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Programmatic Advertising

What Are the Main Elements of Programmatic Advertising?

New updates from the AdTech industry.

Jason Hancock
What Are the Main Elements of Programmatic Advertising?
Programmatic Advertising

What Are the Main Elements of Programmatic Advertising?

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What Are the Main Elements of Programmatic Advertising?

Programmatic advertising is a current hot topic in the digital marketing industry. For any business owner, it’s important to stay on top of the latest advertising trends.

Programmatic advertising is a blend of automation, machine learning, and data science. If you’re not familiar with these advertising methods, it can be a bit confusing.

We can help break down the jargon to better understand how this form of advertising can help grow your business.

Here’s a guide to the benefits of programmatic advertising.

What Is Programmatic Advertising?

This type of advertising involves the buying and selling of advertising space. In the early days of digital advertising, buyers, and sellers struggled with managing ad space.

There were few opportunities for ad targeting, measured performance, or ROI monitoring. This made running a successful advertising campaign difficult.

Today’s programmatic advertising offers a dynamic alternative. It’s data-driven.

Algorithmic software capability handles the selling and placement of digital ads instantly. This applies to a wide variety of formats and channels.

Using machine learning and automation, this technology meets the needs of the advertiser and publisher. It incorporates relevant data to advance customer targeting for more accurate and precise advertising.

What’s the result? Programmatic advertising yields a higher ROI for advertisers and publishers alike.

How Does Programmatic Advertising Work?

There are many moving parts in programmatic advertising. There are a variety of services and tools you can utilize depending on your marketing needs. 

The four major components of programmatic advertising include:

Demand Side Platforms (DSP)

DSPs allow advertisers to purchase digital ad space via ad exchanges. This enables buyers to better target audiences with data such as website category, online behavior, age, physical location, and more.

Advertisers set up the ad inventory and the target audience preferences in the DSP. This type of platform automatically seeks opportunities in networks or ad exchanges that meet specifications.

Supply Side Platforms (SSP)

Publishers use SSPs to manage ad space inventory. This platform connects to multiple ad exchanges, allowing publishers to maximize exposure for potential buyers.

An SSP allows publishers to control ad space efficiently. They can set minimum prices for various impressions and dictate certain formats or buyers.

Data Management Platforms (DMP)

For a successful ad campaign, the system must match the appropriate ad inventory to the right ad space. This is where DMP comes in.

DMPs are independent platforms that function as databanks for managing, collecting, and analyzing data from a wide array of sources.

It uses algorithms to build user profiles to match relevant ads with visitors to the publisher’s site. Publishers and advertisers use DMPs to build an audience, improve targeting, and create reports.

Ad Exchanges

Ad exchanges are an important element in the programmatic ecosystem. Similar to the floor of the stock market, it’s where the DSPs and SSPs meet and agree on trade inventory and price.

It’s common for people to confuse ad networks with ad exchanges. An ad network is a platform that bundles and sells inventory from various in-network publishers. An ad exchange is a trading floor connecting multiple networks. 

It can also be a private marketplace for direct selling.

Programmatic Buying Methods

There are three main models advertisers use to buy inventory from publishers. These include:

Programmatic Direct

You may have heard the terms programmatic reserved, preferred deal, or automated guaranteed before. All of these terms are under the umbrella of programmatic direct.

It’s a one-on-one deal. Publishers offer a certain number of impressions for a guaranteed price. These advertising methods often include full-page ads or content for high-traffic sites.

Real-Time Bidding (RTB)

RTB is a platform for buying and selling ads through a real-time auction. The transition takes milliseconds to complete.

With this model, buyers bid on inventory on open ad exchanges. Advertisers can buy ad slots when a viewer visits a publisher’s site.

Private Marketplace (PMP) 

A PMP is also called a closed auction or private exchange. It’s an invitation-only model that allows publishers to display premium inventory to select advertisers.

This gives publishers more control over who’s advertising on their properties. A minimum price is set before the auction.

Advantages of Programmatic Advertising

There are so many advantages of programmatic ads. Data-driven decisions help remove the guesswork for advertisers and contribute to company growth.

Some of the amazing benefits of programmatic advertising include:

  • Efficient use of marketing dollars
  • Less spent on ineffective ads
  • More specific and data-driven targeting
  • Quick access to audiences and inventories
  • Easier to manage campaigns
  • A time-saving approach to advertising
  • Reaching a global audience

Successful Programmatic Advertising

There are four necessary components for success with programmatic advertising. 

  • Planning
  • Technology
  • Data
  • Expertise 

Programmatic advertising can be extremely successful. For many business owners, it’s an efficient use of time and available resources.

Although it’s often discussed for B2C, this form of advertising works in the B2B context as well. It’s also an effective tool for talent acquisition and recruiting purposes.

Version2 Solutions

There are many variables to consider with programmatic advertising. Advertisers and publishers who don’t choose programmatic are wasting time on outdated practices or are leaving money on the table.

If you want to see the advantages of these advertising strategies, Version2 can help you leverage top-notch advertising tools, monetize your inventory, and access a wide array of resources.

We offer a managed service, hybrid service, and self-service to help you make strategic business decisions, launch successful campaigns, and drive revenue.

Stay ahead of the curve. Take advantage of the programmatic advertising tools Version2 Solutions has to offer. 

Growing a Business With Programmatic Advertising

The benefits of programmatic advertising far outweigh the costs. If you’re interested in learning more about making it work for your business needs, we can help.

Version2 is an advertising technology company. We specialize in programmatic media strategies and algorithmically-driven performance solutions.

Our goal is to empower advertisers and agencies with the top programmatic technologies that boost performance, enhance strategy, and drive winning results.

Contact Version2 today to learn more.

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