Programmatic Advertising: A beginners guide

Posted by Rebecca Appleton on 12 Aug, 2015
View comments Marketing
It’s hard to keep track of every buzzword and trend in digital marketing, and harder still to know which ones to take notice of.

How do you tell an Instagram from a Ping (Apple’s failed attempt at social networking)?  Every year the digital marketer’s toolkit overflows with new best practice techniques and tools - some fizzle out in a matter of weeks, others make a resounding impact that go on to shape the face of the future. Programmatic advertising definitely falls into the one to watch category.

But what exactly is programmatic advertising? Exactly how will it help to create campaigns that blow the competition out the water?  To help you get to grips with the term and its possible benefits for your business, we’ve created a primer to programmatic advertising and broke down what it means for the digital realm as we know it.

The Basics

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In simple terms, programmatic advertising refers to the process of using software to purchase digital advertising. Conventional techniques required agency based RFPs, manual insertion orders and in-house human labour to complete transactions. Programmatic advertising arms machines with the intelligence needed to purchase advertisements.

Revolutionising RTB

For the real time bidding (RTB) realm, programmatic advertising has had a particularly transformative effect. As a website page loads, all available advertising space is passed on to a connected ad exchange platform. This auctions off the rights to the space to the highest bidder.  In the milliseconds it takes for a page to load, the final user experience is determined by which company wins the advertising auction.

For marketers, the value of ad space is determined by the website it appears on, topical relevance and the probability of generating click throughs. In the past advertisers were forced to pre-purchase display ad space on sites they anticipated would draw traffic. With programmatic advertising, advertisers are empowered and marketers have the ability to automate the process, eliminating the need to gamble on ifs and buts. Programmatic advertising is able to manage RTB budgets in real time, maximising effectiveness, relevance and click-through rates.


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Why has it created such a buzz?

Sound revolutionary? That’s because it is! Programmatic advertising represents a new era of efficiency for the world of digital marketing. No longer do SMEs have to rely on human buyers and salespeople to negotiate and process transactions that are expensive, un-strategic and let’s be honest, a little fly-by-night. Instead, programmatic advertising technology removes the human element from the process and replaces it with artificial intelligence that’s cheap, strategic and dependent. No sick days, no social bias, no hangovers and no cognitive misunderstanding. Just cold, hard, tactile advertising strategies designed to deliver measurable results. 

But what about the Humans?

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While robots do replace the menial tasks previously taken on by living, breathing employees, they don’t take on total responsibility. Jobs such as issuing insertion orders to publishers and managing ad tags are dealt with electronically, but the creativity of the human mind is still required to strategize, optimise and implement. Programmatic advertising will see global ad buying positions fall but for marketers and sellers it represents a valuable opportunity. As a brand manager on a budget, you can allocate more human resources to developing bespoke, sophisticated campaigns rather than wasting time cutting through red tape.

Is programmatic advertising here to stay?

Digital marketing trends come and go and while nothing is ever certain, it’s extremely likely that programmatic advertising is here to stay. In 2014 Advertising Age reported that a huge US$10.1 billion was spent on programmatic ad buying and selling, with 80% of that activity concentrated on display ad purchases. The study was conducted by PWC for the Internet Advertising Bureau and indicates that adoption rates are categorically on the rise.

An increasing number of companies are beginning to realise the benefits of purchasing media via programmatic channels, with some blue chip brands even deploying dedicated teams to manage the programmatic ad buying process. And it’s not just online advertising that’s set to undergo reform. Already, media companies are experimenting with programmatic trade to sell ‘traditional’ content such as TV commercials and public billboard space.  

As a small business owner, there are several key reasons why you’ll want to keep in the automation loop. If you advertise online, programmatic advertising gives you a chance to level the playing field and compete with bigger businesses at a fraction of the outlay. There’s faster access to available ad inventory, a greater degree of control over budget and targeting, more efficiency than that offered by the often drawn out RTB process and as with any automation, as many analytics and reports as you could possibly need to fine tune performance.

The final frontier for programmatic advertising is mobile, a medium which has been slow to take off due to the inherent tech difficulties. Watch this space to see how and when this changes.

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