Programmatic advertising is automated digital advertising that optimizes the buying of digital ad inventory. With programmatic advertising, marketers can ensure that their advertising campaign is delivering the most effective ads to the target audience who is most likely to engage or convert. Marketers no longer need to juggle quotes, proposal requests, and negotiations, as programmatic advertising automates the entire purchasing process for a more seamless buying process.
Understanding the options, benefits, and how exactly programmatic advertising works can be a challenge for marketers. That’s why we’ve compiled this glossary of terms to help you understand the ins and outs of programmatic advertising.
Types of Programmatic Advertising
To get started, there are three primary types of programmatic advertising.
1. Programmatic Direct
Programmatic direct advertising works similarly to how advertising was bought when the Internet was still relatively new, although added software assists now. In a 1:1 agreement, publishers and advertisers decide on terms for a media campaign. Then they use AdTech platforms to automate the delivery of the campaign as well as the reporting.
2. Real Time Bidding (RTB)
RTB is a type of programmatic buying that is data-driven and allows advertisers to bid on ad space in real time. After a user clicks on a web page, the publisher of that page puts that ad space up for auction. Advertisers compete for the impression, and the highest bidder wins the space to place their ad. This entire process occurs within the fraction of a second it takes the webpage to load.
3. Private Marketplaces (PMP)
Private marketplaces, as the name implies, offer advertising inventory to select advertisers in a private setting rather than on the open market. Premium publishers, such as the New York Times or Forbes, use this type of exclusive media purchasing when they want more control over the kinds of ads they show on their sites.
Programmatic Advertising Channels
Each of these three types of programmatic advertising happens across multiple channels — programmatic advertising isn’t just banner ads. Here are the primary channels where programmatic advertising is displayed.
Display advertising is a type of online advertising in which an advertisement is displayed in graphical form on a destination webpage. Think of this as a banner ad, and was the first version of programmatic advertising.
Video ad units come in many formats, and typically last 15 or 30 seconds. Video ads can also be skippable or not skippable and played before, during, or after streaming a video online.
While standard display ads are limited by where they can be located, native ads can be displayed virtually any other place, such as the middle of a page. These ads can be great for capturing a user’s attention and are designed to match the rest of the content on the webpage, rather than to stand out from it as banner ads are designed to.
With consumers spending a huge amount of time on social media sites, social advertising is an important channel for marketers. Social media platforms collect data about users, so personalized ads can be created to enhance the experience of the user. This data determines which users will see ads, how much time the ad will be displayed, and in what formats the ads will be delivered.
Search ads appear on search engine results pages (SERPs) and are targeted based on a user’s search. They show as text at the top of the page, above organic results. These are typically pay-per-click, which means advertisers only have to pay for the ad placement if audiences click on it.
1. First-Party Data
When marketers collect information about their customers or site visitors, this is known as first-party data. This can include anonymous behavioral data as well as demographic data.
2. Second-Party Data
Second-party data is first-party data that you purchase directly from the source. Whereas third-party data is bought and sold anonymously on the open exchange, second-party data transactions take place on a 1:1 basis, typically from a publisher selling the data to a marketer.
3. Third-Party Data
Third-party data is purchased from a data provider as segments or audiences and includes groups of site visitors who have exhibited a certain characteristic or behavior on a website. Third-party data is typically available in larger quantities than first- or second-party data, but the original source and the data quality is not as easy to determine as those sources.
4. Behavioral Data
Behavioral data is based on a user’s history of interaction with advertising content or a website. For example, if a visitor visits pages or articles containing sports content, they may be grouped into a “Sports Lovers” audience.
5. Contextual Data
This data refers to the context of the webpage on which the advertisement is located. While behavioral campaigns serve ads to prospects based on their past behavior, contextual campaigns try to place ads where “best-fit” potential prospects are going to be browsing. If you were selling advertising and marketing services, you would target visitors on pages that are relevant to advertising and marketing, regardless of visitors’ past behavior.
6. Conversion Data
Conversion data is just what it sounds like — gathering information on the visitors who have previously converted on your site, whether that is filling out a form, completing a purchase, or signing up for a newsletter. Looking at the similarities among your best customers allows you to find and hopefully convert more customers like them.
The following are different methods of audience targeting.
Retargeting refers to targeting your previous site visitors to bring them back to your website and compel them to complete an action. This could include targeting consumers who haven’t completed an order or targeting your high-value previous customers to entice them to come back to your site.
2. Contextual Targeting
These advertisements are intended for non-search webpages based on their category, keywords, and content. Marketers can use this form of programmatic targeting to access a bigger audience by leveraging any existing campaigns based on keyword searches.
