CTV Programmatic Buying 101

Technologically speaking, automation is one of the firmest signs of progress. Digital advertising took its first steps towards an automated future a while ago, when the first website banner placements were sold through programmatic. Yet when ad monetization models first appeared on CTV, they were negotiated ‘manually’ – advertisers and publishers discussed the terms of ad publications the old-fashioned way.

As more viewers join the CTV community, more advertising solutions are popping up. Programmatic is no longer a novelty here. In fact, it’s one of the fastest-growing sections technology-wise in the entire field. eMarketer points out that today over 55% of CTV ads are already being delivered programmatically. Some platforms even offer artificial intelligence buying! So let’s have a look at how (and why) this all works.

What is Programmatic Buying?

Let’s define programmatic buying first: it’s an online advertising technology meant to automate two main ad delivery processes – ad buying and ad selling. Ad inventory (the slots that publishers have available for ads) is sold on various ad platforms via auctions. These can be open auctions, private marketplaces for exclusive partners, or other options of cooperation, as discussed further below.

Since the beginning of programmatic, the Ad Tech industry has learned to deliver ads via mobile apps, desktop browsers, social networks, video players, and other mediums among the plethora of different devices. And now we can benefit from this on CTV as well.

Types of Programmatic Deals

For a better understanding of programmatic marketing, we need to take care of the terminology and remember the main types of programmatic. Let’s review each of them in detail.

• Open auctions are real-time buys where inventory prices are changed automatically depending on the number of participating bidders. In this way, auctions are open for any entrant. Publishers set a minimum price for their inventory (typically floor CPM – cost per mile), while advertisers (bidders) set their price ceiling. The rest is done automatically – the system sells impressions to the highest bidder while trying to spend as little ad dollars as possible.

• Private auctions work exactly the way open ones do, with the only difference relating to the auction participants. As the title suggests, only invited advertisers can access this kind of auction. The application process is normally moderated by publishers.

• Preferred deals, aka unreserved fixed rate buys, are ad exchanges with pre-negotiated pricing. This kind of deal is at a higher priority compared to auction deals and allows advertisers to take a more calculated approach to their buys.

• Guaranteed deals type of programmatic buy works via prior arrangements between publishers and advertisers. Advertisers negotiate on ad impressions, and then ‘book’ these ad spaces. This is the right type of buy for unusual or premium inventory and is the perfect model for projecting ad campaign expenses.

The Main Components of Programmatic

When we talk about programmatic, we can’t ignore its constituent parts. There are multiple technological mediators between an advertiser and a publisher: SSPs, DSPs, Ad Servers, Ad Exchanges, and Ad Networks.

• Supply-Side Platform (SSP) is essentially a multifunctional advertising software that uploads and coordinates ad inventory. The main purpose of an SSP is to connect that inventory with multiple ad exchanges to ensure broader coverage. Through offering inventory to a wider range of potential buyers, an SSP ensures higher demand and therefore – more profitable transactions. 

• Demand-Side Platform (DSP) is technically the same as an SSP, only from an advertiser’s perspective. This service allows media buyers to compete with one another to achieve better deals and reach their targeted audiences for cheaper.

• Ad Exchange is a figurative marketplace, where SSPs and DSPs are connected into a single network. The system works automatically, trying to match thousands of ad requests and inventory offers. When multiple advertisers claim the same inventory, the dispute is settled through an auction, where the most generous bid wins. It all happens in a matter of milliseconds.

• Ad Network normally represents companies that function as mediators in publisher-advertiser relations. Unlike ad exchanges, networks bundle ad spaces by a website, app, category, or certain viewer group and sell those to individual buyers. To learn more about the differences between an ad exchange and an ad network, see our

   blog post covering the topic in detail.

• Ad Servers are the storages where advertisers keep their assets like videos, images, animations, etc. Ad servers also track performance for each ad unit to improve reporting and ad management. These servers ensure fast delivery of those assets to user screens following the sale of an impression.

How Does Programmatic Buying Software Work on CTV?

The process starts when users select their video content. The moment their personally identifiable information (such as device IDs) was collected by a publisher and transmitted to an ad exchange, the system signals that the ad impression is ready for purchase. This triggers automatic bidding targeted towards a particular user, and the associated listing appears on an SSP.

An SSP then offers this particular ad impression, while delivering details about the content, age group, location, and other targeting information. If those details align with a buyer’s request, the ad exchange system starts an auction to let the highest bidder compete for that ad impression.

Auctions take place in real-time. When all the bids are gathered, an ad exchange picks a winner and sells that impression to it. Advertising materials (images, texts, videos, etc.) are passed on to an SSP and finally displayed on a user’s screen. All these operations occur nearly instantly from a user perspective, making ad impressions effective and relevant to users.

Benefits of Programmatic Buying

We have reviewed the entire programmatic action chain, so you might already have an idea as to what opportunities this technology offers. Now let’s highlight those benefits in detail:

• Precise targeting. Programmatic buying software enables advanced targeting opportunities based on demographics, purchase power, geographics, behaviors, interests, and other personal information. This ensures relevant ad display, increases campaign effectiveness, and ultimately drives sales. In addition, because of the automated nature of programmatic, tools like ads txt for apps can be used to avoid ad fatigue.

• Automated and fair competition. Programmatic means automation. In the CTV environment, this saves media buyers time on doing ad placement research and making arrangements to deliver the ads. An algorithm does all that in a matter of milliseconds. Not only is this method fast, but it is also far more accurate.

• Buying transparency. Programmatic marketing avoids traditional advertising obstacles thanks to its ad placement tools. Advertisers can now exactly understand their ad destination and have an insight into how viewers see ads, along with getting a good understanding of brand advertising examples. This knowledge is critical for comprehending current campaign efficiency and planning future ones.

• Campaign reports and quick optimization. Since all the processes are automatic, programmatic marketing platforms can hold logs and other records, allowing marketing specialists to conduct analytics based on them. Not only does this allow campaign reporting, but it also allows campaigns to be quickly hotfixed if something goes wrong. This also allows for the implementation of SPO, or supply path optimization, to ensure that all facets of the programmatic transaction are performing at peak efficiency. 

• Real-time stats. This point complements the previous one. Programmatic platforms offer real-time updates that greatly facilitate decision-making. Now CTV advertisers have more tools than ever to successfully plan new ad campaigns.

How to Join Programmatic CTV?

To participate in open auctions as an advertiser, it’s enough to register with one of the DSPs. After completing the registration, you can start filling up the campaign details, setting up targeting options, uploading creatives, and planning your budget. As soon as uploaded content passes moderation and the payment details are settled, you can lay back and enjoy the autopilot as you join the future of digital advertising.

Publishers, in turn, will have to register on one of the SSPs or private ad exchange platforms, like TheViewPoint. In case you’re not willing to participate in auctions but want to deal with a specific advertiser instead, you can utilize preferred or guaranteed buy methods. Ad monetization platforms for publishers empower them to track ad destinations, ad pods, frequency, pricing plans, partnered advertisers’ info, and other crucial data for a profitable and credible programmatic marketing approach.

Takeaways

Laying out the different programmatic mechanisms and opportunities is enough to showcase the unique ability of these advertising tools to deliver precise and targeted ads that benefit advertisers, publishers, and viewers. Programmatic is friendly to new users and offers tangible benefits for experienced professionals. From this standpoint, its yearly growth is unsurprising.

Nonetheless, programmatic CTV ads are clearly not a panacea from all advertising misfortunes. The CTV industry is a newborn among other programmatic fields and will evolve and develop as time goes on. However, for those media specialists who want to get in ahead of the rest, programmatic is the way to go.