The programmatic advertising is process of buying and selling the ad inventory. Conflicting to the traditional media buying process, the programmatic advertising may not necessarily involve the advertisers and publishers working 1 to 1 basis to serve ads. Also, the ad delivery depends on the type of programmatic deals selected.
There are 4 major types of programmatic deals decides the ad delivery on the publisher’s website. Here are the key programmatic deals.
Real Time Bidding (RTB): It is also known as open auction or open marketplace in the programmatic advertising domain. Real time bidding (RTB) has become identical name for programmatic media because of its widespread usage.
The ad slots are open to all the advertisers or buyers in RTB, they will be selling it through open auction type of bidding in the ad exchanges. The highest bidder will get a chance to serve an ad on the publisher’s web page. The whole process will take place in real time, and advertisers can select the ad slot once it is available to serve an ad.
In RTB, the highest bidder will allow to serve the ads, but they don’t have to pay the actual amount when they select to serve the ad. RTB follows second-price auction to charge the advertisers. In second price auction, the highest bidder will charge only $0.01 more than the second highest bidder during the auction.
RTB is easy to set up and optimize performance using the Ad Exchange platforms, but it lacks the transparency from the advertiser’s perspective. Advertiser know about general category of the publisher, but they don’t know the exact publisher category where their ads will appear.
Private Marketplace (PMP): The private marketplace operates similar to RTB, but it is not available for all the advertisers to participate in the auction. The advertisers will be invited by the publishers through ad exchange to participate in the auction. The publisher will reserve their premium inventory to desired advertisers to participate in the auction.
Considering the benefits that PMP is offering to the publishers, PMPs used to reach the relevant advertisers by the publishers to serve the high paying the ads on their websites to maximize the revenue. The PMP will allow the advertisers to measure the performance with granular level of data and optimize to reach their targeted audience to promote the business.
Preferred Deals: Advertiser will get an option to choose the ad inventory at a fixed price before it will be available on private marketplace or open auction in programmatic buying process.
The publisher and advertiser will negotiate the price before setting up the preferred deals in the ad exchange. The advertiser will pay the fixed price when they are serving the ad through the preferred deal.
The advertiser will get more information about the ad inventory and targeting before serving the ads through preferred deals. Advertisers can use DSP to understand the audience and regulate to purchase the ad impression during the auction.
Programmatic Guaranteed: It is also known as programmatic direct or automated guaranteed and follows the traditional approach of media buying. The advertisers and publishers negotiate the deal 1 to 1 basis.
It is slightly different from the other media buying types, programmatic guaranteed doesn’t follow a bidding process. The inventory is sold direct to the advertiser after negotiation. The programmatic guaranteed provides advertisers to choose when it comes to ad inventories, price, audience targeting and other delivery settings.
Programmatic guaranteed is used by the advertisers that they know precisely where to serve their ads on the selected publishers web pages.
Here’s an article to know more about What is Programmatic Advertising? How does it works?
Conclusion: The programmatic buying is ruling the digital marketing domain by connecting the buyers and sellers programmatically. The advertisers and publishers will get set of advantages and disadvantages using this platform. However, this could create plenty of opportunities for both the parties to optimally utilize their resources.