Programmatic advertising

What it means

Programmatic advertising is the automated buying of ad space on websites and apps through real-time auctions. As a page loads, a split-second decision determines which ad a particular visitor sees, based on who bids most to reach that audience.

It replaces manual negotiation with individual publishers. The advertiser sets the audience, budget and bids in a demand-side platform, which connects to exchanges offering inventory across thousands of sites. Formats are typically display ads, video or audio.

Its strengths are precise targeting by interests, behaviour, location or device, and a reach impossible to achieve by hand. Behavioural data also power retargeting, which reaches people who have already visited the advertiser's site.

How it works in practice

Small firms mostly use programmatic indirectly, through the ad networks of large platforms that hide the automation behind a simple interface. Larger advertisers work with agencies and their own platforms, which give more control over buying.

Controlling where ads appear is crucial. Allow lists and block lists, brand safety filters and viewability measurement protect against ads showing up on dubious pages or being seen only by bots.

Results must be measured against goals, not just impressions. Awareness campaigns track reach and frequency, performance campaigns track conversions and cost per order, comparable with other channels such as PPC.

What to watch out for

Targeting based on cookies and identifiers requires the visitor's valid consent. Without it, ads must not be personalised on the basis of tracking, and both advertiser and website operator are responsible for following the rules.

The programmatic market suffers from fraudulent clicks and impressions, opaque intermediary fees and ads in unsuitable places. Without ongoing monitoring, part of the budget can be spent with no real effect.