What is programmatic advertising, and what does the planner decide?
Part of Programmatic media planning
The short answer
Programmatic advertising is buying and selling ad impressions through software, one impression at a time. When a page loads, the publisher's sell side platform sends a bid request describing the site and the slot, buying platforms bid in milliseconds, and the winner's ad is served. Planners decide which sites, deals and rules those bids may use.
Key takeaways
- Programmatic means software buys each impression, either in an open auction or under the terms of a deal.
- A bid request carries what the seller declares about the site and slot; ads.txt and sellers.json let buyers check the seller.
- Google moved Ad Exchange traffic to a first price auction in 2019, and OpenRTB lets each request state its auction type.
- The planner's work happens before the auction: the brief, the site list, the buying route and the rules the bidder follows.
- After launch, the planner compares served domains with the approved list, because a bid is not proof of where the ad ran.
What is programmatic advertising?
Definition
- Programmatic advertising
- The automated buying and selling of digital ad impressions, in which software decides for each impression whether to bid, how much and with which ad, inside rules a person has set.
Before programmatic buying, an agency booked space with each publisher by insertion order and the publisher served the ads it had sold. Programmatic moves that work into software, with machines talking to machines. IAB Tech Lab's OpenRTB page (opens in a new tab) describes real-time bidding as a way of transacting media in which an individual ad impression is put up for bid in real time. Its OpenRTB specification is the shared language for those conversations, and its stated mission is to spur growth in real-time bidding marketplaces through open standards for communication between buyers and sellers.
Programmatic is a way of transacting, not a channel. The same machinery sells display banners, video, native, audio and connected TV. What changes from one campaign to the next is which inventory is allowed, under which terms, and who checked it. The programmatic media planning hub covers the planning work end to end; this page explains the machinery the plan feeds.
Who takes part in a programmatic transaction?
| Party | What it does | What the planner needs from it |
|---|---|---|
| Publisher | Owns the site or app and the ad slots on it | Content that fits the brief and an ads.txt file naming its sellers |
| Sell side platform or exchange | Packages each ad opportunity as a bid request and runs the auction | A sellers.json record and the deals the desk asked for |
| Demand side platform | Receives bid requests and bids for the advertiser within its rules | Targeting, lists, budgets and bids set exactly as planned |
| Agency or trading desk | Sets the rules, loads the lists and watches delivery | A brief, an approved site list and a reconciliation plan |
| Advertiser | Pays for the media and owns the brand standards | Tolerances, markets and the final say on what runs |
What happens during one programmatic auction?
The auction, step by step
- The page asks for an ad. Code on the publisher's page, or in an app, tells one or more sell side platforms that a slot is available.
- The exchange sends a bid request. It describes the impressions offered, the site and page, the device and any deals in effect, and sets a time limit: OpenRTB's tmax is the maximum time in milliseconds the exchange allows for bids to arrive.
- Each bidder applies its rules. A demand side platform checks the request against every campaign's lists, targeting, budget and floor, and decides whether to bid and how much.
- The auction picks a winner. OpenRTB marks the auction type in each request, where 1 means first price and 2 means second price plus.
- The ad is served and logged. The winner's creative loads, and both sides record the domain, price and deal for reporting.
Auction rules have changed over time. Google's Ad Manager release notes (opens in a new tab) record the move to a unified first price auction during 2019, ending with the December 16, 2019 note that all Ad Exchange traffic used a first price auction. In a first price auction the winner pays what it bid, so bid strategy matters more to cost than it did under second price rules.
What does a bid request tell a buyer about the site?
The bid request is the only description of the impression a bidder sees before it spends. The OpenRTB 2.6 specification (opens in a new tab) defines its fields. A handful of them decide whether a campaign with a site list can bid at all.
| Field | OpenRTB 2.6 definition | Why it matters to the plan |
|---|---|---|
| site.domain | "Domain of the site" | The value a site list is matched against |
| site.page | "URL of the page where the impression will be shown" | Lets page level rules and context checks work |
| site.cat | "Array of IAB Tech Lab content categories of the site" | A seller declared label, useful but not a review |
| imp.bidfloor | "Minimum bid for this impression expressed in CPM" | Sets the lowest price the seller will accept |
| imp.pmp | "containing any private marketplace deals in effect for this impression" | Shows whether the impression is offered under a deal |
| source.schain | "represents both the links in the supply chain as well as an indicator whether or not the supply chain is complete" | Shows which companies handled the impression |
Which buying routes sit on top of the auction?
