Marketing Technology

What Is Programmatic Advertising?

Launching digital ad campaigns can be complicated: You have to collect data, understand your audiences, and create relevant content that drives customers to action across the channels they visit. With more screens and information vying for your audience’s time and attention, brands need a simplified way to deliver ads at scale and cut through the noise.

That’s where programmatic advertising comes in.

What Is Programmatic Advertising?

Programmatic advertising is the process of using software platforms to buy digital ad space. With a programmatic advertising platform, advertisers can bid on available inventory, using customer data and algorithms to automatically find the most relevant, high-performing placements for their campaigns.

The Benefits of Programmatic Advertising for Advertisers and Publishers

This streamlined ad-buying process makes transactions more targeted and effective, boosting the chance that ad dollars are spent efficiently to increase awareness and conversions.

This tactic equates to a higher likelihood of return on investment (ROI) for marketing and advertising spend. Programmatic advertising has become so popular that a June 2024 EMARKETER forecast predicted it would make up an incredible 91.3% of digital display advertising in the U.S. for the year. In fact, programmatic digital display ad spend for 2024 is expected to total $156.82 billion – up from $133 billion in 2023.

Whether marketers want to drive awareness, consideration, or conversions for their goods or services, programmatic advertising offers numerous benefits.

Saved Time and Resources

By automating ad buying, advertisers can reduce costs, while saving time and money, freeing them to better focus on creative strategies and innovative tactics to help improve campaign results.

Improved CPM, ROI, and Control

Brands can use programmatic advertising to automatically launch targeted ads at scale, decreasing their cost-per-thousand impressions (CPM) and improving their ROI.

Advertisers should look for a programmatic buying and monitoring platform that allows them to optimize their CPMs in real time, ensuring that they’re getting the most out of their budgets.

More Personalized Experiences

Programmatic advertising uses artificial intelligence, machine learning, and data signals to find the most high-impact placements for each ad — ensuring the greatest chance to reach the right customers in the right place at the right time.

Advertisers, for example, can target audiences based on known information such as demographics, content interests, online behaviors, and position along the path to purchase.

Through the use of first-party data and an audience of 600 million daily users, Taboola helps advertisers refine and reach targeted audiences across top publisher sites.

With 80% of people trusting ads on news sites more than on social, this is a significant opportunity to get in front of potential customers where they are, for example, by using native advertising that is integrated into the digital experience.

programmatic advertising

How Programmatic Advertising Works

Traditional ad buying — which is conducted directly between company representatives and ad salespeople — has a longer lead time, is more expensive, and can’t utilize real-time data to adjust media buys.

Programmatic advertising, on the other hand, uses technology to purchase inventory, which can be done in a few different ways.

Demand-Side Platform (DSP)

A demand-side platform (DSP) is a type of software that advertisers use to buy targeted digital ad inventory at scale automatically.

To begin, advertisers upload their assets — such as campaign images, copy, and data — then identify their targeting parameters and audience segments, and set their budgets. The DSP then uses that information to find publishers that would fit advertisers’ campaigns.

Supply-Side Platform (SSP)

A supply-side platform (SSP) is the publisher’s equivalent of a DSP to automatically sell advertising inventory, such as programmatic native and display placements, to brands.

For publishers, SSPs are important because they can help find the right brand partners and the most relevant ad content for their audiences — maximizing revenue and engagement.

Ad Exchange

DSPs and SSPs are connected on an ad exchange, the third-party marketplace where programmatic ad inventory management occurs.

Here, a publisher can set minimum CPMs, as well as designate preferred ad formats and content types. The advertiser can set its bidding parameters, block certain websites, and choose its targeting criteria. The ad exchange will then match this information to find the best fit for both parties, triggering which ads will be displayed.

Taboola, for example, offers flexible auction models through open exchanges and private marketplace (PMP) deals. Our platform also integrates with an expansive number of industry-leading DSPs and SSPs, providing advertisers and publishers the ability to establish deals with their preferred partners.

Data Management Platform (DMP)

A data management platform (DMP) is software that advertisers can use to gather, analyze, and manage customer data that they collect from online and offline sources, such as websites, email, direct mail, call centers, apps, and social media.

Once the DMP collects this data, the platform organizes it, extracting insights and optimizing placements based on learnings.

Common Types of Programmatic Advertising

Publishers commonly use a variety of tactics when selling programmatic advertising — reserving select inventory for programmatic direct, then selling remaining inventory through real-time bidding (RTB) and the private marketplace (PMP).

Direct

Programmatic direct is a one-to-one ad-buying process. It is unique because, even though publishers and advertisers work together to set a fixed CPM for a guaranteed sale, it can all still be done through an ad-buying platform.

Compared to other types of ad buys, programmatic direct is generally less flexible, affordable, and scalable but more transparent and brand-safe.

Real-Time Bidding (RTB)

RTB is the process by which advertisers bid on programmatic ad inventory and compete for each ad slot. Advertisers commonly bid by CPM; they’ll set their highest bid through their DSP and then duke it out in real time through the ad exchange.

Since RTB happens instantaneously and automatically, advertisers can use this process to bid on many different placements at a time — increasing their reach and scale without burning their budget. As such, RTB is considered one of the most cost-effective and flexible forms of programmatic ad buying.

