What is Programmatic Advertising? In 16 minutes

Hi guys, today we will talk about Programmatic Advertising. In this video, I will take you through step by step what Programmatic Advertising is, what are the different types of Programmatic Advertising and where does each of the platform fit in Programmatic Advertising ecosystem. As a definition, Programmatic Advertising is data-driven ad buying and selling using real-time bidding. To understand Programmatic Advertising, you need to have a thorough understanding of these three keywords that is data-driven ad buying and real-time bidding. I will take you through the whole Programmatic Advertising ecosystem and eventually you will understand what these three mean. To understand Programmatic Advertising, you first need to go back in history and understand what used to happen before Programmatic Advertising. Now in any digital marketing transaction where you see an ad on any online digital asset, whether it's a website or an app, there are usually at least two parties involved. One is an advertiser and one is a publisher. Now advertiser is a company who want to promote their products and services and want to show their ads. For example, Nike or it can be ABC Furniture. Now these companies primarily want to promote their products and reach out to people and show them their ads. So they need ad spaces. So they buy ad spaces. On the other hand, there are companies who have websites and apps and they can sell ad spaces on their websites where they can accommodate ads from these advertisers. These publishers are companies like bbc.com. They have a website or any app which can show ad and have ad slots available on their digital properties. So a publisher is like bbc.com or it can be any website for that matter of fact that is abc.com or any app. Now these guys, they sell ad slots. Now these ad slots, the placeholders, ad slot is a placeholder where an ad can be shown. This ad slot is called inventory because that is what the advertisers buy and that is what the publishers sell. Now before programmatic advertising, what used to happen is if an advertiser is willing to show an ad on a particular website, with the human interference, a person from this advertiser would work or have a contact with one of the publishers he is willing to show an ad and they will negotiate on a price and have a contract or an insertion order. That's how advertisers would buy inventory on publishers websites. But with the rise of websites, there's millions of websites which start every day, it became difficult for the advertisers to keep track of all the websites they might be interested in showing ads on. Now with the rise in this problem where the advertisers were not able to keep track of all the publishers it was very difficult for them to have a contract with all of the publishers separately. Now it gave rise to products called ad networks. Now what these ad networks did is they club together, they talked to each of the publishers separately whether small or big and they clubbed this together the inventory where they had contracts with these publishers that they can show ads on their websites and pay them for this. This process is called monetization. So this was publisher one, this was publisher two, this was publisher three. Now these ad networks, so with the rise of ad networks what advertisers did is they directly started having contracts with ad networks where they would get access to a lot of websites all together with just one contract. For example an ad network the most commonly used is GDN that is Google Display Network. So all the websites who have partnered with Google as an ad network is called Google Display Network. So in this scenario advertiser like Apple will go to Google Display Network and have a campaign where they can have access to a lot of publishers where they can show ads. Now this solution of ad networks somehow reduced the work for advertisers as well as it served for smaller publishers who were not in a position to negotiate directly with an advertiser because they had less traffic so that they could show less number of impressions and advertiser will not go to each of the publisher small publishers to monetize their inventory. So these problems were solved by the ad networks but with the rise of ad networks there were a lot of ad networks again. So it again became difficult for advertisers to keep track of all the ad networks together. So with this problem there was a rise of a product called ad exchanges. So what these ad exchanges did is what ad networks did with publishers so ad exchanges did the same with ad networks and directly with big publishers as well. So now all these ad networks were plugged together in ad exchanges as well as some big publishers plugged their inventory in ad exchanges where an advertiser can come and they can run a campaign and have access to all these ad networks as well as publishers. Now with the emerging ecosystem the system started to look like something like this there was an advertiser there were publishers who directly wanted to sell their inventory or ad slots to advertisers or some of them through ad networks. Now with the rise of ad exchanges there was because ad exchange is a high-tech data-driven platform it's a software which was to be plugged in by advertisers as well as publishers but they couldn't directly connect with these ad exchanges so they needed an intermediate product to be connected to these where on advertiser side these ad exchanges provided some softwares called DSP which is again a software which helps advertisers to create a campaign and buy inventory from ad exchanges. The full form for DSP is demand side platform. Now this is called demand side platform because there is a demand for inventory there's a demand for ad slots these guys they buy ad slots. Similarly on the publisher's side now these ad exchanges were connected to SSPs which is supply side platform. Now it's called supply side platform because they have a supply of ad inventory. Now advertisers would connect to DSPs now ad networks and publishers directly could connect to SSPs and these SSPs were internally connected to ad exchanges and DSPs were connected to ad exchanges. Now the thing here is all the ad buying and selling would happen in ad exchange. Ad exchange is like a marketplace like if you know trading it's similar to a trading platform where people buy stocks and sell stocks. So this was ad exchange. One of the biggest ad exchange example would be it's a google product and it's short for an google ad exchange. Now if you look at this picture an advertiser who is running a campaign uses a software to book his campaign and to buy ad slots. On the publisher side they connect to supply side platform which is again a software or a program where they sell these and the whole ad buying and selling takes place in ad exchange. So it all the whole ad buying and selling process is done through softwares. This advertiser does not need to have a contract with this publisher. All the transaction whether