Programmatic Advertising 101 - Definitions You Need to Know - Shelly Palmer

By Thought Leaders Archives

We're busy planning our 7th Annual Media Technology Summit and we're going to devote quite a bit of time to the subject(s) of programmatic advertising. While it is one of the most overused phases 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. And, hopefully, you and your colleagues will attend our upcoming Media Technology Summit (If you've read this far, email me for a discount code – you deserve it.) and be total experts on the subject.

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 as you teach Geek School for the C-Suite. 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
  • How Non-Transparency Can Help Your Business

I'm looking forward to seeing you October 23rd at the Sheraton Times Square for the 7th Annual Media Technology Summit where you will learn a little, teach a little, see old friends, meet new ones and show off your programmatic prowess.

Shelly Palmer is Fox 5 New York's On-air Tech Expert (WNYW-TV) and the host of Fox Television's monthly show Shelly Palmer Digital Living. He also hosts United Stations Radio Network's, Shelly Palmer Digital Living Daily, a daily syndicated radio report that features insightful commentary and a unique insiders take on the biggest stories in technology, media, and entertainment. He is Managing Director of Advanced Media Ventures Group, LLC an industry-leading advisory and business development firm and a member of the Executive Committee of the National Academy of Television Arts & Sciences (the organization that bestows the coveted Emmy® Awards). Palmer is the author of Television Disrupted: The Transition from Network to Networked TV 2nd Edition (York House Press, 2008) the seminal book about the technological, economic, and sociological forces that are changing everything, Overcoming The Digital Divide: How to use Social Media and Digital Tools to Reinvent Yourself and Your Career; (York House Press, 2011) and Digital Wisdom: Thought Leadership for a Connected World (York House Press, 2013). For more information, visit shellypalmer.com.

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