Programmatic advertising is something any connected consumer sees every day. In third-party digital, we refer to these as display ads. They appear on publication websites and can be static or video. Programmatic ad buys describe what happens when you execute or traffic these ads.

It can be confusing and a bit of a black box. This 101 summary decodes this process so you can explain it to your advertisers.

What Are Programmatic Ad Buys?

Programmatic ad buying is the automated process of submitting digital ads through a DSP (demand-side platform). A DSP links to third-party digital sales technology, working as the gateway to push the ad out into the digital world.

The ad creation happens in the third-party digital system. Creative loads, and you set targeting. When you submit it as an order, the ad goes to the DSP for the auction.

How Does a Programmatic Auction Work?

In the DSP, real-time bidding (RTB) occurs based on available inventory. It’s quick and simple, but you don’t get to choose the sites where ads will serve. The DSP “matches” the ad’s content and targeting with publications, and it automatically calculates and places bids for the spot. The highest bid (or CPM) wins, and website viewers see the ad.

Luckily, you don’t have to do any of this manually. The third-party digital platform and the DSP take care of this through a streamlined process.

You can see a visual of how this works in this real-time bidding infographic.

What you do need to be aware of is the quality of the DSP.

Not All DSPs Are the Same

There’s a lot of junk on the internet, known as made-for-advertising (MFA) sites. Companies create them solely for ad arbitrage, with little effort around content or user experience. They can sometimes “game” programmatic systems. Not every DSP has the guardrails and protections in place to keep these sites from receiving programmatic ad buys. The quality of your DSP matters!

MFA sites are problematic, and less than half of those who purchase programmatic advertising are aware of them, according to an Association of National Advertisers survey. The report also revealed that only one-third of ad buyers stated they were knowledgeable about the quality of their buys.

While it may be impossible to screen out every MFA site, the DSP connected to your third-party digital solution should be hyper-vigilant. It’s important to ask questions about this to ensure the best performance for your customers’ ads. If inventory is low quality, advertisers will be frustrated and unlikely to renew.

Programmatic Makes Up the Bulk of Most Local Ad Sales

Programmatic ad buys likely represent a large share of your third-party digital. Most customers are familiar with targeted display. The tactic can apply across the advertising funnel, engaging audiences with deals and promotions. It also complements OTT/CTV, streaming audio, SEM (search engine marketing), social media and radio.

Since it’s so prevalent and popular, it’s also highly competitive. So, what can be your competitive edge? It will come down to the quality of the sites where the ads run and their full deliverability. Delivering in full means an ad met the number of impressions ordered.

When targeting is precise and ads appear on relevant, high-quality sites, they will perform well. You’ll be able to provide transparent reporting that includes where the ads appeared. 

Explain Programmatic Ad Buys Like a Pro

Use these simple explanations to talk to your customers. Be sure they understand the importance of the DSP’s quality and of avoiding MFA sites.

For more insights on ad ops, read our e-book, You’re Selling Digital Advertising — Now What?