3. Lookalike Modeling
Also referred to as audience modeling, lookalike modeling uses first-party data to model potential customers, providing advertisers with a large pool of targetable users.
4. Behavioral Targeting
This form of advertising is based on the interests and behaviors of the user. Data collection allows for behavioral targeting, and advertisers determine what data should be collected.
Geo-targeting enables advertisers to target users based on their location so results will be more personalized and relevant. This targeting method is often used by local advertisers trying to reach people within a certain location of their store or service offering.
6. Search Retargeting
Search retargeting means serving display ads to users as they browse the Internet based on previous keyword search behavior, intended to capture in-market consumers.
Tracking, Profiling, and Brand Safety
The AdChoices program was developed to apply consumer-friendly standards, address public education, and promote industry accountability in the collection and use of advertising data related to online behavior.
A bot is a software program that automates tasks on the Internet or other network. Bots simulate human users in online interaction and result in fake impressions.
A cookie is a tiny text file that identifies the browser of a user to track activity and maintain information about the user. Cookies can be either first-party cookies or third-party cookies. Websites leave first-party cookies on a computer, while third-party cookies are left by a different domain than the website the user is visiting.
4. Cross-Device Tracking
This term refers to the tracking of a consumer’s behavior across multiple devices, such as a mobile device, tablet, and desktop.
When a user opts-in, they permit a company to use collected data about them. This data is generally collected for the purpose of marketing the brand’s services or products.
When a user requests to be removed from a brand’s list, they are opting out of being tracked, and therefore out of audience targeting.
When advertisers track a user’s interests and create a profile based on the user’s behaviors and interests, this is known as profiling.
In the process of tagging, a pixel is added to a webpage, and data about the visitors of these pages is collected. The webpages for this process are typically the key pages and landing page for a campaign.
9. Targeted Advertising
Targeted advertising refers to ads that are targeted to consumers based on demographics, interests, purchasing behavior, and location.
10. Tracking Pixel
A tracking pixel collects information about the placement of an ad. Generally, this tracking pixel is used for noting whether an ad has or has not been served.
Programmatic Ad Units
These are the primary types of programmatic ad units available.
1. Standard Ad Units
This term refers to ad specifications that provide a framework for the webpage design. They also provide specs for the ad inventory of a standard image ad unit or an animated in-page ad unit. Standard ad units include Skyscraper at 160×600 pixels, Leaderboard at 728×90 pixels, and Big Box at 300×250 pixels.
2. Interstitial Ads
Interstitial ads are one of the most popular types of mobile ads. They cover the entire screen, and are displayed between content pages. These ads are also referred to as transition ads, Flash pages, and splash pages.
An overlay is an ad that briefly appears over the webpage’s content.
Pushdown refers to a highly interactive ad unit that pushes down the content of a webpage when the creative expands, moving the site out of the way to display the ad. It lives in a space that is bigger than an expanding leaderboard and typically has original dimensions of 970×90 pixels, expanding to 970×415 pixels. Pushdown creatives are browser-only and can’t be served in mobile apps.
This refers to an ad unit template in which the ad designer selects as many as three interactive modules in a pixel space of 350×1050. The format is very brand-centric and is an extra-large vertical canvas that allows advertisers to share their brand message with scale.
Similar to a slideshow on Facebook, the filmstrip unit allows advertisers to have five different slides that come together to tell a story. The entire ad unit is typically sized at 350×3000 pixels, and each slide is 350×600 pixels. These segments scroll via user interaction in a placement window of 350×600 pixels.
7. Rich Media
Rich media refers to ad units with advanced technology, including video and audio. It can take the form of buttons, banners, tear-backs, transitionals, page take-overs, and floating ads — elements that encourage users to engage and interact with the content.
8. Expandable Ads and Banners
These rich media advertisements expand to greater dimensions. The enlarging of the ad depends on how the user interacts with it. For example, the ad may expand briefly to grab the attention of the user.
Slider ads reside at the bottom of a web page. These ads slide or fade in and move up or down as the user scrolls. The ad will stay visible unless the user manually closes it.
10. In-Banner Video
In-banner video refers to a video that is played within the confines of a 300×250 pixel display ad unit instead of being initiated through a video player. It can play automatically once the page loads or require a user to click to play.
This refers to a video ad that plays before an online content video begins. You would typically see one of these before a video on YouTube, Facebook, or publisher websites.
This refers to a video ad that plays in the middle of an online content video. These are also very commonly found within videos on YouTube, Facebook, and publisher websites.
This refers to a video ad that plays after an online content video ends. These also appear on YouTube, Facebook, and publisher websites.
