Programmatic Advertising, simply explained

The complexities behind programmatic advertising are numerous. There are all kinds of three letter acronyms involved like DSP, SSP and DMP. Let’s ignore all of those, shall we? Acronyms make my head hurt.

A high level explanation of programmatic advertising

There are four key parties involved in programmatic advertising:

  1. An advertiser who wants to place an ad

  2. A website (or app) that wants to show ads, for money

  3. A visitor to that website

  4. A magical computer system that sits in between the advertiser and the website. (This is where all the acronyms live. There are actually multiple parties involved here, but it’s easier to think of it as a magical system of computers.)

Here’s how a programmatic ad is placed:

  • An advertiser creates an ad. They want to sell shoes to women who are interested in running, in Calgary, Alberta.

  • The advertiser places this ad inside one of the magical programmatic computer systems. (StackAdapt is a super cool one, by the way.)

  • The magical computer system then finds a well suited website to run the ad on. It could be a running blog, a news article on the Boston Marathon, or even a day care’s website.

  • A visitor sees the ad. Maybe they click on it, maybe they don’t.

In a nutshell, that’s how programmatic advertising works.

What makes programmatic so special and magical?

What makes it different from other forms of different advertising is the magical computer system that sits in between the advertiser and the website that shows the ad. This system does the following things:

  • It takes in ads from all the different advertisers who want to run their ads.

  • It matches those ads up with all the different websites that want to make money running those ads.

  • The system knows what kinds of visitors are likely to visit each website. In our case, the system has chosen some websites where it feels female runners from Calgary are most likely to visit.

  • The advertiser doesn’t have to make deals with individual websites. They can just pick an audience and let the magical computer system do all the hard work.

Pretty slick, eh?

Want to go beyond grade 8?

This article by SEER Interactive does a great job of going into more detail.