Understanding the Programmatic Ecosystem

The Lay of the Land: Part 2 of the “Programmatic Matters” Series

Digital advertising used to be so simple. If you wanted to reach a specific audience to promote your product or service, there wasn't any complex programmatic ecosystem to navigate. You’d simply identify a website that catered to that audience, and you’d purchase inventory to run your ad for a specific amount of time in hopes it would capture the attention of said audience. There was even the chance of scoring free tickets to sporting events or receiving exclusive invites to lavish parties hosted by the publisher as its digital ad sales team tried to subtly persuade you to spend a majority of your ad budget with them, all while showering you with free alcohol. As Edith Bunker famously wailed, “Those were the days.”

Sure, life was simpler back in the early 2000’s, a time when Britney Spears was still an innocent, pimple-faced kid and MySpace was the innovative leader of the emerging social media movement. Simple, yes. But effective? Not so much.

Today there is so much more onus on delivering digital advertising that is not just seen, but advertising that delivers on a number of stringent KPIs like clicks, interactions, conversions, brand recall, etc. The advancement of new technologies has opened the door to hundreds of companies that are trying to make digital advertising more targeted and effective. Not surprisingly, this has made the advertising ecosystem a very complex space. Perhaps you’ve seen the LUMAscape, a chart that painstakingly compiles hundreds of companies across key sectors of the digital marketing and ad technology landscape in areas like display, search, mobile, social, etc. to try and help make sense of it all. Good luck.

The simplicity of buying online advertising is slowly becoming a thing of the past. On the bright side, digital advertising is becoming a lot more effective and cost-efficient, thanks to the explosion of programmatic media buying, and that is really the one area of ad tech you really need to understand. In Part 1 of this series, we simply described the concept of programmatic – the automated process of buying digital ads across the Web. We also asked you to share your thoughts on this emerging model and the response has been great. We will be sharing the results with you at the conclusion of this series.

For now, let’s take a deeper look at the programmatic ecosystem and where you fit in. If you get confused, don’t worry; you’re not alone. (Hell, even some of the people heavily involved in it don’t quite get it. But you didn’t hear that from me.) My goal is to strip away some of the jargon and refrain from using excessively complex flowcharts and try and make this simple. It's easy to feel overwhelmed, but as they say, "knowledge is power," and just being able to identify the key players involved in programmatic will give you the confidence needed to excel in this growing area of digital advertising. So, here we go…

The B2B Marketer

First, let’s start with you, the marketer. If you want to engage the most appropriate customers across the Web, you’ll want to execute your media buy programmatically. By doing so you’ll achieve far greater scale and more control over pricing than you would when working directly with a single publisher. In some instances, depending on the scope of the campaign, you may use an agency for help with creative development, media planning and media buying. These agencies have become more adept at programmatic and have even set up departments especially designed to execute programmatic deals. More on that shortly.

Ad Servers

Also referred to as "Campaign Management Platforms" or "Ad Tracking Systems," ad servers are the conduits that store and deliver digital ads to hundreds of publishers using a simple line of code. This makes it simple to display your ad across any number of websites while also keeping track of performance so you’ll have access to robust campaign reporting.

Trading Desks

Let’s come back to the agencies. Surely, they were not about to be left out of the programmatic revolution. Therefore, many of the large agency holding companies developed their own agency trade desks or ATDs. The trade desks help clients execute programmatic media buys and increase the efficiency and scale in buying digital advertising. Rather than having hundreds of individual client campaigns to execute, the ad buying is done through a single trading system on your behalf. Some notable ATDs include Xaxis, Accuen, Cadreon and Vivaki.

Demand-Side Platforms (DSP)

Before the rise of DSPs, advertising was bought and sold by human beings. The introduction of demand-side platforms gave rise to the machines. Don’t worry; this story ends better than The Terminator. DSPs are tools used to purchase digital advertising and are designed to make the process cheaper and more efficient. Advertisers and agencies rely on DSPs to purchase millions of ad impressions across the Web, but targeted to specific users based on a variety of data points like behavior and psychographic data. Again, these tools help determine where and how much it will cost to run your ad. Some notable DSPs include MediaMath, Turn, AppNexus and DoubleClick Bid Manager.

Thanks to Data Management Platforms, your ads become smart; think Bradley Cooper in Limitless. Without the addition of data, your ads are clueless; think Bradley Cooper in The Hangover.
Michael Goldberg, Content Marketing Director, Dun & Bradstreet

Data Management Platforms (DMP)

Data manifests itself in every aspect of marketing, especially in digital advertising. The ability to find truth and meaning in that data can help create relationships that lead to a sustainable competitive advantage. That’s why it’s imperative that data informs your digital advertising strategy. Fortunately, DMPs help marketers by storing and analyzing large amounts of data to help make better ad targeting decisions. DMPs are essentially the data warehouses for advertising. This is the step in the programmatic path where your ads become smart; think Bradley Cooper in that movie Limitless. Without the addition of data, your ads are clueless; think Bradley Cooper in that movie The Hangover.

Advertisers and agencies use DMPs to collect, store and utilize their first-party audience data – when they have it. These platforms also aggregate and provide access to third-party data that can be used for new audience acquisition or to augment first-party data. As an example, Dun & Bradstreet data is often utilized within these DMPs by advertisers and agencies to hone in on the right audiences for B2B advertising campaigns. Because we are able to combine both contact-centric and firmographic intelligence, our data sets enable highly targeted programs through programmatic advertising. Some notable DMPs with access to third-party data include BlueKai, Nielsen, Adobe Audience Manager and Lotame.

Ad Exchanges

This is where the rubber meets the road, so to say. Ad exchanges are fundamentally the marketplaces where advertisers and publishers come together to buy and sell ad space. Publisher inventory is released here for advertisers to be able to access and purchase it, often in real-time. All of the media buying tools we mentioned above help make the right decisions on behalf of the marketer about the inventory found in the exchange. There are countless exchanges for all types of media and inventory.

Supply-Side Platforms (SSP)

As a marketer, you don’t have to be too concerned with this, as it is a tool for publishers. Just as marketers leverage DSPs to help buy inventory, the SSPs help publishers sell their inventory in the ad exchanges. Some notable SSPs include PubMatic, Admeld and Rubicon.

Publishers

This one’s easy enough. The publishers are the owners of the inventory you may or may not find valuable enough to purchase. Each publisher comes in different flavors and sizes, from large media companies to small niche websites, and open up different types of inventory like mobile, native and display.

So, that wasn’t too hard, was it? It was my goal to offer a fundamental overview of the programmatic ecosystem without the complex jargon. Hopefully you now have a good lay of the land and have the knowledge you need to execute your very own programmatic ad buy by understanding the key players that help make it possible.

After all, programmatic gives you back some more control of where your advertising messages show up, so this knowledge can be very valuable as you plan your advertising strategy.

Read other posts in the "Programmatic Matters" series:

Image credit: "Untitled" by Gavin Schaefer, Flickr http://ow.ly/RiRVA

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