Programmatic advertising is an increasingly popular and complex field. Over 80% of digital display marketing was spent on programmatic advertising. From real-time bidding to audience targeting, there are a lot of terms and concepts to keep track of.
This article will provide you with a comprehensive glossary of the most important programmatic advertising terms, so you can navigate the industry with ease. Whether you’re a beginner or a seasoned pro, this guide is designed to help you stay up-to-date with the latest industry developments.
What Is Programmatic Advertising?
Programmatic advertising is the use of automated technology to purchase and optimize digital campaigns. This technology utilizes artificial intelligence and machine learning to buy advertising space. It also utilizes data and algorithms to serve the right ads to users.
This differs from search engine marketing which focuses only on search results. Through the use of search engines, users are targeted with ads related to their search results. Programmatic advertising deals with more than search engines as ads can also be seen on social media devices.
Types of Programmatic Advertising
To understand what programmatic advertising entails, we must understand some of its terminologies. Programmatic advertising has 4 types which are discussed below.
1. Real-Time Bidding (RTB)
It is also regarded as an open auction. It is when inventory prices are determined through a real-time auction. It is fully open to all advertisers and publishers, and it is an effective way of buying media with a large audience.
The ad inventory is bought based on view basis in real-time. Real-time bidding enables advertisers to adjust their campaign budgets in real-time to optimize campaign performance.
2. Programmatic Direct
This is a type of programmatic advertising where the publisher avoids auctions and sells media inventory at a fixed price instead. It is also known as programmatic guaranteed. It follows the traditional approach of advertising. In this type of advertising, the two parties negotiate on a one-on-one basis. No bidding process is involved.
It is often used by advertisers who specifically know their audience and they also have a hefty advertising budget. Programmatic direct gives advertisers the chance to choose prices, ad inventory as well as frequency capping.
3. Private Marketplace (PMP)
This type is similar to real-time bidding. The difference between them is that the private marketplace puts more restrictions on who can participate in the auctions. It uses an invite-only basis. Some publishers use certain selection processes to determine who gets an invite.
The ad inventory involved is usually premium and they are used by publishers with very wide audiences. Another difference between PMP and RTB is that advertisers are able to know the website their ads will run on. This would make it easy to calculate the return on investment (ROI).
4. Preferred Deals
This is another type of programmatic advertising that involves advertisers choosing an ad inventory at a fixed price. This is done even before the inventory is made available in private marketplaces that would have auctions.
It is also referred to as spot buying. Both parties involved agree on targeting and pricing beforehand. Demand-side platforms can be used by advertisers to understand their audience and decide on purchasing the ad impression.
Programmatic Advertising Glossary
There are a lot of terms used in programmatic advertising. Some include DSPs, ad exchanges, and geotargeting. All these terms are correctly spelled and defined in the subsequent paragraphs
1. Ad Budget
This refers to the amount of money an advertiser is willing to spend on a programmatic advertising campaign. Advertisers determine their budget and let artificial intelligence display relevant ads to their customers
2. Ad Copy
This is referred to the written text in an advertisement. It helps spread useful information about ads and businesses. Some of that information includes contact information as well as the benefits of buying your product.
3. Ad Exchange
It acts as a marketplace for selling and purchasing ad inventory. The sale and purchase are done through bidding and real-time auctions. It connects supply-side platforms(SSP) to demand-side platforms (DSP).
4. Ad Exchanger
It is the medium through which the supply side feeds an inventory into an ad exchange.
5. Ad Network
It is a company or platform that connects advertisers to different publishers. It gathers various inventories from different publishers and offers them for sale. A popular example is google ads.
6. Ad Server
This is a platform that distributes ads to end devices such as mobile phones and laptops. It also captures performance metrics.
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It means Authorized Digital Sellers. It is a text file that enables a publisher to record those who can sell inventory on the website. It helps to reduce ad fraud by granting buyers transparency.
8. Ad Rank
This refers to the position granted to advertisers’ pay-per-click (PPC) ads in search engine results.
9. Application Programming Interface (API)
APIs enable the connection and transfer of data from external applications. That data is then sent to a unified dashboard.
