Advertising Digital Publishing
3 mins read

What is programmatic advertising and should you be using it?

How publishers can maximize revenue with less effort

The programmatic advertising model is growing in popularity worldwide. According to the IAB International Report on Programmatic In-Housing from 2020, the global programmatic share of digital ad spend saw a 54% increase from 2015 to 2019. In 2020 the value grew almost 70%, reaching $129 billion, according to Statista.

Transparency, reach and relevance — these are the advantages of the model for advertisers, but what about publishers? We explain what programmatic is and when media outlets should use it.

What is Programmatic

In its simplest form, programmatic is about automating buying and selling of online advertising space. Algorithmic software allows advertisers to target consumers precisely and purchase relevant ad space on websites by leveraging data through an automated auction process. (Think of an ad for a banking service for students served to a person aged 18-25 before the start of the academic year, while he or she is reading economic news.)

Automated real-time bidding for ad space

There are two main models for selling inventory in programmatic: direct deal and real-time bidding. The direct approach requires that the publisher sell ad space to specific advertisers. The real-time bidding model is more common. Despite the many stages of the sales procedure, the auction happens in the blink of an eye:

A publisher provides its ad space availability on a supply-side platform (SSP). The SSPs manage, sell and optimize available ad space on the publisher’s websites and mobile apps.

Each time a publisher’s website loads, an ad request is sent to multiple ad exchanges.

Demand side platforms (DSPs), which host advertisements, bid for the right to put an ad impression on the publisher’s website.

The winning bid is then delivered to the website via the SSP and displayed to the user.

When media are eligible to sell in programmatic

Each SSP has specific requirements for newcomers, but these are the most common:

1. Traffic quality
Usually SSPs will usually not specify the amount of traffic needed, but it’s expected to be big. For example, OpenX, the third largest SSP in the world, supports such publishers as VICE and Conde Nast UK. On the other hand, the 13th biggest SSP, Sovrndefines 1,000 daily pageviews as the absolute minimum. Traffic sources with the highest priority, in order, are organic, direct and social.

2. Original Content

Cooperation does not take place without a content quality assessment on the website. Publishers with plagiarized content, for instance, won’t be accepted.

3. User engagement

Publishing partners should work to improve all metrics, but average session duration and low bounce rates are particularly important for SSPs

4. Viewability
The higher your website’s ads viewability, the more your inventory is able to attract in programmatic. To improve ads viewability publishers should optimize their layout, improve SEO and analyze the content quality.

Oliwia Gruszewska, Ad Operations Analyst at Yieldbirdsuggests auditing both the content and the ad banner metrics for inventory value optimization. She recommends using Similarweb and Marketscout

Google Ads Manager, the most popular SSP, offers a free version for small and medium-sized businesses. 

Gruszewska recommends using more than one SSP or, at the very least testing a number of them, particularly because SSP’s are often targeted to certain regions or platforms.

Advantages of programmatic for publishers

Yoni Wilbur, Global Product Strategy Lead for Google Ad Manager, writes that the programmatic model helps publishers succeed in the following ways:

  • Maximizes revenue with less effort, thanks to full automation
  • Easier access to data on your website’s performance and sales progress

Maciej Zawadziński and Michał Włosek, experts from Clearcode – AdTech & MarTech development partner, mention these other benefits:

  • Access to more advertisers, thanks to the ability of SSPs to aggregate multiple networks
  • “Price floors” ensure that your inventory is not being sold too cheap.
  • Brand safety is meant to be protected by blocking unwanted advertisers or even selected companies

Disadvantages of programmatic for publishers

The most important disadvantage of programmatic is that human control is still required, writes AdTech development partner War Room Inc. The auction is fully automated, but both publishers and advertisers need dedicated staff for process control and optimization. Even though inappropriate ads and advertisers should be blocked, there still needs to be a person who ensures there is not inappropriate ad matching or an unfavorable floor price. Later, the team has to analyze your inventory quality and sales performance.

Sofiia Padalko

This piece was originally published in The Fix. Abridged version republished with kind permission. The Fix is a solutions-oriented publication focusing on the European media scene. Subscribe to its weekly newsletter here.