Programmatic advertising is an automated way of buying and selling advertising space in real time. It uses algorithms and software to purchase digital advertising, as opposed to traditional methods such as manual RFPs (Requests for Proposals) and negotiations. Programmatic advertising uses data about online consumer activity to optimize ad campaigns in real time.
Programmatic advertising integrates two platforms:
- Supply side platform (SSP): used by publishers
- Demand side platform (DSP): used by advertisers
The DSP sends bids to the SSP on behalf of the advertiser for the purchase of online ad impressions. The SSP selects the most suitable bid, based on available inventory of ad space that is submitted by publishers. This complex transaction, which results in an ad impression, happens in a fraction of a second, based on the past online behavior of the person viewing the web page.
By 2017, programmatic advertising accounted for nearly 80% of the online advertising market.