Programmatic advertising/adtech: a brief introduction – part 1

In this first article, Rupam Davé takes a look at the key features of programmatic advertising. Part 2 of the series will consider some of… Read more

In this first article, Rupam Davé takes a look at the key features of programmatic advertising. Part 2 of the series will consider some of the key legal implications that those contracting for adtech need to take in to consideration.

What is programmatic advertising?

Programmatic advertising is the process through which online advertising opportunities are sold by publishers (i.e. website operators) to advertisers looking to target specific audiences with their adverts using an automated process.

In this article we describe how “real-time auctions” operate (although other forms of programmatic advertising also exist).

Programmatic contrasted with traditional online advertising

Under the traditional model, an advertiser manually purchases advertising space on websites through direct contracts with each website publisher.

In contrast, in the programmatic world, the advertiser purchases website user views (known as impressions) through an automated online auction which trades individual impressions in real-time. Typically, in this scenario, the advertiser and the publisher will not have a direct contract in place and instead will rely on their respective intermediaries to ensure appropriate safeguards are flowed up and down the supply chain.

How do real time auctions work?

Each time a web-user requests a webpage through his or her browser, the publisher (i.e. the website operator) will sell that person’s impression to an advertiser through an online auction facilitated by multiple third parties. The highest bidder will win the auction and its advert will be served to the web-user:

The key third-parties are:

• Demand Side Platform or “DSP”

Advertisers (or agencies acting on their behalf) will typically provide bid criteria to a DSP.  Each DSP will then automatically bid for impressions on the advertising exchange on the advertiser’s behalf.

Bid criteria might include: maximum bid value, specific sites to bid for, specific demographics to target, types of device to target (e.g. smart phones over desktops) or times of the day to bid.

• Ad Exchange

This online platform runs each real-time auction by connecting impressions with adverts (typically through its interfaces with various DSPs and SSPs).

• Supply Side Platform or “SSP”

Publishers will typically provide their requirements to an SSP. The SSP will then manage the sale of each impression on the ad exchange on the publisher’s behalf.

• Data Management Platform or “DMP”

All participants in programmatic advertising can utilise a DMP. A DMP holds and processes information about individuals visiting websites.

DMPs also help advertisers to create audiences of individuals with common characteristics. These “target audiences” can be used by advertisers to target specific groups with advertising campaigns.

Key terms

The adtech sector is rife with jargon which can be difficult to get to grips with. To help with this, we’ve produced a glossary which should help to demystify the most common terms.

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