The advertising paradigm is getting more complex every day. In-app advertising is no longer simply about ad placements within apps – it’s now about using data and technology to deliver the right ad, to the right person, at the right time.
App publishers need to understand programmatic ads in order to stay ahead of the curve and maximize their ad revenue. Here’s a detailed guide on programmatic advertising for you as an in-app publisher.
Let’s start by understanding what are programmatic ads and how they work.
What is Programmatic Advertising?
Programmatic advertising automates the complex buying and selling process of advertising. In the past, advertisers would work with ad agencies to buy ad space on specific websites or apps. The process was manual and time-consuming.
With programmatic advertising, ad space is bought and sold in real time through automated auctions. This allows advertisers to target specific audiences with laser precision.
In simple terms, we can define programmatic ads as the concept of programmatic buying and selling of ad impressions in real time. Using this advancement, ad buyers can purchase ad impressions from premium ad exchanges and ad networks.
Advertisers should use this type of ad because it offers a higher degree of control and transparency, as well as the ability to scale their ad campaigns quickly and efficiently. Now that you know about programmatic ads, let’s explore how they work.
How Does Programmatic Advertising Work?
Programmatic advertising works by using software to buy and place ads automatically. This software is known as a demand-side platform (DSP).
DSPs connect to ad exchanges, which are marketplaces where ad space is bought and sold. Advertisers use DSPs to bid on ad space in real-time auctions. The highest ad bidder wins the ad impression and their ad is made live.
Ad exchanges are powered by ad inventory from ad networks and publishers. Ad networks are middlemen that connect advertisers with publishers’ ad inventory.
Publishers display these ads on their apps or even websites. They can sell their ad space directly to advertisers or through ad networks. Premium publishers have high-quality ad inventory that is in high demand and offer enhanced targeting.
For example, programmatic ad platforms such as Google Ad Manager and Facebook Audience Network use real-time bidding (RTB) to sell ad space.
The Three Crucial Terms in the Programmatic Advertising Ecosystem
This ad ecosystem is incorporated with three significant terms that you must know before getting started with programmatic advertising – SSP, DSP, and Google Ad Exchange. Let’s explore each of the terms to have a better understanding of how this ad ecosystem functions.
1. Supply-Side Platform (SSP)
The supply-side platform is also referred to as the yield-optimization platform or sell-side platform. SSP holds the publisher’s inventory. It is responsible for making the publisher’s inventory available programmatically and also sets the price floor for each auction.
Publishers submit a custom page as the ad source, approvals are given on Ad Exchange after they place the pixel code on the page. The pixel code delivers anonymous data about each ad impression to the SSP so that prices can be optimized in real-time.
The SSP is programmed to deliver the maximum price for each ad impression but it can also work on a fixed price. Using SSP, publishers can filter ads by type, size, or topic and also block certain advertisers.
2. Demand-Side Platform (DSP)
The DSP is software used by advertisers or ad agencies to buy ad impressions in real-time. It allows them to bid on ad space in real-time auctions and also target specific audiences.
DSPs connect to ad exchanges and use data to target specific audiences. They also use algorithms to optimize ad campaigns in real time and get the best results for their clients.
Advertisers use DSPs to buy ad space on websites and apps. They can also use DSPs to target specific audiences with their ads. For example, they can target people who have visited their website in the past or people who live in a certain area.
DSP decides which ads to display to users based on factors like the user’s location, demographics, and interests.
3. Google Ad Exchange
Google Ad Exchange is an ad exchange that connects advertisers and publishers. It allows them to buy and sell ad space in auctions. Advertisers use Google Ad Exchange to buy ad space on websites and apps.
This platform is used by both small and large publishers and Google Ad Exchange has ad inventory from millions of websites and apps.
The best part about using Google Ad Exchange is that it offers transparency and control to both advertisers and publishers. Advertisers can see where their ads are being displayed and they can also choose which websites and apps they want to advertise on.
The Four Key Types of Programmatic Media Buying for App Publishers
When we define programmatic ads in terms of types of media buying options, there are primarily four options available, including:
1. Real-time bidding (RTB)
In RTB, ad space is bought and sold in real-time through programmatic auctions. Advertisers use DSPs to bid on ad space in these auctions and the highest bidder wins the ad spot. It’s a cost-effective way to buy ad space because advertisers only pay when their ad is shown to a user.
Moreover, RTB lets advertisers a large set of targeting options so that they can reach their desired audience. With this, advertisers can be confident about their ad spending as they know that their ads will be shown to people who are interested in their product or service.
2. Preferred Deal
In a preferred deal, the publisher and advertiser agree on a price for a certain amount of ad impressions in advance. The agreement can be made through an auction or manually.
Preferred deals are not as common as other types of programmatic deals because they don’t offer the same level of transparency and control. However, they can be beneficial for both parties if the price is fair and the ad inventory is high quality.
3. Private Marketplace (PMP)
A private marketplace is an auction where only select publishers and advertisers can participate. This type of programmatic deal is used to buy ad space on premium websites and apps.
Private marketplaces are beneficial for both advertisers and publishers because they offer more control over the inventory and the prices are usually higher than other types of programmatic deals.
4. Programmatic Direct
Programmatic direct is a type of deal where the advertiser buys ad space directly from the publisher. This type of deal is similar to a preferred deal but it’s done through programmatic technology.
Programmatic direct deals offer more control and transparency than other types of deals. They are also more efficient because the ads are served through this technology.
App publishers should know about these four key types of programmatic media buying options so that they can make the best decisions for their business.
Also Read: Is Programmatic Guaranteed better than Preferred Deals?
Why do App Publishers Need Programmatic Advertising?
There are a couple of key reasons why app publishers need programmatic advertising, including:
1. Simplifies the System to Sell Ads
Programmatic advertising makes it easier for publishers to sell ad space. In the past, publishers had to manually find advertisers and negotiate prices. Moreover, it becomes easier for new publishers to enter the market as they can use programmatic platforms to sell ad space.
With programmatic advertising, all of this is done through technology. Publishers can use programmatic platforms to find advertisers and to automatically sell ad space.
2. Offers More Profitable Opportunities for Publishers
Programmatic advertising offers more profitable opportunities for publishers. In the past, publishers had to rely on CPM models to make money from ads.
With programmatic advertising, publishers can choose from a variety of pricing models, including CPM, CPC, and CPA. These pricing models are more advantageous for publishers because they can earn more while dealing with fewer technicalities.
3. Offer Demographic Targeting
Another reason why app publishers need programmatic advertising is that it offers demographic targeting. This means that advertisers can target their ads to specific demographics, such as age, gender, location, and interests.
This type of targeting is beneficial for both advertisers and publishers because it helps to improve the quality of the ads.
4. Delivers Better ROIs
Programmatic advertising also delivers better ROIs for advertisers. This is because programmatic platforms use data to target ads, which leads to improved ad performance. Moreover, the ROI is also improved through the use of data-driven optimization.
Data-driven optimization is a process that uses data to improve ad performance. This means that the programmatic platform will constantly be improving the way that ads are served, which leads to better ROIs for advertisers.
Get Started With AppBroda!
We hope this article helped you understand what programmatic ads are. If you’re looking to get started with programmatic advertising, AppBroda is the perfect platform. App Broda is a leading app growth and mobile advertising platform catering to the needs of app publishers.
