How it Works - A walkthrough of the programmatic process

Introduction to Programmatic Advertising: Digital Marketing Digital Marketing Introduction - Programmatic Advertising
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Transcript

So let's get into how it works. Well first we need to talk about the ad tech companies involved. First one we're going to talk about is an SSP, which is a supply side platform. They are obviously the supply side of this business. They are ad tech companies who work directly with publishers. for publishers, they deliver demand to their content, helping them monetize, differentiating factor is the quality of the publishers they work with.

And each SSP can work with 10s of thousands of publishers through direct or third party integration. On the right, we see a handful of ssps app Nexus probably being the largest recently acquired for $1.6 billion. So what makes these unique is that they focus on working with the publisher. So app Nexus is a mobile SSP. And they'll set relationships with as many direct apps as they can. Some you see here, whereas with friends, IATSE, meet me Pandora, these are major applications that have a lot of traffic and have a need to work with an SSP.

What makes app Nexus are what they claim to be better than anyone else is that they have a better direct relationship. They have more apps, the apps that they work with are better quality, things like that. On the flip side of that, you've got the DSP, the demand side platform. These are ad tech companies who work directly with advertisers and agencies. for advertisers, they provide inventory at scale, and efficiencies not found with direct partnerships. The differentiating factor for DSP is a scale number of partnerships and the technology they use to execute the by and each DSP will work up to work with up to dozens of different apps.

Ssps and exchanges. So we've got a few different DSPs here on the right. And like I said the differentiating factor is scale and also the technology they use executed by. So if we look at the companies outlined here, ground truth to start with, they are a mobile platform and they focus on location data and location reporting. That's what makes them unique is their location data. The trade desk and double click are huge.

They have the most scale of anyone in the industry, tremor video DSP, they focus on video. And they also do mobile and desktop central focuses on a lot of local markets, and also having scale not quite the scale of trade desk or double click, but they focus on a local partnership and getting scale. So now these companies would work directly with your advertisers, Nike, Coca Cola, Dunkin Donuts, McDonald's, they would work either directly with that advertiser Pfizer or with the agency that is representing them. So now comes into play the exchange. The exchange is what allows these two different sides of the coin to connect to each other. A lot of times you'll find that an SSP now has an exchange built in.

There are third party exchanges that only act as an exchange. As the industry continues to evolve. We see mergers and acquisitions, we see companies trying to do more than just use it as an SSP or just a DSP. So they start to create more technologies or offer more services. But for the sake of this course, and to oversimplify it, we are just going to say that there is an exchange that sits in between all of these that all these companies can plug into, which is very true. All these different companies can all plug into one exchange and that exchange would allow them to facilitate Take any sort of transaction.

So as we've talked about now supply side has a good amount of supply, demand side has a lot of money willing to be spent. There are different companies now. And they need to connect the exchange is where they do that. So starting with the RTB process, ie real time bidding process, and we'll get into a little bit more about RTB versus programmatic later. But this process would essentially be the supply side says, I have an app that I'm working with, maybe it's Pandora, and they have inventory available. And they'd like to get at least a $1 CPM for does anyone on the demand side have a client that would be interested in buying this inventory at that price?

On the demand side, they may be working with Nike and Nike may say Yes, I'd actually love to buy that inventory and the price is good. So it's sold and the exchange is where that transaction takes place.

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