Dissecting Programmatic – Part 1

Dissecting Programmatic – Part 1

The programmatic ad space is a maze littered with acronyms, technologies and definitions. It’s easy to get intimidated, and overwhelmed. But whenever I find myself lost deep in the maze, I find it always helpful to step back and remember what exactly, from a broad perspective, we’re trying to do in programmatic…that helps me re-center the role of whichever component I’m digging into within the broader mission. 

What is the “mission?” At it’s simplest, it’s about targeting where your audience currently is, instead of targeting where you think they’re going to be.

Traditional media buying is about researching the viewership of content (TV shows, websites, magazines, radio) – and putting your ads in the content who’s viewership you determine mostly closely resembles who you’re trying to reach (target audience). Programmatic is different in that we’re looking for where our target audience is, and getting an ad in front of them in real-time. The focus in programmatic becomes less about the content, and it’s viewership – and more on identifying audiences. 

What does this really mean? A simple example: often when you go to a website, banner ads will take a second or two to load. In that time, the website you’ve visited is auctioning that ad slot, and whichever advertiser is willing to pay the most will put their ad in front of you. This transaction, happening in fractions of seconds, is the foundation for programmatic buying. 

There are three key tools used in this transaction:

  • (SSP) Supply Side Platform – the tool publishers use to auction their available ad slots
  • (DSP) Demand Side Platform – the tool advertisers use to bid on available ad slots
  • Ad Exchange – what connects the SSP to the DSP, and where the auction takes place

That is the core of programmatic. Everything else within the programmatic world plays a part in making that transaction better – for the publisher, advertiser and target consumer. But when you whittle away all the other buzz words – that real-time auction is the core of what programmatic is. 

Data’s Role in Programmatic

Identifying where our target audience currently means we need information. One of the main ways we gain information on who we’re bidding on is cookies. Audience lists, or cookie pools, are used by the DSP to identify known visitors who the SSP is offering up for auction. 

There are three types of cookies:

  • 1st Party Data – data you’ve collected firsthand, typically web analytics or CRM systems
  • 2nd Party Data – someone else’s first party data
  • 3rd Party Data – audience lists that can be bough from data aggregators 

There are thousands and thousands of 3rd party pools you can purchase: demographic audiences, behavioral audiences, in-market audiences…we’ll get more into that in the next post. For the sake of this post – it’s just important to remember that cookies are the basis for how advertisers find, and target, the right audiences. 

Cookies, which are simply snippets of code that are placed in a user’s browser, are anonymous markers that can be targeted during the ad auction. Because of this, there’s a plethora of ways to match cookies to other sources of data, to further inform advertisers’ bids. “Data onboarding” is the name for matching cookies to other sources of data – and, again, what we’re going to dig into in the next post.

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