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Programmatic Advertising Evolution Overview

May 5, 2025

Understanding Programmatic Advertising

Introduction

  • Objective: To understand the evolution of programmatic advertising and the problems it solves.
  • Key Concepts: Advertisers and publishers are the primary stakeholders.
    • Advertisers: Companies wanting to promote products/services (e.g., Nike).
    • Publishers: Companies owning content-centric websites/apps (e.g., BBC).

Pre-Programmatic Era

  • Advertisers like Nike directly contacted publisher sales teams (e.g., BBC) for ad slots.
  • Involvement of manual processes like signing insertion orders.
  • Limited by geographic location and network connections.

Shift to Online Advertising

  • Rise in digital platform usage shifted advertising from TV/radio to online.
  • Budget reallocation by advertisers to online platforms became significant.

Rise of Ad Networks

  • Function: Connect advertisers with multiple publishers.
  • Examples: Google AdSense, Yahoo, Seismic.
  • Ad networks streamlined the process, reducing need for individual negotiations with publishers.

Evolution to Ad Exchanges

  • Needed due to the proliferation of ad networks.
  • Ad Exchanges: Platforms connecting ad networks and allowing bulk advertising buys.
  • Tools:
    • SSP (Supply Side Platform): Connects publishers directly to ad exchanges.
    • DSP (Demand Side Platform): Allows advertisers to buy inventory efficiently.

Components of Programmatic Advertising Ecosystem

  • DSPs: Demand side platforms for advertisers.
    • Examples: DV360 (Google), The Trade Desk.
  • SSPs: Supply side platforms for publishers.
    • Examples: Google's DFP, Seismic SSP.
  • Ad Exchanges: Facilitate buying/selling of ad inventory.

Rise of Data Management Platforms (DMP)

  • Function: Collect user behavior data to aid targeted advertising.
  • Example: Oracle's BlueKai.

Addressing Ad Fraud

  • Rise of fraudulent activities like click farms necessitated verification systems.
  • Verification Vendors: Ensure ad impressions are legitimate and brand-safe.
    • Examples: IAS (Integral Ad Science), DoubleVerify.

Role of Ad Servers

  • Host and manage ad creatives across campaigns.
  • Provide centralized control and analytics.
    • Example: CM 360 by Google.

Emerging Channels

  • Introduction of CTV (Connected TV) and programmatic audio/video.
    • Integration of streaming services and digital out-of-home advertising into the programmatic ecosystem.

Types of Programmatic Deals

  1. Programmatic Guaranteed (PG)

    • Guaranteed impressions contract between advertiser and publisher.
    • Highest priority and premium pricing.

  2. Private Marketplace (PMP)

    • Inventory packaged for select advertisers without guaranteed impressions.
    • Mid-tier pricing.

  3. Open Auction (OA)

    • Remaining inventory sold to highest bidder.
    • Lowest pricing.

Conclusion

  • Programmatic advertising modernizes ad buying/selling with automation and efficiency.
  • It encompasses a range of platforms and technologies designed to optimize advertising effectiveness and reach.

These notes provide an overview of the key concepts, stakeholders, and technological progress in programmatic advertising up to 2024, capturing the industry's complexity and evolution.

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