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At this point you have probably heard all of the buzz about programmatic advertising and how it is starting to take over the digital marketplace.  In fact in a recent study provided by eMarketer, 80% of digital display ads will be bought programmatically in 2018.

However, that doesn’t necessarily mean all of the people utilizing programmatic advertising understand what it is, let alone how it works. Which is why we decided to write this article in hopes that we can explain it a little better.

What is Programmatic Advertising?

First, we would like to point out that programmatic is a very general term. In its simplest form, it means technology that automates the digital media or ad buying process. This can include automating anything from campaign set-up, purchasing ad space and campaign optimization. Through programmatic advertising, one of the primary buying tools is a Demand-Side Platform or DSP.

What is a DSP?

A DSP is a software that allows an advertiser to buy digital inventory from ad exchanges and manage advertising campaigns. A DSP accesses data from multiple sources and performs real-time analytics to evaluate impressions as they are offered and place bids accordingly. The DSP can connect to multiple ad exchanges and data exchanges simultaneously.

What is an Ad Exchange?

An ad exchange is a digital marketplace where advertisers buy digital advertising space via real-time bidding (RTB).

What is Real-Time Bidding?

Real-time bidding (RTB) happens as ad exchanges announce the amount of impressions and inventory availability to DSPs. The DSP then automates decisions, bids and purchases in real time, while a user’s requested web page loads. The advertiser can select criteria for targeted ads and access huge numbers of available impressions.

In a nutshell, programmatic advertising makes it possible for people to purchase ads across multiple websites all at the same time, based on their targeting criteria, in a cost-effective way.

If you have any questions about programmatic advertising or would like to see if this is right for your business, we can help. Contact us today.