10. Artificial Intelligence (AI)
This refers to teaching machines to think rationally like humans. AI is used by programmatic advertising to manage and automate ad campaigns.
11. Automated Guarantee
This refers to when advertisers purchase placements at a fixed price for a period of time.
12. Behavioral Targeting
This is when ads are targeting users based on their online habits such as the websites they visit, things they bought online, etc.
This is the amount of money placed in an auction by an advertiser. The bid is placed for a keyword to secure ad placements for top spots in search results.
14. Click-Through Rate (CTR)
This is the ratio of users who clicked on your ad compared to the total number of views your ad got.
15. Cost per Acquisition(CPA)
This refers to the amount paid by an advertiser on average to convert one user into a customer. It considers the value of a lead, purchase and conversion.
16. Cost per Click(CPC)
This refers to the average cost of a user clicking on your ad. It is majorly used in PPC campaigns.
17. Cost per Mille(CPM)
This refers to the price of a thousand impressions for an ad.
18. Cost Per View(CPV)
This refers to the amount an advertiser spends for a user to view their ad.
19. Data Management Platform(DMP)
It is a system of data storage and management used by advertisers, publishers, and agencies. It is used to optimize media buying as well as marketing campaigns.
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20. Display Ads
They are forms of advertisements that include forms of multimedia such as images and videos. They are used on websites and social media platforms.
21. Demand-Side Platforms(DSP)
This is software that allows advertisers and agencies to buy ad inventory on different platforms. They decide the best inventory to reach a target audience. They also place buys and give performance reports. Ad exchanges connect them to SSPs.
22. First-Party Data
This data is gotten from web pages and it includes data on consumer behavior. It helps agencies and advertisers learn more about their audience and demographics.
23. First-Price Auction
This is when the advertisers bid for an inventory. Whoever is the highest bidder wins the auction and then pays the price he used to win the bid.
24. Floor Price
This is the minimum amount a publisher is willing to sell his or her inventory for.
This refers to picking keywords associated with a particular location. It could be a city or town. This helps to reach the target audience searching for those keywords online.
It refers to the total number of times your ad has been seen by a user.
These are words and phrases that an advertiser’s target audience searches for on search engines. Advertisers use these keywords to optimize their search engine marketing campaigns.
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28. Machine Learning (ML)
It is a form of artificial intelligence that uses a lot of data sets to accomplish certain tasks. It uses these large data sets to learn and make informed decisions without being programmed to do so.
29. Pay-Per-Click (PPC)
This is a form of advertising that enables advertisers to place ads on search results as well as social media platforms. The advertisers pay each time a user clicks on their ad.
30. Post-Click Engagement
It is a practice of optimizing advertising campaigns by encouraging users to take action after an ad is clicked.
31. Private Auction
This refers to when a private marketplace is restricted to only a select few advertisers. These advertisers can bid for the inventory before it reaches the open marketplace.
32. Second-Party Data
This is first-party data that is purchased directly or through a DMP.
33. Second-Price Auctions
This is a situation where the winner of the bidding contest pays a cent more than the next highest bidder.
34. Supply Side Platform (SSP)
This is software that enables publishers to sell mobile, display, and video ad impressions to potential advertisers. It is automated and done in real-time.
35. Target Audience
This refers to users who are more likely to buy your products and services. Advertisers often make research to know their target audience and create personalized ads for them.
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36. Video Ads
These are forms of advertisement that contain videos that have the intention to grab the viewer’s attention. They are more engaging than text-only ads.
37. Web Traffic
This refers to the number of users who visit your site. It can be measured in the form of sessions and visits. It is a good indicator to know if your ad campaign is working or not
Programmatic advertising is the future and it can get really complex. The use of automation distinguishes programmatic advertising from more conventional media buying methods.
It analyzes a wide range of user signals to make sure that ads are served to the appropriate people, at the right location, and at the right moment. All the terms listed above will give a well-rounded idea of what programmatic advertising is all about. We wish you success on your journey to learning more about programmatic advertising.