What do Google, Kellogg’s, and Holiday Inn all have in common? They all use programmatic advertising, a tool that provides businesses with new ways to promote their products, reach their target audiences, and achieve their performance benchmarks. In other words, it helps your company drive purchases, quote requests, phone calls, visits, and more.
Before you add programmatic advertising into your business strategy, however, it’s critical to understand what it is and how it works for you. That’s why we’re providing the 411 on this go-to tool for marketers and advertisers. Keep reading to get started!
What is programmatic advertising anyway?
Programmatic advertising automates the process of buying ad space through the following technologies:
- Demand-Side Platforms (DSPs): Platforms that allow you to purchase ad space through an ad exchange, like Google Ad Manager, which features advertising inventory from publishers.
- Supply-Side Platforms (SSPs): Platforms that allow publishers to manage and offer ad space to advertisers, marketers, and other parties interested in purchasing ad space.
- Data Management Platforms (DMP): Platforms that allow organizations to collect and manage user data for digital marketing purposes, such as programmatic advertising.
By incorporating these three technologies, as well as artificial intelligence (AI), programmatic advertising automates the process of purchasing and bidding on ad space. When you company programmatic vs. traditional advertising, programmatic advertising makes the process smarter, relying on user data to deliver relevant ads in milliseconds.
How does programmatic advertising work?
If the definition of programmatic advertising left you somewhat confused, this breakdown of how programmatic advertising works should help — we also included a handy flowchart to make it easy to follow along. 
Let’s start by looking at an overview of the programmatic advertising process:
- Arrive: Whenever a user arrives at a website involved with programmatic advertising, it triggers the automated advertising process to start. As programmatic advertising happens in milliseconds, users don’t even notice it.
- Send: In response to a user arriving at a website, the website publisher automatically sends the dimensions of its ad space to an SSP or supply-side platform. One way to think about this step is that the publisher lists their product for advertisers to purchase.
- Read: After receiving information on the available ad space, the SSP analyzes a user’s cookies. The goal here is to learn as much as possible about the user, from their demographics to their interests, to deliver a relevant ad.
- Evaluate: Next, the coordinating DSP or demand-side platform becomes involved. By reviewing the information gathered by the SSP, the DSP can evaluate the user’s worth and assign it a value — or the worth of that user’s impression.
- Bid: With a value assigned to that user, the DSP submits a bid to the SSP. It’s worth noting that this process happens in real-time, which is why some refer to programmatic advertising as real-time bidding (RTB).
- Choose: Once the DSP’s bid arrives, the SSP will review it and any other bids. The SSP will then pick its winner, which is often the highest bidder. Depending on the auction, you may pay your highest bid or the price of the second-highest bid, plus a fee.
- Deliver: With the winner picked, the SSP delivers the ad to the user. As the programmatic advertising process happens so fast, the page will load with the ad displayed — it won’t load and then reload the page to display the ad.
To prevent fraudulent views, many publishers implement fraud protection. This protective measure ensures your company only pays for ad space that reaches valuable members of your target audience, versus spammers and other less-than-ideal consumers.
5 ways programmatic advertising works for your business
Now that we understand what programmatic advertising is, let’s answer the question of how programmatic advertising works for your business. Whether you’re overseeing your marketing efforts or partnering with a marketing agency, programmatic advertising offers several advantages.
Five of the most notable benefits of programmatic advertising include:
1. Lower your advertising costs
For many companies, the biggest perk of programmatic advertising comes from its savings. By automating your bidding process, as well as modifying your cost-per-thousand-impressions (CPMs) in real-time, you’re optimizing your ad spend. Look at Google, for example.
It used programmatic advertising to promote its Google Search App, and that caused its CPMs to decrease by 30 percent. Their programmatic advertising campaign also reached 30 percent more people in the company’s target audience.
2. Maximize your productivity
With programmatic advertising, you can boost your productivity. Plus, you can dedicate your time to other high-priority tasks that demand your attention. The reason is that programmatic advertising handles the process of bidding and purchasing ad space for you — it doesn’t require your help.
It’s important to mention, however, that you should check on your programmatic advertising campaign. When you do that, you receive real-time feedback from audiences seeing your ads. Google, for example, modified its ads in response to user feedback during their campaign.
In a sense, programmatic advertising requires routine maintenance versus daily care. That’s what gives you and your team more time to focus on other projects and tasks, which maximizes your overall productivity.
3. Streamline your ad buying
If you’re managing your advertising and marketing efforts in-house, it can become overwhelming. With programmatic advertising, however, you can streamline the time-intensive process of purchasing ad space. This benefit lets you focus on your overall advertising strategy, as well as the results from it.
By taking more of a strategic approach, you can optimize your campaign and bids to drive more results, whether that’s earning more quote requests or product orders.
4. Expand your audience insights
A massive perk of programmatic advertising comes from its audience insights. Remember how programmatic advertising, via an SSP, gathers user data through cookies? You can use that data to inform your existing campaign, as well as your future ones.
For example, you may learn more about the interests of your audience. That can help you create advertisements that engage and interest your target audience, as well as encourage them to take your desired action, such as buying a product. In the programmatic advertising campaign Kellogg’s did, for example, they improved their targeting two to three times by reviewing audience insights and contextual data from their campaign.
Even better, viewability rates for their ads increased by more than 70 percent. IHG, a hotel group that owns the Holiday Inn, also found similar success with programmatic advertising. In their campaign, they wanted to earn more direct sales — IHG estimated that 20 percent of potential direct sales went to third-party sellers, such as Expedia.
By leveraging audience data from its programmatic advertising campaign, IHG improved the messages of its ads and the targeting of its audiences. That led to the company not only achieving its marketing goals but committing to programmatic advertising.
5. Achieve your KPI goals
With the ability to narrow your target audience, as well as gather valuable user data, programmatic advertising helps you achieve your key performance indicator (KPI) goals. That translates to a return on your investment (ROI), which makes programmatic advertising worth it. You can also measure your KPIs with confidence with programmatic advertising.
As it’s an online marketing tactic, you have an immense amount of valuable analytics that you can review to assess your success — you can also use that data to spot areas for improvement.
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