Measuring and Optimizing Campaign Performance
Below are terms related to metrics for measuring and optimizing a campaign’s performance.
1. Ad Interaction
Through ad interaction, advertisers can measure the performance of a rich media campaign. When the user clicks an exit link, hovers over the ad with the mouse, or directs the ad to display in full screen, the interaction will be captured.
2. Ad Verification
Ad verification verifies that ad impressions are all quality impressions, are displayed as intended, and are compliant with the guidelines of the industry.
3. Brand Safety
Brand safety refers to the prevention of displaying ads on webpages that may negatively impact a brand.
4. Bounce Rate
This is the rate at which website visitors leave after they’ve viewed only a webpage. Decreasing bounce rate is a goal of marketers who want to increase engagement and time-on-site.
5. Click-Through Rate (CTR)
The rate users click an ad is referred to as the click-through rate. This rate is given as a percentage.
A conversion is the desired action from a user in response to a digital ad. Examples of a conversion include when the user makes a purchase, opts in to a newsletter, registers through a website, signs up for a service or downloads an offer.
7. Cost-Per-Action (CPA)
Cost-per-action, otherwise known as cost-per-acquisition, is a method of calculating ROI in digital advertising, based on the total amount spent on a campaign divided by the total number of leads or conversions.
8. Dynamic Pricing
This refers to when a real-time auction determines an ad impression’s purchase price rather than the price of the ad being fixed by a predetermined rate.
As in “eyeballs on the page.” This is a colloquial term for the number of people who see an online ad, or impressions served.
When the content on a screen isn’t visible any longer, this point is referred to as the fold. An ad that users can view when the webpage appears, without having to scroll, is known as “above the fold.” The opposite of this is “below the fold.”
Fraud in online advertising refers to malicious activity to misrepresent an online ad campaign’s performance or to increase the costs.
Frequency is a characteristic used in creating a target audience based on past behaviors. For example, building a sports audience with a frequency of five means people have visited sports content at least five times to be qualified for that audience.
13. Frequency Capping
This refers to a cap on the frequency that a specific ad is shown to a user. This intent of frequency capping is to improve performance and prevent banner fatigue.
This term refers to how many times an ad has been viewed.
The number of individuals who have been exposed to the ad is referred to as reach.
The opportunity that an ad has to be seen by a user is known as viewability. Factors like a consumer’s time on a page and the page’s location impact the viewability of an ad.
This is a list of websites that are determined by an advertiser to be safe for serving ads. The opposite would be a blacklist.
18. Win Rate
The impressions won in an online auction versus the number of bids submitted is known as the win rate.
19. Yield Optimization
To determine the worth of an ad’s impressions and increase the revenue of ad inventory, publishers can use yield optimization.
The Programmatic Industry
To understand the programmatic buying and selling market, you’ll want to familiarize yourself with the following types of advertising technology that are used.
1. Ad Exchange
An ad exchange is a virtual marketplace where suppliers or publishers put their impressions up for bid to buyers. Every impression is announced by the ad exchange in real time. Buyers have a chance to purchase impressions by bidding.
2. Ad Network
An ad network is an intermediary between publishers selling ad inventory and purchasing advertisers. A network aggregates and filters advertisement inventory and helps connect sellers with buyers for online ad impressions. Buyers and sellers often negotiate on specific impressions instead of bidding.
3. Ad Server
An ad server stores display ads, provides these ads to visitors of a website, and creates reports by monitoring campaigns.
4. Customer Relationship Management (CRM)
Companies use customer relationship management to track and organize contacts with both current and potential customers.
5. Data Management Platforms (DMP)
DMPs help manage first-party and third-party data so advertisers can use the data for a targeted advertising strategy.
6. Demand Side Platform (DSP)
Advertisers can use a DSP to manage the purchases of their online display ads in real time. Through ad exchanges and networks, a DSP buys ads for advertisers.
7. Supply Side Platform (SSP)
An SSP enables publishers to manage and profit from ad impression inventory. This technology platform also allows publishers to improve the revenue from digital media.
8. Trading Desk
A trading desk can be either an Agency Trading Desk (ATD) or an Independent Trading Desk (ITD). Both handle programmatic advertising, but an ATD is often associated with and managed by a large holding company, while an ITD is independently owned and operated. Both manage cross-channel advertising on behalf of their marketer clients.
Learn More About Programmatic Advertising With AUDIENCEX
AUDIENCEX is an independent trading desk. We simplify digital advertising, helping you find and convert more customers and increase your revenue. If you have questions about programmatic ad buying, contact AUDIENCEX today.