What Is Programmatic Advertising?

Many of the ads that you see on your computer, tablet or phone are targeted specifically to you. Here’s a brief outline of how programmatic advertising works.

Certain websites have default locations on their pages for the purpose of displaying digital ads. But the ads that are placed in those locations are changing in real-time so they are customized and relevant to the viewer. In other words, different people on different devices see different ads in the exact same spot at the same time.

Not all websites participate in this dynamic ad environment. Some websites may have fixed ads that are shown to every viewer, but that is becoming less common over time.

In other words, in many cases, you could be sitting next to a friend and viewing the same web page at the same time on your individual phones. But if you were to each look at the other person’s phone, you may see that you are each being presented different ads on the same web pages, depending upon a number of anonymized targeting data points, such as age range, gender, interests. Geographical location is another ad targeting factor, but if you’re sitting next to each other, that would be the same since you would both be in the same location.

In many cases, the targeting data can be reasonably accurate when it’s determined by the ad platforms, such as Google, Facebook, LinkedIn and Amazon. Even so, some users may provide incorrect info when they sign up for such services (particularly Facebook). Yet, much of the info is generally correct.

However, other adtech companies may not have users who voluntarily provide their gender, age, address, etc., which means much of their targeting parameters are inferred or derived from other ways, such as the internet locations you visit. Furthermore, with shared user devices, such as a home computer accessed by more than one person, the targeting data isn’t as accurate as can be expected if one person is interested in baseball, and another person is interested in baking. This means the person who likes baseball might be served ads that have to do with baking and vice versa.

Circling back to the purpose of this article and the video above, programmatic advertising represents the automated processes and networks behind the scenes that connect buyers and sellers of advertising spaces and which also present ads on web pages in the instant before they load on your device.

Even though it’s imperfect, programmatic advertising is an extremely fast bidding system for ad placements, which benefits ad space buyers and ad space sellers, particularly at scale. When it works as intended, even the people who are served the ads can benefit when the ads are relevant to their interests.