Predictive and Generative Artificial Intelligence: What is it and what’s the difference?

Artificial intelligence has all but dominated recent news. As technology advances and is incorporated into different aspects of our lives, you may be overwhelmed, or even scared, trying to understand how the technology works, let alone how to use it. 

Before you get too overwhelmed, however, consider that AI is already a substantial part of our daily lives, and has been for years now. The personal assistants on our phones, smart speakers in our homes, autonomous vehicles, and customer service chatbots: all artificial intelligence. It’s present in the background of our lives, streamlining, personalizing, and improving some of our more mundane tasks and experiences: social media feeds, eCommerce experiences, online shopping, real-time traffic and weather conditions, purchase verifications and online banking platforms, to name a few. 

In advertising, AI reflects a similar pattern. Many media buyers have used predictive AI in their buys for years, whether they realize it or not. In fact, more than 80% of industry experts integrate some form of AI technology into their online marketing activities. 

It seems all roads point to even more improvements, advances, and applications of AI in media buying. As such, it’s more important than ever for media buyers to understand how the technology works and ensure they are harnessing the power of its technology. 

In this blog post, we’ll cover exactly what artificial intelligence is, the different types, its functions in media buying, and why it’s a necessary technology for the advertising industry.


What is artificial intelligence?

Artificial intelligence is an umbrella term for the concept of reproducing human intelligence and cognition in machines. These machines can then execute activities and streamline tasks, learning and improving as they go. There are two forms of artificial intelligence: predictive and generative. 

What is Predictive AI?

Predictive AI refers to artificial intelligence systems that use statistical models, machine learning algorithms, and data-driven approaches to make predictions about future outcomes based on historical data. Predictive AI foresees future events or outcomes based on historical data.

Let’s look at a simple example. Imagine you ride your bike to work every day. Over time, after trying different ways to get to work, you will learn which route is faster or which road or path is better according to the day of the week or based on the weather outside. This is exactly how predictive AI works. You feed the computer or algorithm with large amounts of historical data so that it analyzes and predicts future outcomes based on past learning and applies the learnings to any new data it receives in the future.

What is Generative AI?

Generative AI refers to artificial intelligence systems that generate new content or outputs based on a given set of input data. Generative AI uses machine learning algorithms and deep learning techniques to create new outputs, such as text, images, music, or videos, that are similar to a given training data set. Generative AI models can be used for tasks such as image generation, text generation, and anomaly detection.

This is the type of AI currently making head waves in the news as it’s the basis for companies such as ChatGPT and Dall-e.


How does AI work in programmatic advertising?

Programmatic advertising leans heavily on the use of predictive artificial intelligence. These algorithms can quickly analyze large volumes of data from different sources and draw conclusions from them. When applied to programmatic advertising, this has various use cases.

  1. Identifying patterns in consumer behavior

Every touchpoint that a brand makes with a consumer can be turned into a data point for artificial intelligence to sort and analyze. Part of this analysis reveals patterns in customer behavior that can then be used to tailor the ad experience based on specific interests or preferences. 

  1. Predicting Outcomes

AI can analyze data to identify the likelihood that a consumer takes a certain action. These predictions can then be used to better shape the customer journey. Knowing how consumers act based on search history or previously clicked-on ads enables brands to serve more strategic ads tailored to these typical outcomes.

  1. Predictive Analysis

One of the most significant benefits of AI in programmatic advertising is that it can be constantly used to improve future campaigns. Analyzing past metrics, AI can identify which channels, targeting strategies, ad formats, and targets are working well and which are not. This information can then be used to optimize future campaigns, improving your ROI. 


Will AI replace human media buyers and planners?

As you were reading the use cases for AI in programmatic media buying, you may have thought, “But, that’s my job.” In short, yes, AI can almost replicate the brain of an experienced media buyer in a machine or algorithm so it becomes capable of predicting, planning, and optimizing media. 

Don’t panic. The key word is “almost.” 

Though machines can certainly make programmatic advertising more efficient, faster, and easier to implement, there remain many factors that need human input and link AI to an overall media buying strategy. Additionally, when you bring efficiency to the media buying process, media buyers are freed from the more tedious tasks, allowing them to focus on the strategic and creative elements of their jobs.


Why should you use AI in advertising?

AI-backed strategies create a more personalized experience for the customer. Because AI analyzes campaign data to identify patterns, advertisers can deliver more tailored ads based on the customer’s interests and needs. This provides a more personalized, relevant, and positive customer experience. And every advertiser knows a happy customer is of great value as they are more likely to be a loyal, repeat shopper.

