features should a publisher look for in an online video platform (OVP) when getting started with programmatic video advertising?

When choosing an online video platform, publishers should prioritize features like reliable, lightweight HTML5 players for global content distribution, support for AVOD, and easy integration with programmatic ad platforms.

Is programmatic advertising dead?

Programmatic advertising is not dead, but rather alive and thriving. This form of advertising has proven to be highly beneficial due to its efficiency and cost-effectiveness in ad trading for all involved parties. Its continued success and widespread adoption indicate that programmatic advertising is here to stay for the foreseeable future.

Programmatic in advertising refers to the automated process of purchasing and selling ad space utilizing specialized software. Unlike traditional methodologies involving manual negotiations, programmatic advertising streamlines the buying and selling of digital ad inventory through efficient and automated mechanisms.

Why are Publishers turning to Programmatic Video Advertising?

Publishers are embracing programmatic video advertising because it offers greater efficiency, better control, and a significantly improved revenue stream. Automating the ad buying process saves them time and resources, while advanced data targeting ensures their ad space reaches the most relevant audience. This translates to higher fill rates (no more empty ad slots) and increased competition among advertisers, ultimately maximizing the value of their inventory and driving up their ad revenue.

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