Invitation-only RTB auctions are known as PMPs (private marketplaces), exclusive to certain groups of brands and ad buyers. Advertisers might choose to use PMPs because they’ll know their ads are being run on premium, high-quality publisher sites; they’ll also get up-front access to valuable ad inventory, which can come at a premium price.

Challenges in Programmatic Advertising Implementation

With the automated and speedy nature that the programmatic advertising buying process allows, advertisers need to be aware of potential challenges.

Ad Fraud

Ad fraud was estimated to have cost businesses an estimated $84 billion in 2023 — and that number is expected to reach $172 billion in 2028. With the right verification systems and processes in place, programmatic advertising can help companies decrease ad fraud by automatically weeding out scams and identifying the most relevant ad spots.

That’s why the Interactive Advertising Bureau (IAB) Tech Lab introduced ads.txt or Authorized Digital Sellers to improve programmatic media buying and prevent advertisers from accidentally buying on fake domains. Basically, publishers add ads.txt files to their web servers, listing their authorized sellers. Programmatic advertising platforms then check those files to make sure the site and seller are legitimate.

programmatic advertising

Taking brand safety one step further, Taboola is also verified by the Trustworthy Accountability Group (TAG) and listed in the TAG Registry, giving advertisers the transparency and peace of mind they deserve in launching secure campaigns.

Brand Safety and Reputation

Ensuring that placements align with the product, service, or brand being advertised can be tricky. Look for a provider that provides parameters to control where and how ads are shown — be it through keyword blocking, selecting which topics ads can run alongside, and other safety and security measures.

See how Taboola High Impact enhances brand safety for advertisers

Learn More

Ad Blockers

As the use of ad blockers grows, creating high-quality,vengaging ads is critical to reach the largest number of people possible.

Examples of Programmatic Advertising

Let’s unpack some case studies and examples to see how brands have already seen success with programmatic advertising.

InnoGames Acquires 50K New Players a Month

InnoGames, a leading developer and publisher of online games, wanted to reach new players and increase conversions. The company partnered with Taboola to launch programmatic mobile and native ad campaigns across the globe.

Taboola quickly became one of InnoGames’ top partners for generating traffic on PCs — attracting 50K new players in just a month.

Major Finance Brand Drives 80% Viewability

A major U.S. finance brand wanted to educate consumers about its products by sharing an educational video series with target audiences. After partnering with Taboola, the brand was able to deliver programmatic video ads across top-quality publisher sites.

programmatic advertising

As a result, the finance brand achieved an 80% viewability rate, 70% completion rate, and 15% decrease in CPM month-over-month.

Banco Sabadell Increases Conversions by 17%

Spanish banking group Banco Sabadell wanted to find more target customers for its mortgage product and drive high-quality leads to its website. Working with Taboola, it launched programmatic display and native ads across niche publisher sites, including guaranteed impressions with viewable CPM (vCPM) – the amount paid per 1,000 viewable impressions of a campaign.

The bank also conducted its programmatic buying through an integration with Google’s DSP, DV360, and used its DMP (data management platform) to exclude current customers from seeing the ads, ensuring they were only reaching valuable prospects. These tactics drove rich results: Banco Sabadell increased conversions by 17%, drove a 30% higher CTR, and saw a 126% higher CTR than other PMPs with display formats.

The Future of Programmatic Advertising: Trends to Watch For

Getting to know — and target — audiences where they are is time well spent to create impactful advertising that drives action.

Taboola, for instance, has long-term partnerships with top global publishers and apps, so advertisers know their placements are brand safe and verified — whether they’re delivering ads on the homepage, mid-article, or within the Taboola Feed.

Advertisers can also use these high-impact opportunities to launch ads in a range of formats, such as videos, carousels, Stories, and rich media ads.

Key Takeaways

As technology — such as artificial intelligence — and first-party data expand, programmatic advertising’s power and versatility will continue to rule. Advertisers that take advantage of programmatic operations are ahead of the competition and are converting audiences across the open web.

Use our Programmatic Creative Best Practices for a deep dive into the technical requirements of programmatic ad assets. Or put your knowledge to the test and start creating your next programmatic campaign with Taboola.

Frequently Asked Questions (FAQs)

What is the difference between display ads and programmatic advertising?

Display ads are a type of ad format that, as the name implies, provides visuals ads. They are purchased in a closed network. Programmatic advertising is a tactic of bidding on ad space based on several factors, including price and placements.

Is programmatic the same as Google Ads?

Programmatic is a broad term for automated advertising. Google Ads is one kind of programmatic advertising. It is a digital advertising platform across Google properties that includes search, display, and video ads. Google uses a pay-per-click (PPC) model, where advertisers pay a fee each time someone clicks on their ad.

What is the biggest programmatic advertising platform?

There are many programmatic advertising platforms available that marketers can use to automate their ad buying and manage their campaigns.

Taboola, the world’s leading content discovery and native advertising platform, has direct integrations with the world’s leading DSPs, serving 450 billion content, product or service recommendations each month. Advertisers can also access Taboola’s proprietary data, contextual targeting abilities, and PMP offerings to reach their business goals.

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