What is Programmatic Advertising?

15th Feb, 2022
Author image
Tara Wesson
Content Strategist

Are you using digital advertising to promote and grow your business? It’s one of the best ways to get your brand front and centre with your target market without spending all your marketing budget.

If you are, then perhaps you may have heard about programmatic advertising, since it’s gaining a lot of attention among online marketers these days. If you’re looking to improve Return On Ad Spend (ROAS) for your campaigns, then it’s something you must know about.

In this article, we’ll cover everything you need to know about programmatic advertising. This easy-to-use guide will outline the basics: what it is, how it works, and its benefits.


What is Programmatic Marketing?

Programmatic marketing is the practice of using behavioural targeting and automated auction-based technology to buy digital ad space. This allows you to target hyper-segmented audiences, which results in engaging and converting ads that satisfy user intent.

It differs from traditional methods of media buying, which require a human to purchase large inventories of ad space. Comparatively, programmatic marketing allows you to bid on an impression-by-impression basis. You pay for an impression that’s actually valuable to you.

It’s basically buying 1,000 ad impressions at once versus buying each ad impression when it happens in real-time.

Types of Programmatic Marketing

There are two basic types of programmatic marketing:

  • Real-time bidding (RTB)
  • Programmatic direct

Real-time bidding (RTB) allows advertisers to take part in an auction to bid for publisher ad inventory on an impression-by-impression basis. This auction can either be open to all advertisers on the ad network/exchange or private, invite-only.

Open auctions have minimum Cost per Metric (CPM), where the floor price is set by the publisher. Advertisers will then bid, ultimately determining the cost. The amount one pays for ad space will be determined by the competitive demand among the advertisers.

Private and invite-only auctions operate the same as open ones. The only difference is who’s bidding for publisher inventory. Advertisers will need to be of a certain quality and standard; publishers want appropriate ads shown for their websites, apps, and videos.

Programmatic Direct, on the other hand, is a private, one-on-one relationship between an advertiser and a publisher. This allows the advertiser to get a priority opportunity at ad space that’s available. Because of the nature of programmatic direct, costs are fixed and predetermined.

Like RTB, programmatic direct can come in separate formats. Firstly, there’s a preferred deal, which is when advertisers get a chance to buy inventory at an agreed CPM price.

Secondly, there’s programmatic guaranteed. This is when an advertiser buys a predetermined volume of inventory beforehand, similarly to traditional media buying. What makes it programmatic is that technology is used to streamline workflows and improve efficiency.

Programmatic Marketing vs. Programmatic Advertising

It’s also important to note that the term programmatic marketing really just means programmatic advertising. It’s a term that only concerns itself with digital display advertising.

More specifically, this includes:

  • Website ads
  • Mobile ads
  • YouTube/video ads
  • In-app ads


How Programmatic Advertising Works

As programmatic advertising is a complex process, it’s important that we clearly outline how it works. Here’s a rough step-by-step outlook:

  1. A user clicks on a website. Programmatic advertising starts when an individual clicks on a webpage. This is called an impression, which provides an opportunity for ads to be shown. User data of the visitor is also noted.
  2. The publisher of that website puts an ad impression up for auction. This ad impression is sent by the publisher to a supply-side platform. The SSP analyzes the user data of the impression, such as online activity, location, and demographics.
  3. Various advertisers bid for that impression. The supply-side platform then communicates with the demand-side platform. The DSP will assess the impression provided by the SSP and specify a CPM bid for it.
  4. The highest bidder wins the auction. All advertiser bids are acknowledged by the SSP, which determines the winner of the auction. The appropriate ad is then transferred from the DSP to the SSP.
  5. The user is served the relevant ad on the website. The impression is served with that ad; the user will see it appear on its screen. The time between the user clicking on the page and the ad appearing is about 100 milliseconds.
  6. The user hopefully clicks on the ad, leading to a conversion. If programmatic advertising works correctly, the ad will satisfy user intent. The use of user data will help ensure audience targeting is accurate. The ad is clicked on and hopefully converts.

It’s important to note that this is just a basic walkthrough of how programmatic advertising works. The process also involves ad exchanges, networks, and data management platforms. An agency or in-house team will also work on behalf of the advertiser.


