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What is Programmatic Advertising and How Does It Work?

Isn’t it great when you go to the greengrocer in your neighborhood and the greengrocer has your favorite oranges ready for you and recommends that you try the melon, which is very sweet and knows how much you like it?

And we all value that personal touch in our purchases.

Well, if we extrapolate this to the digital world, have you noticed that the advertising that hits you when you browse the internet coincides with your tastes and interests?

In a world where we receive thousands of advertising impacts, every day, personalizing advertising is one of the strategies that work best.

Fortunately, the way of advertising on the Internet has changed radically and programmatic advertising is a great example of this. This type of advertising not only makes it possible to greatly increase the effectiveness of your business campaigns, but also to impact audiences and advertise in spaces that were previously unthinkable, and all thanks to the great advancement in Artificial Intelligence.

And the greatest news is that this kind of advertising is not only for the big corporations anymore. Any small to medium business can opt for it, thanks to advertising agencies like Ranwell Productions which is a great example of a company that offers powerful advertising campaigns at a very affordable cost, so it is the perfect ally for small to medium businesses.

What is programmatic advertising?

We can define programmatic advertising as an online advertising model through which you can automatically purchase advertising space on the Internet.

We would say that programmatic advertising is the smartest way to advertise online since in this case advertisers pay for their ads to be shown only to their specific target. In other words, they buy audiences, not media or advertising spaces, for showing an ad to a specific audience, not for appearing in a certain space.

It is perhaps one of the most complex parts of marketing, but if you know how it works, your chances of success will be much higher. After all, it gets to connect a brand with the right consumer at the right time and in the right place by displaying ads related to them.

5 Advantages of Programmatic Advertising

Programmatic advertising offers a series of benefits for your business and advantages over traditional advertising. Let’s see some of them:

  1. Reach an infinity of media

One of the greatest advantages of programmatic is that thanks to technology and AI, it has been possible to create a system in which you can place your ads in countless media, websites, blogs, etc. which was previously unthinkable.

  1. Segmentation improves exponentially

Big Data and the collection of user data allow advertising campaigns to be carried out with very precise segmentation in which you can play with variables such as the type of user, the place where they are, their interests, their online behavior, etc.

  1. It is much more efficient

Once again, thanks to technological advances and a series of processes that bring together different interconnected agents, you can buy ads yourself by connecting to a platform/software, which means significant savings in time, work and money.

  1. Great optimization capacity

Programmatic advertising can be modified in real-time by seeing which types of ads or which media are working better and which are worse. This way you can optimize your campaigns and have more control over your advertising.

  1. A greater predisposition on the part of the user

With programmatic advertising you can practically personalize each ad so that users will only be impacted by ads of interest to them and this greatly minimizes the rejection of online ads and improves the user experience.

The 2 types of programmatic advertising

We can differentiate two types of programmatic advertising:

Direct programmatic

This one is based on the direct hiring of advertising through a platform or software with a single medium or support.

In other words, you choose where you want your ad to appear and what type of audience you want to target, which allows you to have more control over your campaigns.

This can be very useful if you are promoting a certain product or service that you do not want to appear in certain media or websites (for example An ad about a baby product on a weapons blog, an adult website, etc.).

The RTB (Real-Time Bidding)

This type of programmatic allows you to impact only users with certain attributes that you have previously defined.

With RTB, you can bid on ad slots in real-time by limiting your ad impressions to users who are most likely to click on them.

This is done thanks to a cookie-based system that collects a lot of user information (demographic data, interests, behavior, etc.) which allows you to segment your target audience in a much more precise and effective way.

How does programmatic advertising work?

Programmatic advertising works with a system based on algorithms that are responsible for establishing matches between the spaces available online and the data that advertisers obtain about their audience. Thus, they progressively store more and more data until they even anticipate user behavior based on their interests, tastes, schedules and devices, as well as demographic data such as age, sex, social position, or location.

Different agents participate in this whole process:

The offer

What are the media, websites and blogs that have advertising space and want to sell it?

The demand

What are the companies, businesses and brands that want to buy programmatic advertising?

SSP (Sell Side Platform)

The offer or the different media use a SSP (Sell Side Platform) which is a platform where they upload all the information about their advertising spaces, and the slots they have for sale (setting a price for each slot).

ad exchange

The SPP connects with the Ad Exchange, which serves as an intermediary between the supply and demand of ads. This detects the advertising gaps and the information of the user who has connected to this page and generates an “opportunity” for interested advertisers, in addition to setting the price of this ad.

DSP (Demand Side Platform)

The price is set based on the bids made by the demand or the advertisers in the DSP where the campaigns and all their segmentation are configured (such as Facebook Ads or Google Adwords).

In addition, the DSP is in charge of finding the best price for these ads thanks to the Bidder, which through algorithms and AI is dedicated to getting you the best result according to the budget you have and the options you have selected.

DMP (Data Management Platform)

All the information and data about the users to create the audiences of the campaigns are in the DMP that serves both to create specific audiences and so that advertisers can create them based on data from external sources.

All of this DMP information is organized to make advertising as effective as possible and to give both parties the ability to target as effectively as possible.

Trading Desk

There are also external agents such as the Trading Desk, which are agencies or parts of agencies specialized in programmatic that facilitate the purchase of advertisements for companies by contributing their knowledge and technology.

Affiliate networks and ad networks

They provide the same service to the media that offer their advertising space.

Ad servers

They serve and launch the ads to the corresponding advertising spaces (they are a repository where the advertiser places their banners, videos, etc.) and also measure their information (display time, clicks, etc.).

How is programmatic advertising contracted?

We are going to explain step by step how you can buy programmatic advertising:

Let’s say you want to advertise your product or service in different advertising spaces.

You have two options: Hire an agency or do it on your own.

In case you want to hire an agency, you have to send a briefing with the details of your buyer person and information about how they behave on the internet, what websites they visit, etc.

If you want to handle it on your own, you will have to hire specialized programmatic software. You can choose between three campaign types: new audience, retargeting or email opening. You can also segment by geographical area.

A tool will offer you a list of media where you can advertise, filtered by interests or themes, in which you can select the ones that interest you the most.

You can choose an automatic or determined bid, it does not require a minimum investment and it allows you to measure your campaigns (number of clicks, cost per click, in what medium, etc.)

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