Programmatic advertising is a reason for a clear shift happening in the ad tech world today. This is evident especially in the areas of marketing and associated technologies.
My journey on this exploration of programmatic advertising has come a long way. It began with real-time bidding (RTB), understanding differences between RTB and programmatic advertising but concepts are numerous and still pending to be explored.
From my basic understanding and prevailing trends, most programmatic ads continue to be executed via RTB. But there is definitely more to programmatic ads than just RTB based transactions. Thanks to the varying level of complexities involved in charting marketing strategies. Based on the type of available inventory and the deal by which the inventory is bought and sold, programmatic ads are executed through different channels. Let’s learn more.
Programmatic ads quadrant
Interactive Advertising Bureau (IAB), is an organization that sets the standards for best practises in the interactive advertising. As per IAB, programmatic advertising is categorized across four quadrants based on the two criteria namely inventory and pricing.
Basis of classification
Programmatic media-buying happens based on two points, namely, the inventory type (reserved or unreserved) and the deal pricing (fixed or auction-based).
Inventory type- reserved
Here the ad inventory which is the particular space or section in a website or maybe a whole page set aside for ads is exchanged for an agreed value with specific advertisers. Buying reserved inventory is like buying a desired ad space in a print magazine for the duration, size and the frequency of ad present.
Reserved inventories offer better management of the strategy and corresponding implementation of advertising. For instance, you can buy ad space in a particular website that supports your business goals. The reserved inventory is usually bought from a selected publisher (website) at a predetermined price which is helpful to work out a blueprint in advance and garner efficiency through proper planning.
Inventory type – unreserved
This is prevalent in programmatic ads, as not all the ad space is reserved for a specified advertiser in a website or application. There are unreserved ad spaces which are bought through ad exchanges and ad networks in open market place. This involves platforms and/or players like advertisers, Demand Side Platforms (DSP), Data Management Platform (DMP), Supply Side Platforms (SSP), Publishers, etc.
Unreserved ad space is available across multiple sites and through the technology infrastructure like RTB. It is possible to buy and sell ad space with ease with the established infrastructure, thus giving the vast opportunity of better reach to your audience through retargeting. As users browse through various websites, targeting them with sequential communications are sure to reinforce branding.
Pricing – fixed
Before the advent of programmatic, ad space was sold through a fixed price. The price is fixed beforehand through negotiations for a particular ad inventory that fulfills the set criteria. The concept of fixed-priced inventories continue to be prevalent through ad technology infrastructure in spite of having programmatic ads in place.
Auction based inventory in a website is open for real-time bidding. This dynamically priced inventory is sold either at open or private marketplaces.
Types of programmatic advertising
Based on the classification system, let us get acquainted with the concepts of Automated Guaranteed, Unreserved fixed rates, Invitation-only and Open auction deals.
Automated guaranteed/ programmatic direct
Automated guaranteed or programmatic direct refers to a type of programmatic advertising where the reserved inventory is bought at a fixed price. Here it reflects the traditional way of purchasing the ad space from a fixed vendor at a pre-agreed price that is one seller and one buyer. This is a technology enabled and structured version of an in-person sales process. The publisher reserves part or whole of the available inventory for a specific buyer or set of buyers instead of selling the inventory through any ad network or other sales processes.
In this type, the price is fixed and the transaction is executed through third party companies that facilitates the metrics appraised through the platforms. This ensures and encourages the trust between the publishers and the advertisers. Here, third party platforms are directly incorporated into the publisher system to guarantee ad space and impressions with a considerable control over the pricing and other terms.
Unreserved fixed rates
Unreserved Fixed Rates is also called preferred deals. Here the ad space is unreserved and the price is fixed. Individual advertisers (buyers) buy the inventory through prior price negotiations and have the edge of selecting the seller or publisher through a specific set of criteria or available data garnered earlier. The cost per impression is generally higher in this type of programmatic as it is about the ad spaces in specific sites based on established data.
Usually advertisers contact publishers media space purchases with set of requirements on specific sizes, ad placements and specific target audiences to whom they want the ad to be displayed. If the ad space fails to get sold via programmatic direct and preferred deals, they will qualify for an open marketplace auction.
Invitation-only auctions are programmatic ads based on private marketplaces (PMP). Here the ad space is sold by select publishers and the price is dynamic as the auction happens in real-time between exclusively invited buyers (advertisers). Simply put, one seller and multiple invited buyers.
If you’re looking to run your ads on a particular news website or a sports website, with a defined ad strategy it could be a PMP channel. Unlike Automated Guaranteed, the buyer doesn’t have the control on the price and they utilize the auction and can transact on individual impression basis.
Open auction / real-time bidding
Open auctions are nothing but real time bidding where the ad space is unreserved and the price is determined through an open auction based on a technology infrastructure involving various players starting from DSP, SSP, ad exchange, networks, DMP, etc. One of the major examples are retargeting ads which is based on the RTB concept.
This help advertisers to get access to the ad inventory of publishers across the web. And the access is enabled by the tech infrastructure that supports multiple ad exchanges and networks to participate and deals are clinched. This channel offers options to create and promote ads with a set criteria of user priorities and attributes.
With the arrival of programmatic, current trends have shaped up a vibrant age in the ad tech world. There has been some claims that programmatic is a just a phase, but trends show this could most likely be the next level of digital advertising in this last decade.
In terms of embracing the technology, there has been some reluctance and the challenges faced by publishers and advertisers, and not to mention the jargons and associated acronyms. Even though there are some challenges in this endeavor, it is worth pursuing as the benefits certainly outweigh the efforts.
The coming days can give you a lot more to be excited about. Stay tuned with the trends.
Great days ahead!