While it is one of the most overused phrases in our business, the impact data-driven automation is going to have on how advertising is measured, bought and sold cannot be overstated.
Sadly, the mere mention of the term has the power to provoke Pavlovian responses that range from a rote, “We’re never doing it, it’s a race to the bottom…” to the equally platitudinous, “…we’re looking into it, but our brand clients really aren’t ready for it yet.”
One of the best ways to have a successful conversation about programmatic and its associated technologies is to have a set of common terms that everyone understands and agrees upon. These definitions don’t have to be the only ones, nor the exact ones that the industry will ultimately agree upon… they just need to be defined so you can lead a Socratic discussion and keep it on point.
In that spirit, here are the most basic definitions of the most basic terms to use as a starting point for your programmatic advertising discourse. If you can teach the subject to your colleagues, you will surely benefit from the process.
Programmatic Advertising 101 – Definitions
Ad exchange: An open online advertising marketplace that lets publishers and advertisers connect (think of a stock exchange).
Ad networks: A closed advertising marketplace where the network owner disintermediates the publisher by sourcing and selling/reselling ad inventory to buyers (Publishers also can, and do, create their own ad networks).
API: An application programming interface specifies how some software components should interact with each other. (An Open API, sometimes referred to as a public API, is an application program interface that provides a developer with programmatic access to a proprietary software application.) All APIs are not open.
Arbitrage: The simultaneous buying and selling of securities, currency, or commodities in different markets or in derivative forms in order to take advantage of differing prices for the same asset. In other words, how agencies and ad networks actually create a margin they can live on.
DMP: A data management platform helps all participants in the buying and selling of ad inventory to manage their data, facilitate the usage of third-party data, enhance their understanding of all this data, pass back data, or port custom audience data to a platform for even better targeting.
DSP: The demand-side platform allows advertisers and ad agencies to more easily access and efficiently buy ad inventory off an exchange because the DSP aggregates inventory from multiple ad exchanges. DSPs eliminate the need for another cumbersome buying step: the request for proposal (RFP) process.
First-party Data: Proprietary information collected directly from your customers. It belongs to you. It is unique. It is private. It is unduplicated. It may have a huge value in the presence of other data. Examples include: names, addresses, phone numbers, behavioral information, purchase records, etc.
RTB: Real-time bidding enables ad buyers to bid for ad impressions based on specific campaign criteria which when won is instantly served on the publisher’s site. The fulfillment technology enabling these dynamic transactions is called a “bidder” and can be built into many kinds of platforms.
RTB (Pejorative): Race to the bottom. An idea that any exchange will extremify the marketplace and cause prices to “race to the bottom.” Wrong, in every way, but a clarion call for programmatic naysayers.
SSP: A supply-side platform enables publishers to connect to ad exchanges making their inventory available. In theory, using an SSP empowers publishers to realize the highest prices for their inventory.
Third-party Data: Data you obtain from a third party, partner or someone who collects data for a living. It is a heterogeneous mix of awesome information and useless garbage. Wondering about the value of third-party data… think about the post-card you received last week to take you out of the leased car you returned to the dealer two years ago. The marketing firm that acted upon your supposed “end of lease” date got their data from a third party. Oops!
So there you have it. Programmatic advertising definitions you can use to run your next meeting. If you’re looking for discussion topics, here are a few good ones:
- Unique Media Plus Unique Data
- Direct Order Automation
- How To Use Transparency To Your Advantage
- How You Will Revise Your Sales Compensation Plan With Homage To Programmatic Tools
- Marketplace Unification