Programmatic Advertising refers to the fully automated, data-driven buying and selling of digital advertising space in real time. Instead of booking advertising space manually and negotiating prices directly, intelligent software and algorithms control the entire process from campaign planning to placement and optimization. The aim is to deliver advertising messages to the relevant target group with high precision in order to minimize wastage and significantly increase the efficiency of advertising measures.
How programmatic advertising works
The core of programmatic advertising is a dynamic, data-based process that runs within milliseconds. When a user accesses a website or app, their Data (e.g. demographic characteristics, interests, location and online behavior) are sent to an ad exchange.
- Demand-side platform (DSP): Advertisers use a DSP to define their advertising objectives, budgets and target group criteria. The DSP receives the user data and submits a bid for the available advertising space on behalf of the advertiser.
- Supply Side Platform (SSP): Publishers make their advertising space available via an SSP. The SSP collects information about the advertising space and the user and forwards it to the Ad Exchange in order to sell advertising space to the highest bidder.
- Ad Exchange: This is a digital marketplace where supply (SSP) and demand (DSP) come together. An auction takes place here in real time, known as real-time bidding (RTB). The advertiser with the highest bid wins the auction and their ad is immediately displayed on the user's website.
Advantages of programmatic advertising
Programmatic advertising offers advertisers a number of decisive advantages over traditional forms of advertising:
- Efficiency and Automation: The automated buying and selling process saves considerable time and manual work processes that would be required for direct negotiations.
- Precise targeting: By using extensive data, ads can be displayed in a highly target group-specific manner. This enables precise targeting based on behaviour, interests, demographic characteristics and locations, which minimizes wastage.
- Real-timeOptimization: Campaigns can be continuously analyzed and optimized in real time to improve performance and increase Return on investment (ROI) to maximize.
- Scalability and reach: Programmatic advertising offers access to an immense number of digital advertising spaces and enables the flexible scaling of campaigns both locally and internationally.
- Transparency: Advertisers receive detailed insights into the placement of their ads and performance, which enables better control over the advertising budget.
Common areas of application include Display advertising, video ads (including connected TV), audio ads and native advertising.
