The Evolution of Programmatic Buying

Traditional: Advertisers and Publishers
In the old times if an Advertiser wanted to buy inventory from a Publisher, they would do so manually and directly. This was a cumbersome and tedious process which involved negotiations, insertion orders, manual tracking, and long waiting periods (especially for premium sites). The benefits were so-so as the Advertiser had to track the result of each site manually in order to see where they were performing the best. Additionally, because Advertisers bought on a CPM model, they bought impressions in bulk- the same ad on the same site. Regardless who the user was, everyone was seeing the same ad. It was literally like a Jackson Pollack painting- finding the canvas you want to work on and just throwing all your paint on it, hoping that at least one drop reaches the right spot.

As time went on and the number of Advertisers and Publishers grew exponentially, it became impossible for Publishers to sell most of their inventory and for Advertisers to handle the direct media buying process. They would have to be in direct contact with thousands of Publishers at a time in order to maximize their reach. Additionally, manually tracking all of these sites could prove to be impossible. This issue paved the way for the Ad Network.

Ad Networks
An Ad Network is a company that connects Advertisers to a large amount of Publishers. It acts as a type of broker between the Publisher and Advertiser, buying the unsold or remnant inventory of the Publisher in order to sell it to the Advertiser. The Ad Network had technology that enabled them to categorize the inventory, which they could package and sell to the Advertiser. This benefitted the Advertiser because it allowed for them to extend their reach to numerous Publishers all at once and have their ads targeted a little better based on the categorization of the Ad Network. And rather than having to track the campaigns on the Advertisers end, the Ad Network was now responsible for tracking and optimizing each campaign across multiple sites.

And history repeated itself. As time went on, the number of Ad Networks grew and began flooding the market. This put the Publishers and Advertisers in another predicament. Now they had to spend time trying to figure out which Ad Network would give them the best bang for their buck. It also meant, that Advertisers could be buying the same inventory on the same site more than once. Oh, and did I mention that the Ad Network was taking a chunk of the ad profit from the Advertiser?

And thus, the Ad Exchange was born.
Simply put, an Ad Exchange is a technology platform that facilitates in the automated buying and selling of inventory, often through real-time auctions. Unlike an Ad Network, purchasing is not based on a CPM model, but rather per impression. An Ad Exchange is pretty much a giant pool of impressions that allows for advertisers to bid on each impression based on specific targeting criteria in real-time. This allows for the advertiser to make sure each ad they are serving is being served to the right person at the right place at the right time. With the Ad Exchange, the Publisher is now able to gain more revenue by selling off more inventory, and the Advertiser has greater transparency and control over their placement.

So the Ad Exchanges made things better, but Advertisers and Publishers still didn’t have the necessarily tools and technology to really take advantage of the full value Ad Exchanges brought along with it.

So along came Demand-Side Platforms (DSP) and Supply-Side Platforms (SSP). Both of these platforms are very similar, but just serve different audiences. The DSP serves Advertisers and the SSP serves Publishers.

A DSP is sort of the brain on the Advertisers side in terms of the Ad Exchange. It is a platform for buyers which works with multiple ad exchanges, allowing them to buy from multiple sources of inventory. For the Advertiser, it is the interface which allows them to manage their bids, create targeting criteria, aggregate all their user siloed data, do retargeting, and optimize their campaigns in real-time, and have access to results and data from DMPs. It could be seen as a sort of ad network on crack. However, without the huge mark-up and with automated technology capabilities. To sum it up, a DSP is a one-stop shop for Advertisers- all they need to do is submit their ads and wait for the results.

An SSP is pretty much the equivalent but for the Publishers side. Whereas the DSPs goal is to buy ad impressions as cheaply and quickly as possible from the ad exchange, the SSPs goal is to maximize the price of their impressions. The SSPs enable Publishers to have access to multiple Ad Exchanges, Ad Networks, and DSPs all at once- increasing the range of potential buyers.


So now you understand the key players in the Programmatic Buying ecosystem. And all Programmatic Buying is, is the automated process of buying or selling media. And this process is reliant on these key players in order for it to work.