4 Types of Programmatic Advertising

Programmatic Advertising & Buying

What is programmatic advertising? Specifically, what is programmatic ad buying? If you’re in the business of marketing or advertising, programmatic advertising is something you will want to be well versed in as it continues to increase its prominence every year in the digital advertising world.

Last year alone, around $83 billion was spent on digital advertising, over $32 billion of that was programmatic. This means programmatic advertising accounted for nearly 40% of all digital advertisements bought in 2017. That number is expected to do nothing but increase in the coming years as more advertisers are seeing the apparent benefits.

Put simply, programmatic advertising is the use of software to purchase digital ad space. This innovation has made it possible to speed up the ad buying process online by cutting out most of the work that used to be required to attain an ad space.

The beauty of this for advertisers is that not only can they save time and effort, but by cutting out the process of securing each online ad space manually, they can now allocate more of their efforts towards optimizing their campaigns for the most effective results.

A lot of people are under the misconception that programmatic advertising is the same as real-time bidding. In reality, real-time bidding is just one facet within programmatic ad buying.

In order to get the full scope of programmatic advertising, it’s best to know each of its different forms.

#1. Open Auction

Open auction is the real-time bidding for ad space online. Open auctions are exactly what they sound like ..open to anyone. Web publishers set their minimum bid amount for space and advertisers set their maximum bid amount. From there it’s as simple as any real-life auction, the highest bidder wins. This process all happens in a matter of milliseconds as a website loads. These auctions are available for anyone that is operating through an ad exchange platform to bid on. While this sounds most ideal and simplistic for advertisers, this is typically only open for remnant space on sites, a lot of major organizations both on the supply and demand side do not engage in open auction programmatic advertising.

However, while this may not be top tier programmatic advertising, there is a benefit to open auction ad buying. Open auction ad buying can help serve as an outlet for serving impressions at a lower cost than other avenues of programmatic ad buying. Though this may not always serve the most ideal spots on sites, this lower cost option can help serve a greater deal of your impressions at a quicker rate.

Can also be referred to as open exchange, open marketplace, real-time bidding

#2. Private Auction

Private auction advertising is a lot like real-time bidding in the fact that the ad space is sold in a bidding fashion. However, in private auction, web publishers invite only select buyers to be a part of this auction. With this, the publisher is in the know of what advertisers will be posted on their site.

This is also great for the advertiser as well, as they can be completely in the know on what exact websites they are buying ads on. This type of buying is typically for more midrange websites or midrange ad space. Private auctions tend to be the highest level in price and prominence for what those specific sites and spaces have to offer.

Can also be referred to as private marketplace, invitation-only auction, closed auction

#3. Unreserved Fixed Rate

Unreserved fixed rate occurs when a publisher offers a set space to a single specific advertiser. The advantage of this is that both the publisher and the advertiser can get a deal with someone they trust. An unreserved fixed rate is what most reputable web publishers resort to before sending an ad space to auction. This is in effort to sell ad space at a more favorable price than it would most likely get in the auction. The entire process is still automated, but fixed prices are set and decided beforehand between publisher and buyer.

A big perk to this type of programmatic advertising is that the ad space isn’t officially reserved. With this, the advertiser has the option to buy the space, giving them first right to buying a specific impression. This is a lower priced way of engaging in the midrange and spaces and sites as compared to open and private auctions.

Can also be referred to as preferred deals, private access, first right of refusal deals, first look, spot buying

#4. Automated Guarantee

Automated guarantee in programmatic advertising is known for being the best quality and best value combination. In essence, an automated guarantee is a technology-enabled form of an in-person sales process. With this, a deal is negotiated between a specific publisher and buyer beforehand on an ad space. From there, a fixed price is agreed upon and the publisher then sets aside a reserved spot for the ad server for a specified campaign duration. While this may seem like traditional ad space buying rather than automated, the main programmatic aspects of this are the automation of the request for proposal (RFP) and the campaign trafficking and tracking process.

Can also be referred to as programmatic guaranteed, programmatic direct, programmatic premium, programmatic reserved

To learn more about how you can get involved and use digital advertising through El Toro, reach out to our team, learn what we do and how we can help businesses like yours thrive.