Rise Of (Programmatic) Advertising – Part II

The number of advertisers and publishers is growing ever since. Thus, it became impossible for both parties to approach each other one by one.

Advertisers will have to negotiate with thousands of publishers at a time to maximize their reach. Publishers also had a hard time having to call thousands of advertisers to see if anyone is interested in their inventory.

Big problemo!

Since “Necessity is the father of invention” - thanks to the availability of programmatic buying/selling, this is no longer a problem.

Ad Networks, Trading Desks, DSPs, and Ad Exchanges are there to help marketers to reach thousands of publishers with a click of a button.

Advertisers also develop new and creative methods to influence their customers. There are even tools that deliver personalized ads to different people across different devices and geographical locations.

Publishers can also leverage the power of programmatic sales to sell their remnant inventories automatically. With the maturity of the technology, it is even possible to sell ads to advertisers at a premium price through ad exchanges and private marketplaces.

Born in 2009, Real-Time Bidding is a method for buying and selling online display and video placements in real-time. This is done on a per-impression basis via programmatically held auction. It is similar to stock exchanges of financial markets.

Later the Interactive Advertising Bureau (IAB) laid open RTB industry standards. RTB emerged as a win-win situation for both the publishers and the advertisers. On the supply side, publishers can sell their inventory to the highest bidder, whereas on the demand-side, advertisers get the opportunity to evaluate inventories impressions and increase their reach to target customers.

Here is a brief description of the key players involved in the programmatic ecosystem:

  • Demand-Side Platforms (DSPs) enable advertisers to buy ad impressions and help determine how much to bid for each impression opportunity
  • Supply-Side Platforms (SSPs) allows publishers to help maximize how much their inventory sells for
  • Ad Exchanges connect DSPs and SSPs and facilitate the auction process to determine who gets to serve in each impression opportunity
  • Ad Servers actually place the bid for an ad and serve the winning ad in the corresponding page slot
  • And last but not least, Data Providers enhance the ecosystem by offering additional pieces of information to better inform each transaction. Things like the context or topic of the page where the ad would serve, pre-built third-party audiences, lookalike audience building, hyper-local targeting, fraud detection and prevention, and first-party data onboarding.

And this is a typical flow -

The publisher’s ad placement is connected to the ad server typically via an ad tag or an S2S API integration, in case of in-app inventory.

The ad exchanges conduct auctions wherein different demand-side platforms submit their bid to win and serve the advertiser’s creative.

Technically speaking, the process of integration differs based on –

  1. The type of inventory source (web or in-app) - Usually, there will be a JavaScript or iFrame tag (implemented on the webpages directly or via their ad server) or a Server-to-Server API URL within the SDK that makes ad call
  2. The type of ad format (display or video) - Javascript/iFrame can show banner or native ads, whereas to show video ads, the VAST/VPAID tag needs to be placed in the video player, embedded on a webpage

Earlier, the programmatic auction was decided by something called the waterfall model.

It is a process of consecutive ad calls that goes on until a DSP serves an ad or the priority list is over. The two major drawbacks of waterfall bidding are - increase in latency in serving the ad and chances of missing a higher price/bid for the impression because the higher bidding DSPs were given lower priority.

Another evolution or say, improvement, in the way ad calls were made from the publisher’s website is Header Bidding. It was in a talk from a long time finally came in use by 2015. Publishers saw a boost in their yield and made more money as compared to the Waterfall model.

With advancement in collecting, processing, and curating the data, programmatic advertisement now offers a broader range of targeting options. DSPs in the market now provide time/day targeting, geographic/hyperlocal targeting, and even targeting based on user’s device information.

Advertisers are also using 3rd Party Data Providers (DMP) for contextual targeting or to aim audiences of particular segments. These segments are based on the user’s historical browsing information and provide a way to target the users based on their interests and demographic information.

Since the programmatic buying and selling is done via programs and requires minimal human involvement, it gave rise to ad fraud and poor quality of ads being shown to the users.

One of the eMarketer research estimated that, the recent annual losses to digital ad fraud range from $6.5Bn to $19Bn

However, there are companies in the market that provide services to keep a check on the quality of the ad served on the publisher’s website. It also checks whether the ad call is coming from a genuine source of inventory. IAS and MOAT are among the many anti-ad fraud and viewability technology service providers.

The programmatic trend is all about automation, and the reason we automate is to free up people’s power to focus on the tasks that matter.

In the coming days, Programmatic will continue to automate and bravely seek out new platforms. It won’t be long before marketers are looking for a realistic way to get impressions on VR and IoT devices.

The future of programmatic advertising lies in the hand of over the edge innovation and the extent of human imagination.


Post Written By:
Satyam Divecha
Kritter Software Technology Pvt. Ltd.

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