Additionally, brands and advertisers can save money and time by completing tasks faster than humans and making fewer mistakes. AI-powered systems enable advertisers to streamline their efforts, make quicker decisions, adjust to consumer patterns, provide better value, and improve ROI. 

In summary, AI applications in programmatic provide the following benefits:

  • Better personalization
  • More relevant ads for customers
  • More efficient budgeting
  • Reduced costs and decreased ad waste
  • Operational efficiencies 
  • Increased engagement and conversions


How do people and businesses benefit from AI?

AI applications in programmatic advertising will continue to evolve and grow as technology improves. With every new application, your advertising efforts can be significantly enhanced. And, as mentioned previously, customers will continue to benefit from more personalized tailored ad experiences. 

Task AI to do all the heavy lifting for your advertising so that you and your team can focus on creating the best possible strategy to reach your audience and improve your ROI.

Programmatic Advertising: What You Need To Know

In 2023, U.S. programmatic digital display ad spending is expected to reach nearly $150 billion, accounting for more than 90 percent of total digital display ad spending. And, as astounding as that figure is, that’s only a part of the picture. As fast-growing channels like connected TV and digital out-of-home are increasingly transacted programmatically, the influence (and complexity) of programmatic advertising will continue to grow. 

Programmatic advertising is a vital part of the modern marketing playbook. Here you’ll gain a foundational understanding of programmatic advertising and how you can leverage it to reach and engage your audiences.

Table of Contents


What Is Programmatic Advertising?

Simply put, programmatic advertising is the practice of using technology to automate the buying and selling of ad impressions on media. It uses algorithms to enable advertisers to target segmented audiences using real-time data in ways that simply can’t be accomplished manually, and to do so with accuracy and at scale.

The programmatic ad industry is rife with jargon and acronyms, but from an advertiser’s standpoint, there are just a few basics to know: Brands and agencies use a demand-side platform (DSP) to indicate which impressions they want to buy and how much they want to pay. Publishers and app developers use a supply-side platform (SSP) to deliver their available impressions to brands and agencies. DSPs and SSPs collaborate to automate the buying and selling of digital advertising inventory by integrating with ad exchanges, enabling real-time bidding, and facilitating data sharing for optimization. 

There are multiple ways to buy ads programmatically. The most common methods are as follows: 

  • Open Auction, or Real-Time Bidding (RTB): In open auctions, hundreds of buyers can compete for inventory in real time without any restrictions or pre-negotiated deals. 
  • Private Marketplace (PMP): These invitation-only marketplaces are more exclusive and feature negotiated minimum prices and non-guaranteed volumes.
  • Preferred Deals: These one-to-one deals feature a fixed price and non-guaranteed volumes.
  • Guaranteed Deals: These one-to-one deals feature a fixed price and guaranteed volumes.


What Does Programmatic Advertising Look Like?

Programmatic advertising is especially attractive to brands and agencies because of the high degree of customization and data-driven targeting that can go into these media buys. Additionally, programmatic advertising supports a wide array of ad formats, ranging from fairly basic executions to highly dynamic ones.

What types of digital ad formats are there and what do they look like?

Need help visualizing the variety of digital ad formats you can leverage to reach your audience? Below is a breakdown of some of the most popular programmatic ad formats, such as:

Native Ads

Native ads reflect the look and feel of the environment in which they appear. They are meant to fit into its surrounding content, providing a more seamless advertising experience than other formats.

Read our full explainer on native advertisements.

Display Ads

Display ads can be static or animated, and combine imagery, text, and a URL link to drive audiences to landing pages. Display ads come in a variety of sizes, with the most common being 300×250 (Medium Rectangle), 728×90 (Leaderboard), 160×600 (Wide Skyscraper), 300×600 (Half-page ad), 320×50 (mobile leaderboard) and 300×250(medium rectangle). 

Video Ads

Video ads typically appear before, after, or during streaming content. However, some might expand the definition of video ads to also include display ads that contain video within them.

Audio Ads

Audio ads are formatted as — you guessed it — audio. These are delivered via streaming platforms, like podcasts or music streaming apps like Spotify, Pandora, or iHeartRadio, for example.

Advanced TV Ads

Advanced TV ads are advertisements that are not watched through a broadcast, cable, or satellite connection. This includes advertisements viewed on connected TVs, over-the-top (OTT) devices, and linear addressable TV. Advanced TV advertising provides sophisticated targeting based on household IP addresses and device types.

Social Ads

Social ads allow advertisers to connect with prospective customers via third-party social networking platforms, in the form of display or video ads. Social Ads are commonly used to drive brand awareness and reach new audiences. Display, video story, and messenger ads are common formats in social media advertising.

