The ABCs of programmatic advertising

Programmatic advertising combines data and technology to create effective, profitable digital marketing campaigns. It is automated advertising that uses demand-side platforms (DSPs) for ad buying. On this page, you will learn more about the central terms, systems, and principles of programmatic advertising.

What is programmatic advertising?

Programmatic advertising is an automated method of buying digital advertising. Programmatic advertising differs from traditional direct buying in that purchases are made in real time, and impressions are bought one at a time, often in an auction.

From the advertiser’s point of view, one of the principles of programmatic advertising is to aim for effectiveness. Compared to traditional direct buying, data has a more central role in programmatic advertising. This enables precise targeting and personalisation.

Advertiser, read more to find out if programmatic advertising fits your marketing strategy >>

Programmatic buying platforms

In practice, programmatic buying is conducted through demand-side platforms (DSP) used by buyers and supply-side platforms (SSP) used by publishers.

Through these two systems, the publisher – or the vendor – and the buyer meet in the ad exchange and begin an auction for impressions.

What is the difference between different auction types?

The most common forms of programmatic buying are an open auction (Open Marketplace) and private auction (Private Marketplace). Both programmatic advertising forms are available at Alma Media.

In the Open Marketplace, the publisher sets a floor price for its ad inventory, enabling a great number of buyers to compete for ad impressions. The Open Marketplace is a global, real-time, and automatised auction in which ad impressions are bought based on bids. In the Open Marketplace, the buyer is not tied to any specific budget, time, or number of impressions.

The Private Marketplace is a safer and more controlled trading environment for the buyer and the publisher. In the Private Marketplace, the buyer and the vendor make private deals. The buyers know exactly where their advertising appears, and the publisher has control over the advertisers on its website. Deals have pre-negotiated terms, such as inventory, format, targeting, and price, but the buyer is not tied to any specific budget, time, or number of impressions.

In the Private Marketplace, you can also negotiate programmatic guaranteed deals, in which the budget, time, and number of impressions are fixed such like in direct buying. These deals are perfect when you want to guarantee visibility at a specific moment in launch campaigns or during a popular season, such as Black Friday.

Real-time bidding

Real-time bidding (RTB) is used for programmatic ad buying in both the Open Marketplace and the Private Marketplace.

In programmatic advertising, the publisher sets a floor price for its ad inventory at the ad exchange, where buyers compete for impressions at an auction. The winner is the buyer who bids the highest price for an impression.

All Alma’s programmatic advertising impressions are sold with the first-price auction model, in which the winner pays the price they have bid for an impression.

In programmatic buying, the final price is dynamic and determined in a real-time auction. A programmatic auction is conducted based on CPM pricing (cost per mille = cost per 1,000 impressions). In an auction, the DSPs and SSPs automatically bid for each impression separately.

When to choose programmatic advertising as a buying method

Traditionally, programmatic advertising has been considered a tactical ad-buying method. Today, programmatic advertising is used for both strategic and brand campaigns. Programmatic advertising is almost always a viable buying method, and Alma Media has almost the same inventory and ad formats available in private auction as in direct buying.

The benefits of programmatic advertising are effectiveness, ease of buying, and versatile targeting options. Testing and measuring are also central in programmatic buying, making it possible to make real-time changes to campaigns.

Traditional direct buying is suitable for campaigns aiming at extensive visibility at a specific time or when the aim is to reach a narrow target audience. Direct buying is also the best option for impressive special solutions and content marketing.

Technology partners used in programmatic purchases (RTB and programmatic guaranteed) must be registered on the IAB TCF 2.0 vendor list and approved on Alma Media’s TCF 2.0 vendor list. Material and ad verification tools are examples of the most common technology partners.

Brand Safety and Brand Suitability

Brand Safety means all practices and tools ensuring a safe media environment for a brand. Brand Suitability involves targeting based on the needs of an individual advertiser or buyer. They both ensure that advertising does not appear alongside inappropriate content.

Alma has its own Brand Safety technology that, by default for all our advertiser clients, uses keyword exclusions to prevent your ads from appearing next to devastating news. Article content is analysed using machine learning methods. Video content can be analysed if the video is in Finnish.

However, it is important to remember that complete Brand Safety cannot be reached; for example, front pages cannot be categorised. Additionally, defining a safe and suitable ad context is always subjective. In these situations, Brand Suitability targeting based on the needs of an individual advertiser or buyer comes to the rescue. The best results are achieved through continuous evaluation; you will have Alma’s experts as your support!

The role of data in programmatic advertising

Technology and automatisation are key concepts in programmatic advertising. However, programmatic advertising would never have reached its current popularity without the possibilities of data usage. Data has a crucial role in ad targeting, for example.

In programmatic advertising, you can use the advertiser’s data on customers or data collected by the publisher. By using data effectively, the ad buyer can choose the relevant audiences from billions of impressions at the right time and with the right message. Versatile use of data boosts digital advertising.

See Alma Media’s programmatic products.