What are Programmatic Ads? Meaning, Examples & Importance
Table of Contents:
- What is Programmatic Advertising?
- How do Programmatic Ads work?
- Different Types of Programmatic Ad Platforms
- Importance of Programmatic Ads for Advertisers
- Importance of Programmatic Ads for Publishers
- Programmatic Advertising Trends
- Understanding Programmatic Ads Is Tough!
As an app seller, are you interested in online advertising? Then you must have heard about programmatic ads, and how they are taking the digital world by storm.
But why are publishers running to create programmatic ads? Because it helps make the programmatic buying and selling process faster, smoother, and easier.
As an app publisher, you could be creating the best app, but if your app is not targeted to the right people, at the right time, in the right places, then your app is not reaching its real potential. If you politely nod with others when they say that programmatic marketing is game-changers, but don’t know why. Fortunately for you, we provide you with all the information you need about programmatic ads in our article.
1) What is Programmatic Advertising?
Programmatic advertising is the process of buying and selling digital ad space. Before this process was devised, the ordering, set up, and reporting of ads had to be done manually. With programmatic advertising, the process is now more streamlined which makes it more efficient. All channels and formats can be easily accessed thanks to these platforms that have in-built ad inventory and databases that offer insights to serve ads to the right users at the right price, at the right time.
The programmatic ads ecosystem has three main components:
Sell-Side Platforms (SSPs) -
This software allows publishers to sell their mobile, video, and display ad impressions to potential buyers in real-time. It includes networks, ad exchanges, and DSPs.
Demand-Side Platform (DSP) -
Software that allows agencies and advertisers to buy ads across multiple platforms.
Ad Exchanger -
When the supply-side directly feeds inventory into an ad exchange. The DSP connects to ad exchange and enables advertisers, networks, agencies, and publishers to sell/buy ad space.
Programmatic ads can be classified into three types:
Real-Time Bidding (RTB) - Also known as an open auction, RTB occurs when the inventory prices are decided through real-time auctions. These are open to all publishers and advertisers and are the most cost-effective way to purchase programmatic media buying with a larger audience.
Private Marketplaces (PMP) - Similar to open auctions, PMPs are restricted to only those who can participate. Only selected advertisers have access via invitation-only. But in some situations, publishers may have sections where advertisers can apply to get an invite.
Programmatic Direct - When a publisher bypasses all auctions and directly sells their media inventory at a fixed CPM or Cost Per Mille to advertisers.
2) How do Programmatic Ads work?
Programmatic ads help connect app publishers (who have apps with ad space) to sell with advertisers, who want to use that ad space to promote their products or services.
When advertisers launch digital campaigns, they connect with a programmatic ad agency. Who in turn use a DSP or Deman-Side Platform to completely automate the process of programmatic buying ad impressions to meet campaign goals.
DSPs allow advertisers to purchase ads from multiple app publishers. These ensure that the ads are aimed at the correct audience via a Data Management Platform. The data helps target the right audience by taking into consideration multiple factors such as:
- User behavior
- Online Activities
When people who fall into their assigned category of the advertiser install the app, then it will send an ad request to the Supply-Side Platform. SSPs are used by publishers to sell their ads to maximize the value received from an impression. After this, they run auctions among buyers and the DSP is connected.
These DSPs use the data retrieved to evaluate the ad and match it with the right targeted parameters. The data procured is then used to decide bidding prices for the first impressions. This process is referred to as real-time bidding, and the SSP occurs in real-time.
Though this sounds like a long drawn process, it takes only 100 milliseconds to complete. Once the impression is sold, it is sent to the publisher’s website for display and the process gets repeated.
3) Different Types of Programmatic Ad Platforms
We know that programmatic advertising relies on four categories - DSPs, SSPs, Ad Exchanger, and DMPs. So, let’s explore some of the best programmatic platforms in each category.
Demand-Side Platforms (DSPs)
Adobe Advertising Cloud DSP:
This platform has been given the title of Leader by the Gartner Magic Quadrant for Ad Tech. Adobe provides features that help advertisers start, manage and optimize their ad campaigns.
