Programmatic digital advertising explained
March 08, 2022 by Michele Rossi | Comments
Today, the FAANG and S&P 500 companies rely on more than just selling their products to satisfy their growth goals. They also establish themselves as media owners and rent out their digital contact points to media buyers who wish to advertise to end-users. Can this be applied to your business too? In this blog post, we dive into the actors and mechanics behind digital advertising. If you are curious about the different use cases of digital advertising in embedded devices, please visit the previous blog post in the series.
What are media owners and media buyers?
In digital advertising, the entity that owns a digital screen or the rights to an application or website is a media owner (or publisher). These are the companies that can sell their available screen space to media buyers that might be interested in displaying their ads on that dedicated user interface. Media buyers can come in any shape and size, from small local businesses to big corporations and media planning agencies.
How are Ads running on connected devices?
In the digital advertising industry, new technologies have been evolving through the years to enable media owners to maximize their revenues. There are many options, but from the perspectives of media owners and media buyers, we can boil them down to two main methods: Manual direct ad serving and programmatic ad serving. Let’s have a look at both.
Monetizing through manual direct ad serving
Manual direct ad serving is mainly used by media owners with an established sales department to sell ad space to media buyers or promote a complementary product in their product portfolio. Manufacturing companies or big app publishers negotiate the price for a given ad campaign on their device or app directly with media buyers. There are different ways to measure the prices for those campaigns. One is CPM (cost per mille), which defines a media buyer's cost for one thousand views on a media owner’s device. For manual direct ad serving, media buyers and owners sign a contract that includes the CPM of the advertisement campaign. The media buyer then shares the creative assets (the advertisement media in the form of a picture, video, or audio) with the media owner, who will run the campaign with the help of scheduling software across the agreed-upon platforms.
Not all media owners have a whole sales department dedicated to selling ad space to a media buyer. Sometimes, certain ad spaces cannot be directly sold at a specific point in time. This lack of bandwidth is not just common in smaller businesses, but also in larger companies that don’t specialize in digital advertising or are just starting off on their journey. For them, the programmatic exchange is the alternative.
Automating profits with programmatic advertising
In the past, buying and selling media advertising used to be time-consuming. Media owners and buyers had to individually negotiate each transaction. Advances in technology helped make this process more scalable and efficient. Today, programmatic exchange platforms accelerate the negotiation and deal process between media owners and buyers and ensure that the buyers get what they paid for. Demand-side platforms (DSPs) are helping media buyers (e.g., a glasses manufacturer) to reach a certain target audience (e.g., female teenagers who wear glasses) based on a certain budget on the programmatic advertising exchange. Supply-side platforms (SSPs) help media owners define their ad space: What it is, where it is, and when it is available. An example of this would be a banner spot in the user interface of a vending machine inside a mall from 9 am to 10 pm.
To scale the process of buying and selling media, the digital advertising industry has developed a way to connect the media buyers’ DSP to the media owners’ SSP. Time-consuming negotiations over each ad placement are automated by machine learning processes built into the system.
Programmatic advertising is already well-established in the mobile app industry, where it has been enabling app developers to tap into a large network of media buyers. This method lets media owners of any size maximize advertising revenues, reduce the cost of sales, and save time and effort by replacing tedious negotiations between individual parties with an automated matching algorithm.
When it comes to connected IoT devices, programmatic advertising is still in its infancy. There are challenges with tag mechanisms to help media buyers understand what it is they are buying, or which media formats match the different screens out in the field. The industry is looking to solve these challenges with new standardizations, following the same process as for the mobile area.
Are you eager to turn your apps into digital ad revenue machines? In the next blog post, we’re explaining how you can monetize all your embedded and mobile devices on any kind of screen with just one codebase with Qt Digital Advertising.
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