Programmatic advertising is a process of buying and selling ad inventory through automated processes, which enable publishers to sell their ad inventory and advertisers to buy impressions at a satisfying bidding price.
Publishers’ revenue model is primarily based on selling ad inventories to advertisers.
In the old days, publishers would sell most of their ad inventory through salespeople. However, most of the digital ad inventory is now managed via ad exchanges which are based on automated processes.
Often those programmatic processes also use sophisticated systems that tap into data to qualify the audience. Usually, that data comprises demographics, location, interests, and behaviors of the users, on the publisher‘s platform.
At the same time, a programmatic advertising network might use artificial intelligence to better target and match audiences with advertising.
Therefore, in theory, a programmatic advertising process can leverage on a more complex system to provide better-targeted ads, which might be more engaging, and relevant for users, and bring a higher ROI for advertisers.
In general, the data collected via programmatic advertising can be first-party data (if gathered from the owned platform) or second, third party data (if gathered on outside platforms).
Why does programmatic advertising matter?
Since programmatic advertising is an automated process of buying and selling ad inventory, this usually channels in two ways:
- Or through real-time bidding
As adexchanger.com explains, there are four main categories of programmatic advertising:
- Automated Fixed Price, Reserved Sales, executed directly between a single buyer and seller.
- Fixed Price, Unreserved Via Deal ID, executed at fixed-price deals with a given buyer, on a nonguaranteed basis.
- Private Exchanges, based on a bidding protocol and limited participation.
- Open Exchanges nonfixed, without price floors or limits on buyer access.
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