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What is programmatic advertising and how does it work?

There is still a lot of confusion surrounding what programmatic advertising is and how it works. In this article, we break it down.

If you’ve heard of programmatic advertising but you’re not sure what it is, you’re not alone.

Many businesses use programmatic advertising to advertise online today, with 55 per cent of all digital media in Australia trading programmatically in 2019, according to media group Zenith.

However, there is still a lot of confusion surrounding what programmatic advertising is and how it works.

While supporters say programmatic makes digital advertising easier and cheaper for brands, critics point out that advertisers cannot be certain where their ads will run.

Programmatic advertising explained

In simple terms, programmatic advertising uses software to buy digital ads rather than buying directly from publishers.

While programmatic advertising software takes care of much of the traditional workload, it doesn’t automate everything, so you still need humans to plan and optimise your digital advertising.

To use programmatic advertising, businesses and brands use a demand side platform (DSP) to choose ad impressions and how much to pay for them.

Publishers sell ad space to brands through a supply side platform (SSP) and the two platforms are paired in real time to find the most suitable ad placements.

The programmatic advertising space is rapidly changing too, allowing advertisers to run simple text ads through to display, video and other ad formats.

Benefits of programmatic advertising

The main advantage of programmatic advertising is that it allows you to reach customers better.

You can target audiences based on demographics, geography, interests, behaviours and other factors, as well as personalising ads for different groups.

Brands can use programmatic advertising to review the performance of their ads in real-time too, allowing advertisers to optimise campaigns once they’re live.

Disadvantages of programmatic advertising

Programmatic advertising has its flaws as well, particularly around transparency.

Since programmatic ads target audiences based on demographics and behaviour, brands have less control over where their ads appear.

This problem was highlighted in 2017, when an investigation by The Times newspaper showed ads from the world’s biggest brands were unintentionally appearing on hate sites and YouTube videos created by terrorist groups.

Brands should also be mindful of growing privacy concerns shared by the public too, since programmatic advertising uses individual internet user information.

Talk to the advertising experts

While programmatic advertising is growing quickly, it’s still just one part of the vast digital advertising market.

As the digital advertising industry continues to evolve, businesses and brands need to stay up to date to remain ahead of the competition and get the most value out of their marketing budget.

As a full-service marketing agency based in Melbourne, Assemblo can help you with all things digital advertising, whether it’s strategic advice or developing and running your next advertising campaign.

For more information, give us a call on (03) 9079 2555 or drop us a note via the contact form below.

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