Breaking Down the Programmatic Ad Buying Process

THIS POST IS PART OF OUR LARGER “ALL IN ONE GUIDE TO PROGRAMMATIC AD BUYING” CLICK HERE TO LEARN MORE.

It’s becoming more common for marketers to look to automation to be more effective and efficient in targeting specific audiences. The advancement of automation software has taken simple, time-consuming tasks off busy employees’ hands, allowing them to put more time towards other important matters.

According to Invesp, 91% of marketing automation users agree it is “very important” to the overall success of their online marketing activities, and 63% of marketers plan to increase their marketing automation budget this year.

Programmatic, in particular, has made all the difference in the traditional ad buying process many marketers are used to. This is why Insider Intelligence reports that US advertisers will spend nearly $60 billion on programmatic display this year, and they estimate that almost 88%, or $81 billion, of all US digital display ad dollars will transact programmatically in the next year. 

In addition to display, programmatic CTV spending is also on the rise, with eMarketer estimating that advertisers will spend an additional $1.16 billion on programmatic CTV ads in 2021 than they did in 2020. 

On the whole, programmatic ad buying takes the process to a whole new level, improving the traditional methods, so marketers can spend less time negotiating with publishers and more time attracting potential buyers and appealing to current customers. 

HOW DOES PROGRAMMATIC AD BUYING WORK?

Before you can truly grasp the potential of programmatic ad buying, it’s important to understand the breakdown of the process and what goes into making it much more effective than traditional means. This is because the biggest problem (and challenge) for many marketers stems from a lack of thorough understanding of programmatic advertising. 

The process can get very complex, but condensed down and inspired by Outbrain, programmatic ad buying works in seven steps:

1. User visits website — A given user does what they always do and searches on the internet, landing on a website with an ad spot open for advertisers to bid on. 
2. Website owner sends out bid request on SSP — Using a supply-side platform, the website owner puts up the bid request for advertisers to fight over through the software as opposed to several in-person talks and negotiations. 
3. The request includes different pieces of web visitor’s digital footprint — Here’s where having a meticulous understanding of your audience comes into play. The visitor’s location, demographics, and more are included, so only relevant advertisers are involved in the bidding. This allows for you to reach only the visitors in your target audience, reducing ad spend waste.
4. Advertisers bid for the impression on DSP — Now that everyone knows who they’re fighting over, it’s time to get down to bidding for the impression. This is done through a demand-side platform that allows you to only target specific audiences depending on the relevant data entered into the software. From there, the advertiser puts in their bidding, and the DSP designates impressions depending on the information entered. 
5. The highest bidder wins the impression — It’s as simple as that. If your bid is higher, you get the impression.
6. Their ad is served to the user on the initial website they decided to visit — Unbeknownst to the user, the whole process is done, and the ad is posted for the visitor to see. 
7. They click on the ad — at least you hope so! Here’s where you cross your fingers and hope for the best.

For a better look into how this process plays out, consider this real-time bidding example with the previous steps in mind:

You decide to surf the Wall Street Journal website. The moment you arrive, the WSJ sends out a bid request to the major ad exchanges. The request includes various pieces of data gleaned from your digital fingerprint: IP address, your demographics, location, device, operating system, browsing history, and more. The ad exchanges then conduct an auction with the myriad advertisers competing for the opportunity to serve you an ad. The highest bidder wins the impression, and the ad is served. The entire process happens for every available ad slot on the screen.

HOW LONG IS THE PROCESS?

Although the process sounds like a long one after reading through the breakdown, the whole thing actually goes down in a matter of milliseconds. This is why the user/website visitor has no idea it’s happening — it’s sent out for bidding, bid on, bought, and posted in the amount of time it takes for the user to simply click onto the site.

In fact, it’s four times faster than the blink of an eye and happens in real-time: approximately 100 milliseconds. It’s incomparable to the long and tedious process of manually negotiating an ad spot that doesn’t have the same real-time consumer data included. 

Why it matters

Other than the fact that it takes a typically long (and less efficient) process and condenses it into 100 milliseconds, automation allows you to save a significant amount of precious time and win more impressions through programmatic ad buying. There’s not an endless amount of time to work with to achieve goals and grow your business.

The key is to take the win where there is one, and programmatic ad buying is a win. The advancement in automation has taken away all the tedious tasks of ad buying off the shoulders of essential employees, giving them the time they need to be more productive while at work by reducing time-consuming responsibilities. 

THE PROGRAMMATIC AD BUYER MAKES ALL THE DIFFERENCE

And while it may sound like an easy process to take on since the automation ‘does all the work,’ the truth is, the programmatic buyer is the key to success when it comes to automating your ad buying and improving your targeting abilities. Your programmatic ad buyer needs to understand your campaign and audience inside and out, using that information not only to find the right ad spots but to ensure the right message is being posted. The team at Strategus has considerable experience and expertise in programmatic ad buying and establishing the right criteria for real-time bidding. Bidding on consumers can get incredibly complicated. Partnering with Strategus eliminates that complexity and offers a more hands-on optimization to your ad buying and targeting efforts.