We define programmatic media buying as the act of bidding on an advertising inventory source AND bidding in real time. Each one of these points is vital to understanding the programmatic media buying process.
Bidding on an advertising inventory source
With the growth of ad marketplaces and networks, advertisers can leverage programmatic media buying to bid on and procure digital media without having to pre-negotiate a price with a publisher or online outlet; sign up for a minimum number of impressions or a minimum budget; or generate an insertion order. Advertisers can buy digital media across publishers, (e.g.a 300×250 IAB standard ad unit on Yahoo! or a 15-second pre-roll video on YouTube), on demand and to the extent that they require to satisfy a specific campaign objective.
When a consumer loads a web page with an available space for an ad impression, the publisher of the page puts up the ad impression for auction in an ad marketplace. The ad marketplace then runs an auction among advertisers interested in the opportunity to serve an ad to that consumer. Dozens of advertisers may simultaneously compete in such an auction. Ultimately, only one of them wins the auction and earns the right to serve an ad to the consumer. Best of all is that the process of advertising inventory auction happens within seconds of the website loading and doesn’t require anyone reviewing the auction in real-time.
Bidding in Real Time (RTB)
Imagine you had the opportunity to buy a television spot on any network, wherever you needed one, without going through the advertising sales departments! With programmatic media buying, advertisers no longer need to buy digital media from an inventory source (e.g. a web publisher) in advance. Instead, they bid for it on demand in an ad marketplace and network. Advertisers now have access to several tens of billions of daily opportunities to bid and buy digital media on ad marketplaces. The marketplaces make these opportunities available via auctions and an entire ad auction takes place in a couple of hundred milliseconds or so.
Advertisers participate in Real- Time Bidding (RTB) within ad marketplaces and respond with their auction bids within the blink of an eye. The short duration of these auctions is essential for speedy webpage downloads and an improved end-user experience.
The true value of programmatic media buying for digital marketers is the ability to target their desired audience with digital media campaigns both quickly and efficiently.
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