In previous posts, we mentioned that a comprehensive understanding programmatic advertising can be difficult to attain.
One of the reasons for this difficulty is that programmatic utilizes a lexicon of terms seldom seen elsewhere.
It's vital for publishers to fully understand the benefits and process of programmatic, however.
Despite some brand safety concerns along the way, programmatic advertising still presents a more efficient way to buy and sell online ad space - and it will only continue to evolve.
In an effort to further breakdown the process and make it as digestible as possible, we have compiled a list of definitions to take with you moving forward - or perhaps back to our previous posts.
Knowing the specifics of each word can make the process in its entirety much easier to grasp.
Here is our brief dictionary for programmatic advertising:
An ad exchange is a digital marketplace where publishers and brands can buy and sell ad inventory.
Mostly used for video, display, and mobile placements, ad exchanges hold real-time auctions, collecting bids from brands that want a specified ad placement.
Whether in the traditional process of waterfalling or in header bidding, ad exchanges make filling ad inventory more efficient, and easier for both buyers and sellers.
Ad inventory is the available ad space that a publisher can sell to advertisers.
In a general sense, inventory is a stock of goods held by a business to eventually be sold.
Ad inventory is the same, simply less tangible than what most of us think of when considering inventory.
Where as an auto parts store stocks brake pads, rotors, oil, and headlights as inventory, publishers stock display, mobile, and video ad space as their inventory.
An ad server is a digital technology that quite literally serves advertisements to website visitors.
In the programmatic process of ad buying, the ad server works as a mediator in between ad exchanges holding auctions for advertisers and a webpage with an open ad placement.
The server communicates with exchanges to find a brand, then serve that brands advertisement on the given webpage.
Ad space can be considered the available spots on a webpage where an advertisement can be placed.
On a webpage, ad space can typically be found in the header/footer areas, in the sidebar, within the content itself, and so on.
Publishers often host many webpages, thus allowing them to offer a great deal of ad space. All of that ad space combined is what makes up their ad inventory.
Also referred to as a “wrapper,” a header bidding container is a technology used to make communication with header bidding partners easier and make the header bidding process less disruptive for websites.
The container minimizes the code needed in the process of header bidding.
Instead of individual lines of code needing to be added for each demand source, the container allows for a single line of code to be added.
As demand sources come and go, only the container needs to be updated, not the entire webpage. It is a way to make sure that website load times are not affected by the automated process of header bidding.
CPM (Cost Per Thousand Impressions)
CPM is a way to measure the cost effectiveness of ad space. It is typically the measure of cost accrued by an advertiser per 1000 viewer impressions of an online advertisement.
CPM represents what advertisers are willing to pay for certain ad space. For publishers, higher CPMs represent more valuable ad space.
A demand-side platform is a piece of technology that automates media buying for advertisers.
DSPs are what enable ad buyers to communicate with ad exchanges, allowing them to automatically place bids on the ad space they desire. It is a web-based manager for advertisers to find available ad space.
Header bidding refers to a specific process of how programmatic advertising is executed.
It is the latest advancement in programmatic, making the process even more efficient by considering multiple bids simultaneously, and considering pre-existing direct buys alongside programmatic buys.
By letting multiple advertisers bid on placements at the same time, publishers can truly maximize the value of their ad inventory, while letting less inventory go to waste.
In programmatic advertising, the price floor refers the minimum price set for any single ad placement.
This is a way for publishers to non-directly negotiate with advertisers. By setting a price floor, publishers ensure a minimum return on purchased ad space. No ad will ever be placed programmatically unless it meets or exceeds the price floor.
Programmatic direct is a way for ad buyers and sellers to automate direct ad buys.
In programmatic direct, there is no bidding for ad placements. There are fixed pieces of inventory being sold for fixed prices. Each deal is executed programmatically, however.
It is essentially the middle ground between direct, human-based ad buying, and the completely automated processes of waterfalling and header bidding.
A supply-side platform is very similar to a demand-side platform, except, instead of being on the buyer-side of the transaction, it is on the seller-side. DSPs would aid advertisers, while SSPs would aid publishers.
An SSP is a way for publishers to automate the filling of their ad inventory. The SSP interacts with ad servers to find advertisers. It is a publisher’s automated inventory manager.
Waterfalling is the name for the traditional process of how programmatic advertising is carried out.
In this process, when a webpage is loaded, a request gets sent to an ad server, and that server reaches out to ad exchanges to discover bids made for a single ad placement.
Bids are considered one at a time, sequentially, thus not always gaining the highest possible return for publishers. This process was a breakthrough at first, but left the door open for further advancements to be made - header bidding, the prime example.
While this list does not cover the entirety of programmatic advertising, it will definitely help further your understanding of the process. Be sure to use this dictionary as an aid in reading our Guide to Programmatic Advertising!