Programmatic 101: Pulling Back the Curtain on How Programmatic Really Works

Written by Leslie Lee

Mar 6, 2019

Programmatic 101 - Blog 2

Programmatic – it’s a hot topic and one of those buzzwords that you’ve probably heard used by countless people… who may or may not actually know what it means. With a growing interest in ways technology can advance out-of-home media, many are trying to learn about “programmatic” and what it could offer to the digital out-of-home industry. To help simplify these conversations, we’ve broken out the core elements of programmatic into a three-part series: Programmatic 101. This is part two - to read part one, check out Programmatic 101: Breaking Down the Buzzword.

How Does the Technology Work?  

When we’re speaking about programmatic digital out-of-home, there are 5 key technical elements, each performing unique functions that contribute to the workflow of programmatic advertising.  

Vistar_Tech_Stack_Components

  • A DSP is a computer-based platform that automates media buying across multiple sources. DSPs combine wide access to inventory, the ability to apply data-driven targeting rules, real-time bidding capabilities and the ability to serve, track and optimize ads.

  • A SSP is a computer-based platform that automates media selling across multiple demand sources. An SSP is a software tool that media owners use to make their inventory available via an exchange.

  • An ad exchange is a digital marketplace that enables advertisers and media owners to buy and sell ad placements via an auction. The ad exchange receives the inventory details, “announces” each impression/spot and asks buyers if they are interested in buying said impression/spot and at what price.

  • A DMP is a warehouse for data, that can ingest multiple different types and forms of data, and then modify and extract that data into forms that are relevant for the buying of media.

  • An ad server is a web-based tool that stores, maintains and delivers advertisements to a screen. It is a tool used by publishers to help with ad management, campaign management and ad trafficking. An ad server also provides reporting on ads displayed.

Now that we’ve defined each component, lets walk through how they fit together in executing a programmatic transaction.

The Ad Server alerts a media owner’s SSP when their network has an impression available for a programmatic buy to fill.  This notification is then broadcast through the Exchange. It provides additional details of the location of the available inventory, using a cookie (if it’s through online programmatic), or a device ID (if it’s through mobile).

The DSP sees this availability on the Exchange, and it filters through the information the seller provides and while applying their own targeting criteria.

That cookie or device ID is used to see if the device matches a list of devices the buyer wants to reach. For this, the DSP will have a list or “segment” of devices (usually created from a DMP) that matches a specific profile.

Say you browsed through J.Crew’s website on your phone.  Later in the day, you open Instagram and start scrolling through your feed, and a J.Crew ad pops up of the exact pair of shoes you were looking at while on their site.  This is an example of site retargeting, which identifies users that have been to a client’s website. Other examples include location-based audiences, which identifies mobile devices that have been to a specific physical place, such as a retail store; purchase-based audiences identifying buyers of a certain product; or a persona combining different combinations from above.

When the DSP sees an available impression match its desired segment, it places a bid.  Bids tend to be higher for specific audience segments, as they are more valuable to the buyer.

  1. The exchange then runs an auction, comparing all bids on the available impression.

  2. The winning bid is selected and the ad exchange sends the price from the winning bid to the SSP, and a win notification to the DSP.

  3. The DSP then sends the ad creative to the SSP.

  4. The publisher’s SSP will then send the ad creative to an ad server for delivery.

  5. The SSP will then receive a delivery notification or POP, and deliver that to the DSP - and the impression is recorded.

All of the above technical workflow applies to any programmatic channel - but what about for out-of-home? The unique nature of out-of-home media means there are very specific requirements to make programmatic work for this physical-world medium.

In the next post, we’ll take a look at the nuances of programmatic for digital out-of-home.

Ready to learn more about how you can leverage programmatic digital out-of-home? Download Vistar’s Digital Out-of-Home Primer for Success:

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Topics: Education, Programmatic