Search Ads

Search advertising leverages keywords and phrases to deliver web users advertisements on search engines like Google, Yahoo, and Bing, based on their search queries. Search ads allow advertisers to drive sales by quickly engaging people who are usually in the market for a specific product or service. Common formats for search ads include text, display, video, shopping, local search, amongst others.

Retail Media Ads

These advertisements are typically videos or banner ads within a retail media network that state they are sponsored.

Programmatic advertising in action:

Here are just a few real-world examples of the powerful results programmatic ad buys can deliver across industries:

  • Higher Education: A prestigious university tapped into programmatic advertising to drive interest in specific undergraduate and graduate programs. The organization leveraged a combination of data-driven tactics to target its desired audiences and encourage them to fill out a “request for information” form. The resulting programmatic campaign drove more than 47 million impressions, more than 74,000 clicks (a click-through rate well above industry standards), and 108 conversions.  
  • Enterprise Software: A B2B enterprise software company operating in a category with very little differentiation leveraged programmatic advertising to drive brand awareness and audience engagement. Fueling its campaign with B2B data segments and behavioral data segments, along with its own CRM and search data, the company launched a targeted campaign that achieved an impressive 0.44 percent CTR, exceeding its goal by more than 210 percent. 
  • Automotive: A top-10 auto brand turned to programmatic advertising to drive traffic to specific landing pages intended to encourage conversions like nearest location finder, learning about offers, and submitting an inquiry for a specific vehicle. By monitoring the programmatic campaign’s real-time results, the brand was able to home in on specific audience segments and implement strategic retargeting that took into account hourly trends. This approach drove more than 6,000 actions on the client’s landing pages and helped to inform the auto brand’s fall savings event campaign.  


Why Does Programmatic Advertising Matter?

As the examples above illustrate, programmatic advertising is a great way to drive both awareness and conversion for brands across all industries, both B2C and B2B. Over the decades that programmatic advertising has existed, its technology and tactics have become increasingly more transparent, sophisticated, effective, and measurable. 

In 2022, digital advertising accounted for nearly 72 percent of U.S. media ad spend, and eMarketer expects that percentage to grow to 81 percent by 2026. Given the targeted, data-driven capabilities that underpin digital advertising, this isn’t surprising. But that doesn’t mean your life as a marketer is getting simpler.  

The complexity of the digital ecosystem, and the ad opportunities within it, continues to grow, with new channels, platforms, and technology emerging all the time. Compared to the traditional advertising world, dominated by a known list of top networks and publications, the online world is a vastly fragmented and constantly changing landscape. 

In other words, it’s not humanly impossible for advertisers to keep track of the many digital destinations vying for (and deserving of) their media dollars. But with programmatic advertising, and the tech behind it, you can. 

Programmatic advertising is absolutely essential when it comes to meaningfully leveraging digital advertising. If you’re not leveraging the power of programmatic advertising, you can bet your competitors are—and it won’t take long for your brand to see its own share of voice and relevance dwindle. 

The importance of programmatic advertising will only continue to grow. Need proof? Consider the following: 

More and more media is being transacted programmatically every year. If advertisers haven’t embraced this space yet, they’re going to increasingly find themselves left behind, even in channels where traditional media buying was once the norm.


How Does Programmatic Advertising Work?

OK, so what does a programmatic media buy look like? While there is a great deal of nuance behind the technology that powers programmatic advertising, as well as the types of auctions cited earlier, a basic programmatic buy looks like this:

  1. A person visits a page on a website. 
  2. The owner of that website, through its SSP, puts the ad impressions on that page up for auction. 
  3. Advertisers, through their DSPs, automatically bid on those impressions.
  4. The highest bidder wins the ad impression. 
  5. The winning advertiser’s ad creative is served to the website visitor. 

Once the creative is served, the website visitor sees the ad and potentially clicks and converts. Regardless of their action (or inaction), the result is captured and communicated back to the advertiser. 

All of the above steps happen in about a tenth of a second—and this process happens billions upon billions of times per day across the digital ecosystem. 

The 4 Components of Programmatic Advertising

We’ve mentioned that the behind-the-scenes technology of programmatic advertising is complicated, and that’s true. But ultimately, there are four components that advertisers need to understand. 

Demand-Side Platforms (DSPs)

As mentioned, DSPs are used by media buyers at agencies and brands to manage and purchase digital ad impressions across multiple ad networks and exchanges through one interface. They can target their ads based on a variety of data parameters, including demographics, psychographics, behavior, and contextual relevance. Importantly, advertisers don’t have to worry about picking the right destinations for their campaigns; the DSP does that work for them. 

