In the world of digital advertising, there are few terms that sound so simple but we struggle to explain. Programmatic is a good example of a concept that is widely used in our industry but rarely do people understand its true meaning.

Let me set the right expectations for this post: I will not be covering the history of programmatic, how it evolved and where it is going. There is so much detail on this topic that we will need a book to cover it entirely. Instead, I will be concentrating on the architecture of the programmatic space and its most valuable currency, data.

First things first, let’s define programmatic. The way I envision programmatic is nothing more than an automated way to buy and sell inventory. Wait a minute, we thought this was about advertising. It is indeed but what is the value of an Ad if you cannot display it anywhere for people to see it? Think of this as the real estate model where you have a buyer, a seller and a house. Mapping this to programmatic: the buyer is the advertiser; the seller is the publisher and the house is the inventory except in digital marketing you have millions of houses that need to be sold and to be occupied with a blink of an eye. The ancient way of the advertiser calling the publisher and negotiating the offers on an inventory doesn’t scale up with this volume of inventories and hence why an automated way to handle the negotiation, selling and buying is what makes programmatic a no brainer.

Buyer Seller

In order for this to work, both parties need a mechanism to set their own pricing, terms and rules. In real estate, this is usually represented by realtors where each party will have their own representing them and their properties. In programmatic, Demand Side Platforms (DSP) represent the Advertiser (Buyer) while Supply Side Platforms (SSP) represent the Publisher (Seller).

Buyer Seller Realtor

So what does representing the buyer/seller mean in programmatic? For advertisers, the DSP enables them to set the following rules:

  • Who is my targeted Audience?
  • What is the maximum I willing to spend on this Audience?
  • Which Ad is the best fit for this Audience?
  • Which Publishers do I want to work with?
  • Which Markets do I want to I want work with?

On the other hand, the SSP enables the Publishers to set the following rules of engagement:

  • Which Advertisers do I allow to serve on my properties?
  • What is the minimum price I am willing to sell my inventory for?
  • Which Markets do I want to release my inventory to?

A common space for the DSPs and SSPs to play is the Ad Exchange Market. The Ad Exchange is where the Publishers release their inventory along with the rules they set up in the SSP and where the Advertisers fish for audiences defined by the rules set up in the DSP.

Buyer Seller Advertisements

The complete story of how this space operates including private exchanges, real-time bidding, ad networks, ad servers, trade desks and more goes beyond this post and we will save it for another time. Instead, let’s talk about the role of data in programmatic advertising.

What data are we exactly talking about? It is the data that informs the advertiser that there is a good deal on the table. Let’s look at this from a different angle:

  • I visit a well-known publisher site, NY Times, where the SSP identifies me and throws me into the Ad Exchange.
  • The Ad Exchange alerts all the subscribed DSPs that I am here.
  • Samsung as an Advertiser has been looking for visitors like me and have configured its DSPs to watch for me.
  • The DSPs take one look at me and decide they want me. They bid on me.
  • The DSP with the highest bid wins. Now they have my attention.
  • The DSP picks the right Samsung Ad and shows it to me on the NY Times website.

Lovely story, right? Is it clearer now that the data that defines the visitors is what enables the programmatic buy and sell? Yes, it is the Audience Segments/Attributes.

Audience Segments can be defined based on 1st, 2nd and 3rd party data sources. They can be a combination of behavioral data, demographics, personas, partner data and more. These audience segments exist in all shapes and flavors and are fed into the DSP, SSP and the Ad Exchange. In most cases but not necessarily all, a data management platform (DMP) is the bank that hosts these audiences and distributes them to the players in the programmatic ecosystem.

The data that comes out of the programmatic advertising is equally as important as that data that feeds into it. We are often occupied with finding the right data to feed into the programmatic space. Programmatic is able to process billions of transactions a second so imagine the volume of impressions, clicks and conversions that are generated. This data definitely makes beautiful reports but how about the learnings and insights that it produces?

Here are three ways you can utilize this data:

  1. On-site Personalization: The advertiser wants to show the right ad that leads a consumer to click, register, apply or purchase. It is more than likely that the consumer will interact with the advertiser’s website or mobile app. Knowing what ads the consumer was exposed to and how he/she reacted to them should influence their on-going experience. Unfortunately, Advertisers often ignore these signs and offer a disconnected experience on their consumers. DMP plays a crucial role in pulling these insights from programmatic and passing it to other channels such as the advertiser’s website or mobile app.
  2. Ad Suppression: Programmatic space is complex with many DSPs, Ad Exchanges, Ad Networks and others which makes it difficult to track the number of ad exposures to consumers. Not to forget that consumers can interact with Ads on various platforms and devices which makes it extremely difficult to track. Nevertheless, with identity management and real-time server to server data collection, there are ways to track ad exposure and suppress it beyond the optimal frequency.
  3. Customer Journey: I used to cringe a little bit when this topic came up mainly because of its complexity and the limitations imposed on it by the walled gardens. I came to terms with it knowing that it is not perfect but nevertheless very powerful. Amazon, Google and Facebook make things a little more difficult for advertisers to build a complete customer journey but with device graphs and creative tracking, things are looking promising. Customer journey varies across advertisers where some are 100% online while others are a 50/50 mix. Irrespective of your business model, the customer journey will help you understand how consumers are interacting with your brand and in return which tactics and channels are providing the most value to you. I recommend leveraging the data generated by the programmatic space to be appended to other customer interactions to build the best possible customer journey.

Programmatic Advertising is continuously evolving and introducing new platforms such as TV (Linear and Addressable) and Out-of-Home which means that we will never have a shortage of data or insights to work with.

Jerry Helou, Ph.D.

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Jerry Helou, Ph.D.

Jerry Helou leads the Digital Experience Architecture practice at Softcrylic. He helps our clients accomplish advanced digital experiences and strategic business goals by implementing and leveraging multi-solution architecture.

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