monetary or regulations of the ad buying and selling is controlled by the central ad exchange. That is why this mode of the evolution of the ad buying and selling process which is done completely by softwares is called programmatic advertising. Now by now you should be able to understand programmatic advertising is an ad buying mode. It's a mode how advertisers buy and publishers sell inventory and it's done through programs that's why it's called programmatic advertising. Now that we know that what programmatic advertising is and we know which are the initial stakeholders present in the programmatic advertising ecosystem. Now this ecosystem supports an advertiser to buy inventory and this publish helps publishers to sell the inventory. Now how advertisers buy the inventory depends on and there are three different types or modes how advertisers and publishers transact this ad inventory. The first one is an ideal case let's say for example Nike wants to show ads just on bbc.com. So in that case advertisers will run a campaign and they will set up a campaign in dsp and ask using softwares ask for a proposal from bbc.com that we need to show 100,000 ads on your website from these dates to these dates they would use dsp to set it up and publishers bbc.com will get a notification for this proposal they'll create a proposal and they will start buying and selling the ad process. Now in this case there is one advertiser buying an inventory from one publisher it's called programmatic guaranteed advertising. Now in this case you have to remember one advertiser is running ads or campaign on one publisher so it's a one-to-one deal. Now you will say okay now why is this called programmatic advertising that's what used to happen before the only difference is in the first scenario when there was no programmatic advertising this contract will need people to meet each other the sales teams and have a contract physically which involves sales legwork as well but in this case this transaction was completed only using softwares. Now the second type is in this kind of scenario let's say bbc.com has their home page but they do not want to show ads for any small advertiser on their home page so let's say they have a policy that only these five top advertisers like samsung apple can advertise on our home page so in that case either the advertiser apple samsung or these companies will approach the publisher which is bbc.com and ask them can we advertise on your home page or bbc.com can create a proposal and send it to these six advertisers so in that case it's called pmp which is short for private marketplace so in this case the publisher sells the inventory to let's say four six eight ten any number that you can count on fingers let's say so it's one to few deal the publisher sells inventory to few advertisers this kind of deal is called a pmp mode which is private marketplace and the third one is where the publisher can sell the inventory to anyone they have an inventory because the ad the publisher has different ad units on his website they can choose and create a package of certain ad units and say anyone can buy this inventory using programmatic advertising or they can restrict a few categories let's say if it's bbc.com they will restrict other news outlets to buy inventory on their website because it won't look good if you see a new york times ad on bbc or they can restrict let's say an advertiser who is associated with gambling alcohol or whatever their wish but by generally they would let everyone to buy that inventory on their website so in that case it's called rtb or open auction so it is one to all so one publisher selling inventory to all now in open auction anyone can bid so and whenever there's somebody goes to bbc.com and let's say i go to bbc.com there's an ad slot the bbc.com will send the request to ad exchange that there's a user on my website does any of the advertisers connected to this ad exchange want to buy this slot all the advertisers who are willing they will bid okay i will pay five dollars cpm for this ad impression whoever pays the highest wins the impression and it all happens in real time that's why it's called real time bidding or rtb guys as i mentioned before programmatic advertising is data driven buying and selling of ad slots using rtb now the only puzzle piece missing in the puzzle is data driven now we know that how a programmatic ecosystem looks like there is an ad exchange where the buying and selling of ad slots takes place which is connected publishers are connected to ad exchange using softwares called ssps or supply side platforms and advertisers are connected to ad exchange using dsps now an advertiser can be nike a dsp one of the biggest dsps is a double click bid manager or now it's called dv360 and an ad exchange is the biggest one probably is google ad exchange and ssp can be google ad manager i'll put links for all of these products and softwares in the description below so that you can check them out how they work and other details regarding them a publisher or an ad network can be let's say gdn or bbc.com now with the rise in digital marketing and online advertising there are millions and millions of websites who have ad slots to sell now advertisers are getting more smarter they are more focused on performance now they will spend on digital marketing only if they want to see results in this kind of scenario where there is millions of devices connected to internet and millions of websites and apps being served so in this kind of scenario it's important to understand for advertisers that among this all inventory what is important for us nike will not go and show their ads on all the websites connected to ad exchanges so in this kind of scenario there was a rise of products which have audience data when i say audience data they track audience behavior across multiple websites and apps and flag them as let's say this person has been researching about car probably he's a car buyer so these products where all this audience data is stored is called a dmp which is short for data management platform one of the biggest dmp's is oracle blue guy it's owned by oracle so now these dmp's help publishers and advertisers to understand audience behavior so in our case let's say nike is advertising they will only probably ask oracle to give them data about audiences who have been looking for shoes in the last 30 days or seven days now when these dmp's provide data to give data to nike about all the people who have been looking for shoes so nike in their dsp create a campaign in such a way that only their campaign should be visible on any of the websites when one of these users who is looking for shoes is available on the website that's how dmp's help advertisers and it can be used on publisher side as well so this is an ideal programmatic ecosystem and it shows you how different parties are involved in a programmatic advertising ecosystem i hope this is clear guys and thank you for watching the video 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