Understanding Programmatic Advertising and How it Works - Logicsofts

Understanding Programmatic Advertising and How it Works

31st March 2023

Imagine a bustling marketplace where digital billboards are auctioned off in the blink of an eye, with vibrant ads tailored to each passerby’s interests, all orchestrated by an invisible conductor.

Welcome to the world of programmatic advertising, where technology and creativity come together to deliver an advertising experience like no other, even from the comfort of your home.

You can simply utilize the services of programmatic advertising companies and automate your advertising needs.

What is Programmatic Advertising?

Programmatic advertising revolutionized the method of buying and selling online ad space using automated processes, software, and algorithms. This approach streamlines the advertising process by eliminating the need for manual negotiations and insertion orders between advertisers and publishers, making it more efficient and data-driven.

Before programmatic advertising companies revolutionized the industry, the traditional approach involved manual processes and direct negotiations between advertisers and publishers, often referred to as traditional media buying.

This method came with its fair share of drawbacks, such as inefficiencies in the negotiation process, limited targeting capabilities, and a lack of real-time data for optimization.

How Programmatic Advertising Companies Work and Why You Need Them?

Programmatic advertising companies help publishers automate the process of buying and selling online ad space, allowing for more precise targeting, real-time performance adjustments, and better campaign results.

The process is extensive and requires specialized skillsets and resources to set up from the start. These companies can serve all your advertising needs cost-efficiently without the need for a separate advertising operation.

Your organization can look towards India for talent as it has emerged as a hub for digital marketing and advertising talent, including companies in programmatic advertising.

The rapid growth of the digital economy in India, combined with its strong IT infrastructure and a large pool of skilled professionals, has contributed to the development of a robust programmatic advertising ecosystem in the country.

Let’s take a closer look at this.

  1. Advertisers create ad campaigns: Advertisers set up campaigns in a Demand-Side Platform (DSP), specifying their target audience, ad formats, budget, and campaign goals. Publishers offer ad inventory: Website owners or publishers use a Supply-Side Platform (SSP) to make their ad space (inventory) available for purchase, specifying the ad formats they accept and setting minimum prices.
  2. Ad Exchange connects advertisers and publishers: An Ad Exchange acts as a marketplace where DSPs and SSPs communicate with each other. When a user visits a publisher’s website, the ad space is made available in the Ad Exchange.
  3. Real-time bidding (RTB): When a user visits a website, the available ad space is auctioned off in real-time. Advertisers’ DSPs place bids based on the user’s profile and their campaign targeting criteria. The highest bidder wins the auction and gets their ad displayed.
  4. Ad is displayed: The winning ad is displayed on the publisher’s website to the user. The entire process takes only milliseconds.
  5. Data and optimization: Advertisers and publishers receive real-time performance of the ads, which they can use to optimize their campaigns or ad inventory for better results.


Types of Programmatic Advertising

types of programming

When you explore the world of programmatic advertising, you will discover various kinds that provide varying levels of automation and control over the ad-purchasing process. You will mostly likely run into the following types:

  1. Real-Time Bidding (RTB): Ad inventory is purchased and sold in real-time, impression by impression, under the RTB auction-based system. When a user visits a website, the available ad space is auctioned off to the highest bidder, and the winning ad is displayed. RTB is the most common form of programmatic advertising.
  2. Programmatic Direct: This programmatic advertising involves pre-negotiated deals between advertisers and publishers. Ad inventory is purchased at a fixed price without going through an auction. There are different sub-types of programmatic direct, such as:
  • Programmatic Guaranteed: Advertisers agree to buy a fixed number of impressions at a set price from a specific publisher.
  • Preferred Deals: Advertisers get priority access to a publisher’s inventory at a fixed price before it becomes available in the open market.
  1. Private Marketplace (PMP): A PMP is an invitation-only marketplace where selected advertisers can bid on premium ad inventory from specific publishers. These deals often involve higher-quality inventory and more control over ad placements, offering a middle ground between open auctions and programmatic direct.
  2. Header Bidding: Header bidding is an advanced programmatic technique that allows publishers to offer their ad inventory to multiple ad exchanges simultaneously before calling their ad server. This increases competition among advertisers, potentially resulting in higher ad revenue for publishers.


How to Effectively Use Programmatic Advertising?

Effectively Use Programmatic Advertising

You must devise a well-crafted strategy and scout programmatic advertising companies that resonate most closely with your organization’s approach. Here are some tips to help you!

  • Define clear goals: Start by communicating specific, measurable, and achievable goals for your campaigns, such as increasing brand awareness, driving website traffic, or generating leads.
  • Choose the right platforms: Search for companies that offer reliable Demand-Side Platforms (DSP) for buying ad inventory. Research Supply-Side Platforms (SSPs) and Ad Exchanges to find those that offer quality ad inventory relevant to your target audience.
  • Target your audience effectively: Use the advanced targeting capabilities of programmatic advertising platforms to reach your desired audience. Segment your target audience based on personalized interests and behaviors, and optimize relevant factors to deliver personalized and relevant ads.
  • Test and optimize creatives: Encourage ad formats, designs, and messaging experimentation to identify what resonates with your audience. Optimize your ad creatives based on performance data to improve engagement and conversion rates.
  • Monitor and adjust budgets: Keep a close eye on your campaign budgets and adjust them based on performance. Allocate more budget to high-performing campaigns and pause or adjust underperforming ones.
  • Leverage data and analytics: To maximise time for well-informed choices and adjustments, analyse campaign data. To improve targeting, ad creatives, and bidding tactics, use the analytics insights.
  • Ensure brand safety and viewability: Take precautions to avoid having your business appear on unsuitable or subpar websites. Utilize resources and alliances to make sure your advertisements are shown and provided in settings that protect your brand.
  • Stay informed about industry trends: Stay up-to-date with the latest developments, best practices, and trends in programmatic advertising to keep your campaigns effective and competitive.
  • Experiment with different strategies: Explore various bidding strategies, ad placements, and targeting options to identify the best approaches for your specific goals and targets.
  • Collaborate with experts: If you’re new to programmatic advertising and need specialized help in optimizing your campaigns, consider working with an agency or consulting firm specializing in programmatic advertising to guide you through the process and help you achieve your goals.


By embracing these strategies, you’ll pave the way for long-term success in the competitive online advertising arena and maximize your return on investment.

Find the right programmatic advertising companies to achieve your organization’s marketing goals seamlessly.


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Author : Abhay

Abhay is a Digital Marketing Guru and an accomplished entrepreneur with an experience of a decade working with various businesses varying from startups to established brands. He co-founded many companies like Logicsofts, PrintYo, CrazyRise and more. He is passionate about SEO and Online Data Analytics, which plays a vital role in any business to grow and mutate as per the data results.
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