What Is Programmatic Advertising? A Beginner’s Guide

Ahhh, such a broad question—but one I’m asked all too often.

At its core, programmatic advertising is an automated method for buying ad space on the open web. Instead of negotiating ad placements manually, advertisers use real-time bidding (RTB) to compete for impressions in a fraction of a second. This allows ads to be bought and sold instantaneously at scale.

How Does Programmatic Work?

Imagine a digital auction happening behind the scenes every time a webpage loads. Here’s how it plays out:

1. Real-Time Bidding (RTB): Every ad impression (the moment an ad appears on a page) is auctioned off in real time. Advertisers bid for that space, and the highest bidder wins—just like eBay, but much faster.

2. Ad Exchanges: These are the virtual marketplaces where publishers list their ad inventory and advertisers bid for placements.

3. DSPs & SSPs:

   • Advertisers (or their agencies) use Demand-Side Platforms (DSPs) to set parameters—choosing audiences, locations, and budgets.

   • Publishers use Supply-Side Platforms (SSPs) to categorise and make their ad space available.

   • The ad exchange then matches buyers and sellers, ensuring that the highest bidder’s ad is served in an instant.

     
     

And when I say instant, I mean faster than the blink of an eye.

Where Do These Ads Appear?

If you’ve ever seen an ad while reading an article on ESPN, The Guardian, Fandom, or even your local news site, you’ve already experienced programmatic advertising in action. These ads are bought and placed in real-time through the system described above.

Winning Impressions & Managing Bids

As long as your audience targeting and location settings are reasonable, you shouldn’t have trouble winning impressions and fulfilling your campaign budget. However, if your campaign is pacing behind, most DSPs provide insights into why bids are being lost and how you can adjust your strategy to win more impressions.

Understanding 1st-Price vs. 2nd-Price Bidding

When bidding for ad space, it's important to understand the difference between 1st-price and 2nd-price auctions:

• 1st-Price Auction: The highest bidder pays exactly what they bid.

• 2nd-Price Auction: The highest bidder only pays slightly more than the second-highest bid (e.g., if you bid $5 and the second-highest bid is $3, you might only pay $3.01).

  
  

Why does this matter? If you're using a 1st-price auction and bidding too high, you could be overpaying for impressions, which limits your reach. Careful bid management can help maximise efficiency while keeping costs in check.

Mastering Programmatic Advertising

Managing programmatic campaigns is a science. DSPs can feel like a shadow realm, full of hidden settings and complex mechanics. But don’t worry—AdtechBro has mastered the ways of the shadows. Whether it’s fine-tuning bids, optimising audience targeting, or troubleshooting pacing issues, we make campaign management feel like second nature.

Got questions about programmatic? Let’s chat.