In 2014, the buzzword “programmatic” was acknowledged as the Marketing Word of the Year by the Association of National Advertisers, defeating other industry words such as “content,” “millennials,” or “transparency.” Programmatic advertising uses technology to purchase and sell media in real-time, giving media buyers access to inventory across desktop, display, mobile (web and apps), social media, video and TV.
The advertising industry was traditionally a bilateral system of buyers and sellers who interacted to execute direct transactions between agency media planners and publishers. As the digital realm expanded, nearly 40-60% of publisher inventory was not being sold. Meanwhile, advertisers were simultaneously conducting offline transactions with several publishers to combat difficulties with reaching their target audience.
Ad networks were created in order to remedy the inefficiencies of traditional media buying and bring advertising to the modern digital world. An advertising network aggregates publisher inventory and then acts as a broker between the supply and demand side.
Given programmatic advertising’s ability to reach and granularly target individuals in a cost efficient way, publishers and advertisers preferred to use an automated marketplace to manage transactions and efficiently target users at scale – ultimately leading to the creation of ad exchanges.
source: Altitude Digital
Ad exchanges, such as OpenX or Rubicon, are single interface platforms situated in the center of the programmatic ecosystem, allowing advertisers to create ad campaigns to purchase impressions and publishers to sell inventory. Ad exchanges facilitate real-time bidding (RTB) of individual impressions through the automated technologies of demand-side platforms and supply-side platforms.
Ad networks are limiting because they only work with publisher sites to sell packaged unsold inventory. Contrary, an ad exchange introduces an access point to multiple publisher sites, and auctions their inventory in real-time at the impression-level.
source: Marin Software
DEMAND-SIDE PLATFORM (DSP)
A demand-side platform (DSP) is software that is used within the programmatic ecosystem to help advertisers and agencies buy impressions for display, video, mobile and search ads across publisher sites through real-time bidding.
SUPPLY-SIDE PLATFORM (SSP)
A supply-side platform (SSP) is a platform that allows publishers to manage and sell their remnant inventory on multiple ad exchanges and networks, essentially a publisher’s equivalent of a DSP.
AGENCY TRADING DESK (ATDs)
Agency trading desks (ATDs) exists as independent service-based organizations that specialize in programmatic media buying. Their primary function is to improve client’s ad performance and augment the value of their ad buys.
An ad server is an online web tool used by publishers, networks and advertisers to facilitate business between each party and assist in the delivery of digital ads. Ad servers function to match impressions with advertisers who wants to show their ad to that particular individual, determine which creative is served to a user’s browser or app and tracks the ad’s performance.
DECONSTRUCTING THE PROGRAMMATIC ECOSYSTEM – KEY TAKEAWAYS:
- What is being sold: audiences and inventory
- Who is selling it: networks or SSPs through exchanges
- Who is buying it: agency trading desks through DSPs