Get a group of advertising executives in a room and every one will have a different definition of what programmatic is and isn't.
It's a confusing term for a confusing development in the way advertisers, agencies, and publishers buy and sell ad space.
It comes down to one simple fact: Programmatic advertising is using automated systems (technology) and data to make media buying decisions without humans. It's about efficiency, scale, and targeting.
If you want to understand how it works, I recommend watching the video below:
To sum it up in one sentence: Programmatic gives advertisers the ability to target users with relevant content based on user data and to buy one impression at a time to increase efficiency and effectiveness of the buy -- all without the cost incurred by manual human tasks.
The point is that humans cannot possibly work as fast as computers can at analyzing data, optimizing ads, matching user information, and making decisions based on all the information collected in a few miliseconds -- which is how quickly real-time bidding and buying takes place.
If you're still confused about DSPs, SSPs, DMPs, and a variety of other terms, browse our glossary of programmatic advertising terms:
50 Programmatic Advertising Terms Defined
The amount of ad space a publisher has available.
A platform that delivers advertising to a person’s browser or app and reports on performance.
Agency Trading Desk
An agency or holding company owned trading desk that handles programmatic buying for a media agency.
A method of analyzing data across a campaign’s various touchpoints and then assigning a value to each contact point that contributed to a specific outcome.
Offered by ad networks, server-side platforms, and demand-side platforms, audience extension tools allow publishers to follow site visitors to other websites. This provides publishers with the ability to offer advertisers media buys that include reaching a publication’s audience outside of their website.
A brand's exposure to inappropriate content on a publisher's site. The automation of programmatic means that brands do not always know where their ads will appear.
A small transparent image placed on a website or in an email that tracks user behavior, such as an IP address and time spent on a web page.
Attempts to deliver more relevant ads based on a user’s past browsing and app usage. Platforms typically do this by analyzing and group visitors into audience segments.
The percentage of users who were delivered an ad and clicked on that ad.
The percentage of video ad impressions that are played to completion, meaning the viewer does not skip or leave the video.
An automated system identifies the content of the page, such as keywords, and delivers targeted image- or text-based advertising.
A piece of data that is sent from a website and stored in a user's browser that tracks browsing behavior and stores information, such as user information for login forms. This is how publishers collect information on visitors to sell advertising. Cookies doesn not work on mobile devices, which limits a seller's ability to fully understand users' behaviors.
Cookie Sync or Match
Data appending done to link one company's user identifier (such as a cookie ID) to another company's user identifier. This is done so ad networks and exchanges can merge user information for a single person.
Cost Per Action (CPA)
Average cost of a user converting during a campaign.
Cost Per Click (CPC)
Average cost of user click-through. Divide the total cost of clicks by the total number of clicks.
Cost Per Thousand (CPM)
The price of 1,000 ad impressions on a web page.
Platforms and publishers attempt to track individual users across every device -- mobile, tablet, desktop, and apps. This data is used to better understand users' behaviors online and target or retarget individuals with relevant advertising.
Data Management Platform (DMP)
A system for managing data, such as cookie IDs. This centralized management platform used by agencies, publishers, and brands helps manage first-party data and integrate it with third-party data to tie user information and activity together and optimize media buys.
A system generated number assigned to a automated ad buy that identifies the buyer and the publisher.
Demand-Side Platform (DSP)
Platform that allows buyers to automate the purchase of display, video, mobile, and search ads. There is no negotiation of rates so buyers can quickly and efficiently buy targeted impressions across a wide variety of publishers and platforms.
A method of controlling how many times a specific user is served an ad.
When a publisher offers inventory to more than one ad network, it provides it to one network first, and then follows with the other networks if the first network passes.
Data gathered by website owners about their visitors' behaviors. This is the most valuable type of data because of the quality and accuracy and because the company owns it. It may include subscription, social, and CRM data.
Converts identifiable information into a string of numbers or letters so the person is disguised.
Sales orders for a publisher's inventory that are submitted through an exchange.
Also called transition ads or splash pages, these ads appear between two content pages.
Long-Tail Ad Inventory
Inventory with a smaller number of impressions because of the niche audience. Automated buys allow buyers to combine long-tail inventory to reach niche audiences.
Ad impressions made by bots.
An ad that appears on top of a content page.
Programmatic A/B Testing
Automation of testing of different versions of an advertisement to determine the highest performing ads and to remove ineffective versions.
Using automated methods to understand which combination of marketing contact points are contributing to a goal and using this information to optimize the campaign and reallocate budget.
Gives buyers the ability to create separate creative and copy which are then matched programmatically to find the most effective combination.
Allows buying and selling of media through a web interface. This allows advertisers to automate direct buys.
Where publishers can control what advertisers buy their inventory and prevent the reselling of their impressions.
The lowest price a seller will accept for impressions.
Programmatic Guaranteed or Programmatic Direct
Sellers and buyers negotiate a buy with a set price and run date. This is completed outside of an auction.
A listing of the prices of advertising on a publisher’s or seller’s website.
The buying and selling of ad impressions through ad exchanges and platforms. Price is determined by immediate demand. Real-time bidding works within miliseconds -- a person person visits a website and their information is given to an ad exchange where an auction for that impression occurs.
Advertising inventory that a publisher is unable sell. It is then sold to a third party, discounted, or used for PSAs.
This is first-party data either bought directly from a seller/publisher or through a DMP.
Second Price Auction
The winner of an ad impression in an auction pays one cent above the next highest bidder.
Suppy-Side Platform (SSP)
Software platform that allows publishers connect their inventory with ad exchanges, networks, and DSPs at the same time to sell impressions at their highest value in real time. An SSP provides publishers with access to many potential buyers, and they can set a minimum price they will sell impressions for.
Aggregated data from other platforms and websites. This data can be imprecise as companies have different collection methods for information on users.
Information, such as demographic, past visits, and interests, about a user to create a behavior profile that will be used for ad targeting.
An advertising metric that tracks impressions that can be seen by users.
A metric that determines how much of an ad needs to be viewable or how the user needs to view the ad for it to be counted as an impression.
A directory of websites where an advertiser is willing to serve its ads.
The total number of impressions won divided by the total number of impressions bid on.
Technique used by ad servers to determine the value of ad impressions and maximize revenue from potential advertisers.
Originally published Feb 3, 2015 7:00:00 AM, updated July 29 2019