Price: Customized prices based on company
Support Ads: Display, audio, video, mobile apps
Audience Targeting: Device type, audience segment, browser, location
Launched in 2007, it is recognized as one of the earliest DSPs in the tech world. Partnering with over 3500 advertisers it runs omnichannel campaigns over multiple displays, OTT, mobile, audio, video, native, and more.
Support Ads: Display, mobile, Connected TV, audio, video, native
Audience Targeting: First-party data, audience segmentation, site list, location, technology, audio, video, contextual, daypart
Loved by users due to its simplicity and quality, the platform focuses on supporting brands to expand their reach through social ads, videos, email, native ads, and more.
Support Ads: Social ads, video, native, display, and email
Audience Targeting: Lookalike, Interest, contextual, CRM targeting
b) Supply Side Platforms (SSPs)
The platform has services for both buyers and publishers. As SSPs, it offers an impressive collection of tools to help publishers optimize their monetization potential of digital assets. These include tools for RTB ads, header bidding, and Private Marketplaces (PMP).
Support Ads: OTT, CTV, video, display, mobile, native, addressable, and more
Anti-fraud measures: Uses real-time scanning options to safeguard publisher audiences across multiple ad channels
Google Ad Manager:
Google remains one of the most popular SSPs among publishers, with a 51% market share. The platform was launched for larger publishers that have significantly higher direct sales. Some features that it offers are server-side header bidding, an advanced dashboard, managed PMPs, reporting systems, and more.
Support Ads: Mobile, video, native, display, web.
Anti-fraud measures: Google has the latest safety protocols and standards such as SafeFrame, and HTTPS
This platform offers retail media services to help publishers monetize their apps by leveraging first-party data and audiences. It is also available to publishers with lower traffic and focuses more on retargeting.
Support Ads: Video, social media, web, mobile, display
Anti-fraud measures: Advanced image recognition technology to filter content from publishers' digital property
c) Ad Exchanges
Previously called AppNexus, Xender offers full-stack programmatic advertising services (DSP, SSP, and Ad Exchange). Because of this, the platform has 11.4 billion ad impressions daily. One of the most notable features of this platform is its header bidding wrapper, which makes it more convenient for publishers.
Support Ads: Video, audio, banner, native and more
Anti-fraud measures: Partnered with White Ops to ensure safety
This white-label ad exchange platform has over 25000 publishers and 2 billion impressions daily. Serving full-stack programmatic ad platforms, it offers services to both advertisers and publishers.
Support Ads: Video, audio, banner, push, native, pop
Anti-fraud measures: More comprehensive partnerships to make the marketplace safer for advertisers and publishers
This full-stack ad tech platform is one of the bigger players with over 171 billion ad impressions in a day. Publishers can benefit from its easy-to-use DMP integrations that have open-source header bidding options.
Support Ads: CTV, online video, mobile app, web, and more
Anti-fraud measures: Multiple integrations with security tools to prevent fraudulent practices
d) Data Management Platforms (DMPs)
Formerly known as Salesforce DMP, this platform allows advertisers to capture data from multiple sources and segment it using machine learning algorithms. Also, it provides a native consent management framework that helps advertisers maintain trust and transparency with their customers.
This industry leader offers a wide range of services like identity resolution, audience management, and data marketplace. The platform allows users to access first-party data from multiple sources like CRMs, social media platforms, email, apps, and more. It provides users with the opportunity to expand their data through its marketplace.
The platform offers DSP and DMP to help publishers and advertisers collect, manage and activate their data all in one place. One of its most popular features is the lookalike option which allows you to discover new audiences based on data from your existing ones. Publishers also get access to a data marketplace where they can access high-quality audiences.
4) Importance of Programmatic Ads for Advertisers
Before programmatic advertising, it was difficult for advertisers to get access to ad inventory. This means that 60% of published ad space was left unsold. Process automation has made it easier to solve the issue of buying and selling ad inventory.