Benefits of Programmatic Media Buying

There are several benefits that programmatic media buying provides over conventional media buying. Its real-time, impression-by-impression, auction-based nature makes programmatic advertising more efficient and cost-effective.

These benefits have made programmatic buying experience rapid growth over the last half-decade. Despite the COVID-19 pandemic damaging global ad spend, programmatic continues to grow.

From 2017 to 2021, programmatic digital ad spending share increased from 32.4% to 70% — a 216% increase.

So what makes programmatic advertising effective? We’ve outlined its primary benefits that could also be applicable to your healthcare business:

Increased Targeting

Arguably the best aspect of programmatic advertising is its ability to harness user data in accurately targeting the right audience. Supply-side platforms, for one, use cookies to acquire valuable audience insights in the form of first-party data.

This might include information about online activity, such as what pages on your website they’ve visited. Geographical location and demographics like age and gender are also valuable pieces of data for behavioural targeting.

The supply-side platform will pass all acquired first-party data from each impression to the demand-side platform. This will allow the demand-side platform to accurately assess the value of the impression for its advertiser.

Second and third party data are also used by way of a data management platform. However, these forms of data — especially third party data — will be phased out in the near future.

This entire process of acquiring data and handing it over from the publisher to the advertiser happens within 100 milliseconds.

Increased Reach

One of the best advantages programmatic advertising has over traditional media buying methods is increased reach. Demand-side platforms  can  leverage the programmatic ecosystem, finding more appropriate ad inventory for advertisers.

Programmatic advertising has access to multiple ad exchanges and networks, not just the Google Display Network. Additionally, it can find more ad inventory from places, such as private, invite-only auctions.

Programmatic direct relationships can also be made with specific publishers. This gives programmatic advertisers first dibs on select ad inventory.

Omnichannel Advertising

Because of its increased reach, programmatic advertising makes it easier to advertise over various channels. You can target every form of digital display advertising across all platforms and devices.

This allows you to create a customised customer journey, combining several touchpoints across various channels. For example, you can feature banner ads on a specified website on your custom site list. That can be combined with pre-roll video ads on YouTube and in-app.

Your customised customer journey will be based on your audience targeting preferences as well as your customer/buyer personas. Programmatic advertising allows you to target very specific hypersegmented audiences that are likely to convert.

Real-Time Monitoring

Programmatic advertising buys individual ad impressions as they happen when the user visits the page. This impression-by-impression model of media buying allows for real-time monitoring. If targeting preferences or a bid is off, programmatic allows you to make adjustments.

Now, compare this to traditional forms of digital advertising. Typically, large quantities of ad impressions are bought before they occur. If something is wrong with your strategy, you can’t tweak your game plan like you can with programmatic advertising.

The leanness and flexibility of programmatic advertising make it more efficient and cost-effective.

Automated Media Buying

The process of buying digital ads is automated with programmatic advertising, saving you time and effort. Old school, traditional methods of media buying required someone to negotiate with publishers. This was typically a sales rep from an agency working for an advertiser.

Programmatic advertising allows advertisers and publishers to buy and sell digital ad opportunities on an impression-by-impression basis. Each ad impression is bought in real-time, automatically, following your DSP settings and preferences.

Perfect for Healthcare Businesses

Programmatic advertising is a perfect marketing strategy for healthcare brands that want to grow. Its granular targeting options allow you to identify your ideal target audience. Contextual targeting, 3rd party data, custom site lists, custom segments, and demographics are examples of features.

Despite the fact that healthcare has a small target market, programmatic advertising expands your reach. Compared to traditional advertising methods, the programmatic method of media buying allows you to access several ad exchanges, not just Google.

The audience targeting and automation of the programmatic advertising model makes it a highly efficient solution for healthcare businesses, as long as they adhere to government policies.


What Programmatic Advertising Isn’t

Programmatic marketing/advertising doesn’t include paid search ads on the Google Search Network. Paid search ads are ads that you see at the top of Google Search Engine Results Pages (SERPs) featuring a little green box that says “ad”. Because programmatic marketing/advertising is impression-based/CPM-based, it doesn’t include PPC advertising. This means not only paid search ads but also some forms of display ads. For example, certain ads on the Google Display Network are PPC-based.