The same pipes carry several kinds of transaction. The route decides who may bid, on what terms, and how much the site list matters. Deal terms and the OpenRTB fields behind them are covered in detail in the private marketplace guide.
| Route | Who can bid | What the planner must settle |
|---|---|---|
| Open auction | Any buyer the exchange allows | The inclusion or exclusion list and the seller checks, since anything not blocked is eligible |
| Private auction | Buyers invited into a deal | Which sites the deal covers and the floor |
| Fixed price deal | One buyer or a few, at an agreed price | Whether the price and the sites justify skipping the auction |
| Programmatic guaranteed | One buyer committed to agreed volume | Volume, dates and price, agreed with the publisher in advance |
| Curated deal | Invited buyers, across many publishers in one deal | The domain list behind the deal, since it defines the inventory |
What does the planner decide at each step of the programmatic chain?
Software makes the impression level calls, but only inside choices people made first. Each step below has a decision that belongs to the planner and evidence that should travel with it.
| Step | Planner decision | Evidence to keep |
|---|---|---|
| Brief | Reader, topics, avoid topics, markets, languages | A written brief the client confirmed |
| Inventory | Which sites and apps are eligible | An approved inclusion list with a reason per site |
| Route | Open auction, deal or a mix | The deal sheet or line item settings |
| Seller | Which selling paths are acceptable | ads.txt and sellers.json results for each site |
| Bidding | Floors, budgets, pacing and frequency | The platform settings at launch |
| Reconciliation | Whether delivery matched the plan | Served domains compared with the approved list |
Where does PlacementGraph fit in the programmatic chain?
What does programmatic planning look like for one advertiser?
Fictional example
A Sudbury college recruiting adult learners
A fictional Sudbury college wants display ads in Northern Ontario, from Sudbury to Sault Ste. Marie and Timmins, for its evening diploma programs, in English, beside career and local job market coverage. Its marketing director asks the agency whether programmatic can reach working adults thinking about a career change or only students already searching for schools.
The planner explains that the auction will only bid where the plan allows. The brief names the reader as working adults weighing a career change and describes three articles: a guide to changing careers in your forties, a regional job market explainer and a local story about an apprentice who retrained mid career. The inclusion list holds regional news sites and career publications that pass the seller checks, including a Toronto based careers site with visits from the region.
The desk chooses a private auction with a regional news publisher that offers one and an open auction line item restricted to the remaining listed sites. After the first week, the planner compares the served domains with the list and finds one unlisted domain, traced to a listed site's app. The client accepts it, and the decision is recorded beside the list version.
Frequently asked questions
Is programmatic advertising the same as real-time bidding?
Not quite. Real-time bidding is the auction in which each impression is offered for bids as it becomes available. Programmatic is the wider term: it also covers deals in which a price or volume is agreed in advance but still delivered through the same automated systems, such as fixed price deals and programmatic guaranteed.
Does programmatic advertising cover video, audio and connected TV?
Yes. The OpenRTB 2.6 specification defines separate objects for banner, video, audio and native impressions, so the same auction machinery sells each format. Inventory differs by format, and so do the checks: a site list for display does not tell a buyer which streaming apps or channels a video campaign may reach.
Who sets the price in a programmatic auction?
Both sides shape it. The seller sets a floor, which OpenRTB defines as the minimum bid for the impression in CPM. The buyer sets its bid within that. In a first price auction the winner pays what it bid, and in a fixed price deal the agreed deal price applies instead of an open bid.
Can a buyer see which website an ad will appear on before bidding?
The bid request names the site's domain and, when the seller passes it, the page URL. Those values are declared by the seller, so buyers who care about where ads run check the publisher's ads.txt file and the exchange's sellers.json before adding a site to a list, and compare served domains after launch.
What are the four types of programmatic advertising?
The four routes are the open auction, private auction, fixed price deal and programmatic guaranteed. The open auction lets any buyer the exchange allows bid. A private auction admits only buyers invited into a deal, above a floor. A fixed price deal sells to one buyer or a few at an agreed price. Programmatic guaranteed commits one buyer to agreed volume, dates and price. Curated deals package many publishers into one private deal on top of these routes.
Sources
- OpenRTB (opens in a new tab)IAB Tech Lab
- OpenRTB 2.6 specification (opens in a new tab)IAB Tech Lab on GitHub
- 2019 Google Ad Manager releases archive (opens in a new tab)Google Ad Manager Help
- ads.txt (Authorized Digital Sellers) (opens in a new tab)IAB Tech Lab
- sellers.json (opens in a new tab)IAB Tech Lab
Researched and written by PlacementGraph Research. Read how we research, source and update these pages. Corrections: diana@placementgraph.com.