Programmatic advertising is important to advertisers because:
Scalability Options: Allows advertisers to reach large audiences by buying ad space from any ad inventory available
Real-time Flexible Options: Advertisers have the option to make real-time adjustments based on impressions and take advantage of a wide range of targeting criteria
Detailed Targeting: Advertisers can spend more efficiently with targeting options
Efficient: The entire process is more streamlined as relevant ads are served through targeting options
5) Importance of Programmatic Ads for Publishers
In 2020, US marketers spend around $61 billion on programmatic ads. The figure is projected to rise to $133 billion in 2023, which is 91% of total digital ad spend.
So, programmatic ads help publishers host ads that are relevant to their audiences. It can access deals that bring in higher revenues and maximize returns through different bidding types. For publishers, programmatic ads benefits include:
Simple: Programmatic ads make it simple to sell ad spaces. Publishers can optimize their ad sales with automated tools that reduce the investment time needed to find advertisers.
Communication: Publishers communicate and collaborate with advertisers to ensure that both publishers and advertisers can get the right benefits.
Relevant: When people come to a publisher’s app or site, they are shown ads that are relevant to them because they are part of the target audience of the advertiser. Programmatic ads help advertisers access a wide range of publishers, which removes the back-and-forth negotiations.
Efficient: Allows raised margins and lower costs for publishers to help earn more on available ad spaces.
6) Programmatic Advertising Trends
Just like other digital spaces, programmatic ads are also evolving. Different trends are emerging that are definitely worth paying attention to.
AI and machine learning are used to find patterns and predict results in real-time. As AI develops, it is combining mapping of ad viewing metrics with user data so the ads can be placed more accurately.
Programmatic ad technology can now be used to optimize and measure ads in real-time. Combined with AI, it provides all the necessary data to deliver precise messaging to users, Dynamic Creative Optimization (DCO) makes it possible for advertisers to offer highly relevant and personalized ads to target groups. DCO can understand who the viewers are, and choose the best combination of creatives to deliver the best message.
In 2019, advertisers lost more than $23 billion globally to digital fraud and it is predicted that the industry will lose $32 billion by 2022. But to counter this, several solutions are being used such as blockchain and ads.txt. Publishers can also use ad ops extensions like AdWizard to manage ads that appear on their sites.
7) Understanding Programmatic Ads Is Tough!
The process of understanding and implementing programmatic marketing can be quite challenging. While there are multiple platforms available, it is time-consuming to find the right one that connects with your app and provides you with the best ad sellers. So, rather than looking into programmatic buying and selling, why not sell your app completely on KalaGato?
With our easy and simple selling process, you can evaluate, negotiate, and sell your app within 30 days! Send us a query and get a response within 72 hours. Evaluate your app and receive an offer within 2 weeks. In addition, get expert support to negotiate your deals and get a deal closure in 30 days. For all your app selling needs, choose KalaGato today!
1.What do you mean by programmatic advertising?
Programmatic ads are a system that automates the complete processes and transactions involved with the purchase and placement of ads on apps or websites. These platforms make it possible to purchase and upload ads for targeted advertising content, in a few seconds.
2.What are the main components of programmatic ads?
There are 4 major components that make a programmatic ad ecosystem:
- Demand-Side Platform (DSP)
- Supply-Side Platform (SSP)
- Data Management Platform (DMP)
- Ad Exchange
3. Does running programmatic ads have any benefits?
Running programmatic advertising has the following benefits:
- Increases ad efficiency
- Reduces advertising costs
- Optimize and target the audience in real-time
- Increases ROI
- Build effective cross-device campaigns
4. What impact does programmatic advertising have for customers?
With the real-time bidding feature of programmatic advertising, inventory is efficiently allocated to the highest bidder. This creates customer value as they are shown ads that are relevant to their needs, and fills a genuine requirement.
5. Why was programmatic advertising started?
Programmatic ads started from the requirement of premium publishers to monetize all of their inventory. But this process helped make it easier for all parties involved. These platforms gave publishers the option of offering their websites for ad space.
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