To better understand what programmatic marketing/advertising is, we should also discuss two related topics:

  • Demand-side platforms (DSP)
  • Supply-side platforms (SSP)

The programmatic method of media buying involves two parties: the advertisers and the publishers. DSP and SSP are the technologies that each use to facilitate the buying and selling of digital ad space. These separate programmatic advertising from traditional media buying.

The DSP — demand-side platform — is used by advertisers; the SSP — supply-side platform — is used by publishers. We’ll cover each in more detail below.

Demand Side Platform

A demand-side platform (DSP) is an algorithm-based software that uses machine learning and AI to connect advertisers with publishers. DSPs improve media buying by allowing you to purchase ad space from ad exchanges, networks, and directly from publishers.

DSPs use auction-based technology that allows advertisers the ability to bid on individual ad impressions in real-time, as they happen. Each impression available to advertisers has behavioural data, such as location, age, or online activity, making audience targeting effective.

Advertisers will use the DSP to enter a bid for available inventory from networks, exchanges, and publishers. The DSP will identify ad impression opportunities that align with the advertiser’s audience targeting preferences. The bid goes through, and it either wins or it doesn’t.

This entire process happens in a split second—as quick as it takes for a page to load.

Supply Side Platform

A supply-side platform (SSP) is software on the other side of the programmatic ecosystem to DSPs. Put simply, SSPs help publishers manage ad inventory, making it available to advertisers to bid on.

The SSP connects to ad exchanges and networks, providing them with the publisher’s available inventory. Real-time bidding technology is used to allocate and auction off individual ad impression opportunities. Advertisers use the SSP to set minimum CPM prices.

Why Use a Programmatic Media Buying Agency?

Programmatic advertising uses technology to make media buying a more efficient, cost-effective, streamlined process. Despite the healthcare and pharmaceutical industry being slow to adopt, more and more businesses and practitioners are getting onboard.

If you’re looking for a way to rapidly grow your healthcare brand, programmatic advertising might just be for you.

Are you looking for professional help with your healthcare brand’s digital advertising strategy? Consider hiring a specialised programmatic advertising agency to find out how they can help you grow your business today.


Real-Time Bidding (RTB)

Real-time bidding (RTB) is an automated method of buying digital ad space that involves the use of algorithm-based software to purchase on an impression-by-impression basis.

Programmatic Direct

Programmatic direct is a type of programmatic advertising that involves an exclusive agreement between one advertiser and one publisher.


Impressions are a digital advertising metric that measures how many times an ad has been loaded on a user’s screen.

Cost-Per-Mille (CPM)

Cost-per-mille (CPM) is a digital advertising metric that measures how much an ad costs per 1,000 impressions.

Demand Side Platform (DSP)

Demand side platform (DSP) is a term used to describe technology that allows advertisers to buy digital ad space opportunities from publishers on an impression-by-impression basis, thanks to real-time bidding.

Supply Side Platform (SSP)

Supply side platform (SSP) is a term used to describe technology that allows publishers to manage their inventory, selling digital ad space to advertisers.


Advertisers are those who are looking for ad space opportunities to advertise something, most likely a product or a service.


Publishers are the owners of ad space opportunities; they have platforms that generate traffic and have established audiences that advertisers want to take advantage of.

Media Buying

Media buying is an advertising term that describes the process of purchasing ads on various channels, such as online; in this context, “media” is synonymous with “ad.”


Inventory is an advertising term that describes how many available ad space opportunities a publisher, or a network acting on behalf of publishers has available for sale to advertisers.

Ad Exchange

An ad exchange is a digital marketplace where advertisers and publishers can buy and sell ad space from many ad networks.

Ad Network

An ad network is a platform that hosts a select number of publisher websites, offering their inventory to advertisers.


An omnichannel strategy is a multi-channel marketing approach that uses all platforms, channels, and devices to create a consistent, holistic experience that helps generate and nurture new leads into customers while retaining existing ones.

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