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Programmatic Buying: using real time bidding for ad space

Working at a media planning and buying agency this past summer, I was introduced to the use of programmatic buying of advertising space using automated real time bidding. According to Andy Cocker, COO and cofounder at Infectious Media, “programmatic buying describes online display advertising that is aggregated, booked, flighted, analyzed and optimized via demand side software interfaces and algorithms.” He also noted that programmatic buying implies the use of multi sourced data signals to inform targeting and optimization decisions.

Media purchased through programmatic buying is executed through real time bidding, where advertising buyers bid on an impression or view, and if the bid is won, the buyer’s ad is instantly displayed on the publisher’s site. Real-time bidding allows advertisers to manage and optimize ads from multiple ad-networks by granting the user access to a variety of different networks, allowing them to create and launch advertising campaigns, and to prioritize networks and allocate percentages of unsold inventory

Most exchanges in programmatic buying are second-price auctions, which means that whoever bids the highest for an ad wins the ad impression but pays the price of the second-highest bidder. This difference can sometimes be as small as one cent. What particularly interested me was the value that a media buyer gets using this RTB system. As it turns out, RTB allows the buyer to match their goals almost perfectly because of the automation, so sometimes the goals are performance based and sometimes they are audience based. Basically, the buyer’s values will change depending on a specific audience that they want to reach, and also how many total impressions they want to achieve within that audience.



One Response to “ Programmatic Buying: using real time bidding for ad space ”

  • Pradeep Rawat

    Programmatic Buying (sometimes also referred to as Programmatic Advertising) refers to the eco-system that enables automated way of buying digital ad inventory in categories such as mobile, display, video, social and now native. RTB drives most of volume – 92% in the programmatic eco system (as compared to Programmatic Direct). The biggest benefit of RTB for the digital marketer is that it enables them to buy (via a DSP) at the level of a single ad impression. This increases the performance of digital campaigns as only relevant ad impressions need to be bought.

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