Programmatic Advertising Glossary & Brief History

Many factors have contributed to the exorbitant growth of programmatic digital advertising: better technology, a need for better targeting, and the introduction of mobile phones, to name a few. Experts no longer question the validity of programmatic marketing or if advertisers use it. Instead, people now look to the future to see how they can work to combat any drawbacks people face to grow programmatic marketing and to help advertisers reach their audiences even better.

Before we dive into the different facets of programmatic, it’s helpful to look at the last decade or understand how programmatic quickly climbed up the ladder of digital advertising to become a preferred tactic amongst advertisers.

Check out our explainer of what you need to know about programmatic advertising here.

Basic Programmatic Glossary

Demand Side Platforms (DSPs)

A piece of bidding technology or ad servers with optimization and inventory links. They allow audience buying via RTB across multiple sources of inventory. Using algorithmic driven evaluation techniques, DSPs can determine which impressions to buy in real-time.

Demand Management Platforms (DMPs)

Used to manage cookie IDs and to generate audience segments, which are subsequently used to target specific users with online ads. Advertisers now buy media across a vast range of different sites. DMPs can help tie all that activity and resulting campaign and audience data together in one, centralized location and use it to help optimize future media buys and ad creative.

Supply Side Platform (SSP)

Supply refers to the seller of media – in most cases, the publisher. SSPs are vehicles for publishers to make their inventory available for programmatic buying via an exchange type marketplace. SSPs are sometimes referred to as yield-optimization platforms.

Ad Exchange

An ad exchange is technology that enables advertisers and publishers to buy and sell digital ad inventory programmatically with real-time bidding.

A brief history of programmatic digital advertising

To understand programmatic advertising, we have to travel back to 1994 when the first banner ad was displayed. Hotwired.com made a deal with AT&T to display a banner ad on their site for three months. Over this period, the ad resulted in a rumored 40-50% click-through rate, which will astonish any current-day advertiser who is accustomed to industry-standard CTR rates of ~0.06%.

And for the next few years, digital advertising mirrored this simple and straightforward process. Advertisers worked directly with publishers to negotiate pricing and placement. These ads were about reach, not relevance.

Flash forward two years as the internet continued to gain more mainstream use and integration into society. At this point, advertisers had jumped on board, and they too wanted to advertise on these new websites. This led to creating the programmatic ecosystem’s first element: an ad server – DoubleClick to be specific (which would eventually be purchased by Google for  $3.1 billion in 2007).

Right before the turn of the millennium, competition arose for DoubleClick as they couldn’t keep up with the demand. From 1998-2000, we saw a boom of ad servers that allowed advertisers to place their ads on various sites within the network.

In this same time frame, Google launched AdWords, which allowed advertisers to run CPC-priced campaigns on the Google networks. This isn’t exactly the moment programmatic was born. This only allowed advertisers to run in the Google network; however, this would eventually lead Google down the path of more targeted advertising.

In tandem with Google’s journey, the beginning stages of programmatic advertising were on the rise. At this time, ads were first-come, first-served (literally). Backed by name-brand recognition and power, Google launched AdSense, their display network, in 2003. Unlike other moments in the timeline of programmatic, this too had its ups and downs. AdSense quickly became synonymous with spam and ad fraud. And what did Google do to combat this? They launched the Panda update, which still affects how sites are ranked by reducing ranking for low-quality sites.

Google was not the only player during this time working through the bumps and bruises of digital advertising; however, their journey indicates that no company had a linear line to what we know today as programmatic. And it only grows more complex.

The Birth of Real-Time Bidding

The next decade of programmatic advertising history (the 2010s) cannot be easily outlined linearly. However, most simply put, in 2009, we saw the first use of real-time-bidding (RTB). RTB allowed for the first big wave of programmatic advertising, and the process is as follows:

1. A visitor lands on a page, and the publisher sends a bid request to the ad exchange.
2. The ad exchange makes the user’s profile available to all bidders.
3. The advertiser’s bids are automatically sent to the exchange by the bidding algorithm.
4. The highest bid wins the impression.
5. The high bidders’ creative is served, and the page is rendered.

This entire process happens within one-tenth of a second. This way of buying and selling ads in an open exchange allowed advertisers to bid on specific consumer personas, such as demographic or device type. And the seed was planted. Gone were the days of digital display ads simply used for reach; now, there was an era of relevance.

But to be clear, because RTB gave people the first real glimpse into the world of programmatic, many people believe that this is the only way to purchase ads programmatically. However, programmatic digital advertising has grown much beyond the 2010-era. Check out our explainer to find out everything you need to know.

The Importance of an Effective Programmatic Partner

Realistically, you could launch a programmatic campaign, and go about your day, week, or however long the flight is running. The computers will work to target the audience parameters and targeting you have in place. However, with such great data available to advertisers, the days of “setting it and forgetting it” should be long gone.

The element of the human touch remains priceless to programmatic – even if it is a technology-driven industry. Just as programmatic ads’ buying and selling happen in-real-time, so too should the optimizations and analysis.

At Digilant, we understand that programmatic campaigns need fostering in order to reach their full potential. Our team of highly qualified campaign solutions analysts monitors our client’s programmatic campaigns every step of the way to ensure the audience is reached effectively. Where traditional agencies can be slow to react, overly complicated, and high-cost, we are proactive, agile, and readily available. As we monitor campaigns, we can quickly adapt to what is working while also shifting away from what is not. This also allows us to uncover new audience insights that can be established for use in current and future campaigns.

Interested in learning more about how Digilant’s passion and industry expertise will ensure your programmatic digital advertising campaigns reach new heights? Let’s talk.