What is programmatic buying?

Online marketing has been redefining itself over the past few years. But this change hasn’t just been driven by relatively recent innovations, like social media: more traditional means of advertising have become both quicker and more precise. In the online advertising sector, real-time bidding describes a process whereby ad impressions are bought and sold through real-time auctions quicker than a page can load. And thanks to intelligent targeting, potential customers or clients can be addressed with relevant ads anywhere online and not just within niche advertising environments.

Programmatic buying (PB) refers to the automated purchase of digital advertising products, like online ads. Programmatic buying is a closed process, which only last a few milliseconds and takes place on corresponding PB marketplaces and platforms. Real-time bidding (RTB) and real-time advertising (RTA) are subareas of this field. RTA involves a process in which marketers offer up their advertising inventories through automated bidding tools (RTB). Programmatic buying refers to the automatic purchase of advertisements on all digital advertising surfaces.

The terms real-time advertising, real-time bidding, and programmatic buying are often confused with one another. And while these different processes are very similar, there are some important differences between them.

Programmatic buying is the general term for any sort of ‘systematic purchase’ of web advertising space. Although this process is automated, marketers are still able to use the system to further specify targets. Real-time advertising is the first subarea within this hierarchy and describes an automated system in which different ad components communicate with one another. Information, offers, and bids are exchanged here simultaneously.

Real-time bidding, on the other hand, is a discipline of RTA. Also operating in real time, the critical factor here that makes RTB different from the other forms lies in the cooperation between purchase and sale: with RTB, a classic auction situation is at hand whereby multiple buyers bid for advertisements in real time.

Let’s return to explanation of programmatic ad buying. By using specially provided platforms, not only are ads booked, but target group data for the ads’ corresponding targeting efforts is also accessed simultaneously. This allows advertising stock and target groups to be effortlessly correlated with one another. Through this step, target groups can be selected in advanced (i.e. manually and prior to running the automated system), giving marketers maximum flexibility. Following this, programmatic buying enables companies to increase their reach within a specific target group and reduce scatter loss. The booked formats can be designed in different ways. Display ads comprise a large portion of the advertising forms that are shown via programmatic buying. Large format banner ads or video formats are also possible and are being used more and more via PB.

The main advantage of programmatic buying is its efficiency. Automatically booking ads enables campaign budgets to be spent in a more optimal manner. Additionally, accessing provided datasets allows more precise targeting efforts to be implemented. This allows marketing teams to better identify and address customers, which leads to lower scatter rates.

While it used to be the case that target groups were addressed in their corresponding environments (e.g. mothers on baby blogs), it’s now possible to address them on any desired website. Targeting efforts allow conclusions to be drawn about a visitor’s interests, and, as a result, help ensure that the right ad is matched with the right person. Using targeting methods to find the right audience isn’t a technique reserved exclusively for programmatic buying; there are many other instances where this measure is applied. When used in tandem with the other factors mentioned above, this technology helps its users achieve a broader reach and an increased online marketing performance.