New into Programmatic Advertising? In at the deep end? You are jumping into a space where the technical terms may get puzzling for everyone at first. Therefore, if you want to make the most out of Programmatic Buying as it is such a powerful tool for every digital marketer, make sure you bookmark this and save this blog post; you would be surprised to see how it would do you a lot in the future.
What is Programmatic Advertising?
Programmatic Advertising is an automatic process of buying and selling ad spaces on the internet, including desktop, mobile websites, and mobile applications. The process is based on a bidding system to decide which adverts from whom will get to serve on the ad spaces (ad inventory).
Programmatic Ads Terms
Ad Inventory/Ad Space
Web designers usually leave some space for adverts to display when designing a website or an application to monetize it. Ad inventory or ad spaces, sold or rented to advertisers to have ad content delivered and reach their targeted viewers.
In an ad space, there are usually many ad units according to each different price set by the publisher/agency. Each ad unit also serves a specific range of ad types and ad sizes. An ad unit contains the ad code used to call ads from the ad server and serve it to users.
An ad exchange is a digital marketplace that includes three main subjects: the buyer – seller, and a real-time bidding system. On an ad exchange, the seller can set the floor price, see clearly how their inventory is being sold and the buyer can distribute their content to their desired inventory. All operation processes are automatic and programmatic on an ad exchange.
An ad network offers its network and technology to its clients. Advertisers and publishers are connected through this intermediary to buy and sell ad impressions. The platform matches the aggregated inventory with advertisers’ requests and targets.
Ad mediation uses of technology to maximize the ad monetization of publishers by increasing their fill rates and eCPM rates. To do so, ad mediation platforms provide publishers with access to multiple ad networks. Correspondingly, advertisers from various networks then bid for the available inventory and the meditation platform selects the one that provides the highest ROI.
An ad server stores display ads, serving the ad creative to the ad unit after the ad request is made. There are two types of ad servers:
- First-party ad server: used by publishers to decide on which ads to show to the target audience and collect, store, and report data.
- Third-party ad server: used by advertisers to manage their campaigns, identify, and collect data from the platforms they use.
Ad impressions count the number of times a web page visitor/ app user views an ad.
- Publishers place an ad tag to make their inventory available for sale.
- Advertisers use these ad tags to send creatives for available impressions.
Demand Side Platform
DSP is a platform that aggregates a bulk of advertisers, purchasing ad impressions on their behalf. A DSP programmatically optimizes advertisers’ campaigns on multiple ad networks and ad exchanges while saving their budget.
Supply Side Platform
SSP allows publishers to manage all their available ad inventory on other ad networks and ad exchanges within one platform. SSP brings publishers higher revenue and helps them fill their inventory.
CPM and eCPM
CPM stands for cost-per-thousand impressions, or “Cost Per Mille”. It’s a fixed price advertisers bid or pay for each 1000 ad impressions.
CPM = (Total cost of ad campaign / Number of ad impressions) x 1000
eCPM stands for effective cost-per-thousand impressions, or “effective Cost Per Mille”. eCPM shows how much ad revenue the publisher has generated on average from 1000 ad impressions.
eCPM = (Total ad revenue / Total ad impressions) x 1000
Fill rate is the percentage number of ads served divided by the total number of ad requests that the server makes.
Ad optimization means using data to create and make subsequent changes to a digital ad campaign to improve performance.
Publishers are the owners of ad space (ad inventory) on desktop websites, mobile sites, and mobile applications.
Advertisers purchase ad spaces from Publishers to deliver their message to the targeted audience group (to promote or market their brands or products).
Net is the number of days that the publisher will receive their payments after they get their revenue report. Net terms may vary, some common terms would be Net 5, 15, and 30,; less common is Net 0 and 90.
For example, if a publisher gets their report on revenue on November 1, Net 30 means they will receive the payments on December 1.
When a publisher works with an ad network, revenue share is a working method that both parties will share their revenue in a negotiated percentage. Normally, the revenue share ratio will be 60-40, 70-30, 80-20, 85-15, and 90-10 with the larger portion going to the publishers.
Passback is a model in programmatic advertising that when a primary DSP/ad network cannot buy all the ad impressions they asked to buy from publishers since the bidding price does not meet the set price, the remnant impressions won’t go to waste as the DSP/ad network will pass them back to other buyers. This model allows publishers to monetize every impression, and greatly reduces the chance of serving blank ads.
Data Management Platform
A DMP serves as a data storage, management, and analysis platform for digital advertising campaigns. DMPs use third-party cookies to collect user data and build customer profiles, then categorize them into groups, the ad server will use that data to serve and distribute the ads to viewers who match with the ad campaign targets.
RTB is the real-time process of buying and selling an ad inventory on a per-impression or view via instantaneous programmatic auction.
In Programmatic advertising, Header bidding is an advertising technique in which publishers’ inventory is up for bidding on multiple advertising exchanges in real-time and the highest bidder of an ad impression will get their creatives & content displayed.
The floor price is the minimum or lowest amount a publisher is willing to sell their ad inventory for.
Ad format shows how your ads appearing in sizes or types on a website/app. There are several ad formats to choose from, and each ad format specializes in showing different ad types.
An Advertisement Software Development Kit (SDK) is a piece of code that will help the publisher’s app connect with third-party services and technologies. With an SDK, publishers can connect to multiple ad networks to run in-app advertisements. The SDK will make managing multiple ad networks easy and use the app data to show the right advert to the right user.
Ads.txt stands for authorized digital sellers. It’s a text file that publishers record who are authorized to sell inventory on the website. The file allows online buyers to check the validity of the sellers from whom they buy.
Direct and Reseller
These terms illustrate the relationship between the publisher and its buyers, they usually appear in an ads.txt file.
Direct – the publisher works directly with the AdTech vendor to sell its inventory.
Reseller – the publisher has authorized another company (an ad network or digital advertising agency) to sell its inventory on its behalf.
Ad Quality – Categories & Domains Blocking
Ad quality is a measurement of the user experience when they view the ads.
It depends on several factors, such as the ad’s relevance to the viewers, the clickthrough rate (CTR), and visitor experience on the landing page.
This is a common features in programmatic advertising that will automatically modify the ad content appear on the ad inventory.
Categories Blocking to focus the ad content on the website audience’s interests; Domains blocking to minimize the probability of low-quality ad content or competitor’s content shown on one’s website/application. Publishers use either or both feature to increase their ad quality score.
Viewability is a metric that tracks the number of impressions or views earned in programmatic media buying. To be considered as “viewed”, the screen must show at least 50% of the ad creative for more than one second, this rule is abided by the IAB Standard (Internet Advertising Bureau).