Supply-Side Platforms (SSPs)

On the other side of the transaction, SSPs enable publishers and app developers to offer their available ad impressions to a wide variety of exchanges and DSPs. By opening up their inventory to as many potential buyers as possible, SSPs help publishers maximize their revenue.

Ad Exchanges

An ad exchange is a marketplace for ad impressions that sits in between DSPs and SSPs. It’s essentially a trading floor where the respective platforms go to access the inventory for sale. Advertisers use an ad exchange to buy ad impressions, and publishers make their ad impressions available via exchanges. 

Data Management Platforms (DMPs)

DMPs are unifying platforms that are used to collect and organize all of the data generated by and used to power programmatic advertising. They allow publishers and advertisers to analyze data from all available platforms in order to glean insights and segment audiences. 


What Are the Benefits of Programmatic Advertising?

Programmatic advertising is an essential tool within the modern marketing playbook—and for multiple reasons. The data-driven automation of digital ad buying unlocks plenty of benefits for advertisers and publishers alike.

Programmatic advertising is built on the following pillars — all of which are designed to help advertisers do their jobs better. With programmatic advertising, advertisers can drive: 

Improved ROI

Programmatic advertising’s advanced targeting and measurement capabilities help brands eliminate wasted ad spend. Advertisers can quickly identify their best-performing audiences, tactics, and channels while a campaign is in-flight and can double-down in the areas that drive the highest ROI. 

Campaign Optimization based on Real-Time Feedback

Unlike traditional advertising channels, programmatic advertising enables real-time campaign optimization based on performance data and insights while campaigns are in flight, sometimes with the help of predictive AI models. 

Greater Scale

With programmatic advertising, brands and agencies can scale their audiences as needed to hit desired reach and conversion goals. One of the key ways that advertisers can grow their audiences for programmatic campaigns is through lookalike modeling, which finds new audiences based on what advertisers know about their existing customers and prospects. This can be done at the start of a campaign or any point during its execution.

Improved Relevance

The granular targeting that’s possible with programmatic advertising, coupled with the ability to deliver personalized creative, lets advertisers deliver campaigns that are actually relevant to their audiences. Advertisers can target their ads based on thousands of data points, including demographics, interests, context, sentiment, behavior, IP address, purchase intent, CRM data, and more.


Programmatic platforms provide advertisers with transparency and control over their campaigns. Advertisers can monitor the performance of their ads, track impressions, clicks, conversions, and other metrics in real-time. They can also set budget caps, bid strategies, and targeting parameters, giving them control over their ad spend and campaign outcomes. Additionally, they can block sites or only run across a specific set of sites

Opportunities to Test and Learn

In addition to being able to funnel spend toward the highest-performing audiences, channels, and tactics, programmatic advertising also allows advertisers to test new marketing messaging and creative and see how they perform in real time. These insights can be used not only to help the existing campaign, but can also be put to work in broader messaging initiatives and future campaigns. 

Programmatic advertising is not without its challenges, but its benefits far outweigh the potential hurdles. The key is to partner smartly to avoid potential obstacles and move forward confidently.


How Do You Get Started with Programmatic Advertising?

Advertisers looking to get started in programmatic media can choose to handle the function in-house or to work with a programmatic advertising partner. In many cases, marketers find that in-house management of programmatic advertising can quickly drain internal resources, as successful programs demand significant time, dedicated expertise, constant training, and ongoing education. For these reasons, programmatic advertising partners represent a valuable alternative.  

How to Choose a Programmatic Advertising Partner

Contrary to how some people speak about the automation of programmatic advertising, successful campaigns are not a “set it and forget it” endeavor. The human touch remains vital to achieving the greatest ROI with programmatic campaigns, which is why bringing in a partner that specializes in the technology and strategies that drive programmatic can be more than worth the cost. 

In selecting a partner, look for one that understands the level of nurturing that goes into a strong programmatic campaign and is willing to monitor and optimize results on an ongoing basis while delivering transparent results and insights. Your programmatic advertising partner should be steeped in digital expertise and demonstrate a proactive, agile style of working—and be readily available to answer your questions and provide feedback. 


Digilant: A Trusted Programmatic Advertising Partner

At Digilant, we live and breathe programmatic media. We recognize that this dynamic, fast-evolving space requires dedicated resources with experience in monitoring, interpreting, and optimizing campaign performance every step of the way. We’re data experts and technology enthusiasts. We’re passionate about programmatic advertising and get genuinely excited about the opportunity to uncover new audience insights that can be put to use in current and future campaigns. The proof is in our partnerships and perspectives. 

Are you ready to unlock the full power of programmatic advertising for your brand? We’re here to help. Let’s talk about what Digilant can do for you. 

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