Programmatic advertising: Key terms and acronyms explained

We would be remiss if we didn't start off with a definition of programmatic advertising.

 

Programmatic is the automated buying and selling of digital advertising.

It is used by multiple media-buying platforms including DSPs, ad exchanges and agency trading desks.

 

There are various programmatic models, here are four of the most common:

 

Preferred deal: A non-auction model with a fixed CPM and non-guaranteed inventory.

 

Programmatic guaranteed/direct: A non-auction model with a fixed CPM and guaranteed inventory.

 

Private marketplace/exchange: An auction model that uses real-time bidding and price floors. It is open to an invitation-only group of buyers.

 

Open exchange buy: An auction model based on real-time bidding and variable CPM. It is open to any buyer.

Here are more common marketing terms and acronyms you'll come across working with programmatic ad tech.

 

Ad exchanges 
 

Ad exchanges are auction-based, often highly automated, digital marketplaces that enable multiple parties including advertisers, publishers, ad networks, demand-side platforms, and sell-side platforms to buy and sell display, video and mobile inventory.

 

Ad impressions
 

An ad impression is a digital ad being called from its source and counted once.

 

Ad inventory 
 

Ad inventory is the ad space that a publisher can make available for advertising. Ad inventory can be categorised as premium, remnant or long-tail.

 

 

Ad networks are aggregators of advertising inventory that package it together to sell at an increased margin.

 

Ad server 
 

An ad server is a platform that stores and delivers digital ads to web browsers or mobile apps. It also provides reports on the performance of those ads, measuring all activity by the same methodology for the purpose of fair comparison.

 

 

An ad tag is a snippet of code on a website that communicates with ad servers to make the correct digital ad appear on a webpage or in an app.

 

Black list 
 

A blacklist is a list of IP addresses that are suspected to be sources of spam, or are suspected to be fraudulent and have been placed on an anti-spam database. Public blacklists are databases that are openly available, but companies often also have their own private black lists. It's opposite number is a white list.

 

Bot traffic (or non-human traffic)
 

Bot traffic consists of ad impressions made by bots rather than humans. Bots, or web robots, are software applications that perform simple tasks on the Internet. While they have some constructive uses, they are most often associated with fraudulent activities, such as mimicking a human's view of an ad.

 

Brand safety
 

Brand safety technology ensures ads do not appear in any context that might damage the brand image or reputation. The automation of programmatic advertising means brands do not always know where their ads will appear, so brand safety practises should limit exposure to inappropriate content on a publisher's site. [Editor's note: See British Gas, O2 and M&S ads appear on "paedo and incest" websites, according to The Sun for an example of why brand safety technology is important.]

 

Cookie sync or match 
 

Cookie synching is the process of linking the user identifier (the cookie ID) from one technology to another. It helps advertisers to make better bidding choices and target users more effectively.

 

Cost per action (CPA)
 

Cost per action is the average cost of a single conversion (which can be defined as any desired action a user may take, such as requesting a brochure) during a marketing campaign.

 

Cost per thousand (CPM) 
 

Cost per thousand is the price an advertiser pays for 1,000 ad impressions.

 

Data management platform (DMP)
 

A data management platform is a centralised platform used by agencies, publishers and marketers to manage and merge data such as cookie IDs. A variety of data sources can be combined within the platform to generate audience segments for improved targeting.

 

Dynamic creative optimisation (DCO)
 

Dynamic creative optimisation allows marketers to create multiple versions of the same ad from a single ad tag, driving sophisticated targeting and optimisation. Ad creative is broken down into individual elements and these are pieced together in real time to deliver the most relevant ad to individual users.

 

Deal ID 
 

A deal ID is a unique number assigned to an automated ad buy that allows the buyer and seller to identify one another.

 

A demand-side platform enables advertisers and agencies to automate the purchase of display, video, mobile and search ads. A DSP assesses the attributes of every single ad impression and can assign a bid based on those attributes. By removing rate negotiation and manual ad insertion orders, the purchase of targeted advertising across a wide variety of publishers and platforms becomes quicker and more efficient.

 

First-party data is information collected by digital publishers about their visitors' behaviour. First-party data often includes CRM, subscription and social media data. This type of owned data is often seen as more valuable than external data sources as it typically has a higher degree of accuracy.

 

Long-tail ad inventory 
 

Long-tail ad inventory is aggregated inventory from less popular or well-known publisher sources. Programmatic enables advertisers to combine disparate sources of long-tail inventory to reach highly targeted niche audiences.

 

Programmatic A/B testing
 

Programmatic A/B testing is the automated testing of different versions of an advertisement to determine the highest performing ads and remove ineffective versions

 

Price floor
 

The lowest price a seller will accept for impressions.

 

Real-time bidding enables the buying and selling of digital advertising through auctions which take place in a timeframe of milliseconds – the time it takes for a webpage to load. Auctions take place via media marketplaces such as ad exchanges that connect buyers and sellers, and the price paid for impressions is based on immediate demand.

 

Remnant inventory 
 

Remnant inventory is a publisher’s non-premium inventory, which is usually sold at a discounted rate by a third party via non-guaranteed programmatic buys.

 

Second-party data is first-party data that is owned by someone else, shared by mutual agreement or traded.

 

Second price auction 
 

Second price auctions means the winner of an ad impression pays just one cent more than the next highest bidder. This limits the risk of overpaying for impressions and maintains efficiency in programmatic.

 

A supply-side platform is a software platform that enables publishers to automatically sell display, video, and mobile ad impressions, maximising the price they can charge for these. A SSP allows publishers to access a large pool of potential buyers including ad exchanges, networks and DSPs in real time, and to set a minimum price known as a price floor.

 

Targeting allows relevant advertising to be served based on various criteria. Behavioural targeting analyses a user’s past activity to determine the advertising they are most likely to respond to, while contextual targeting serves relevant ads based on the content of a web page. Advertising can also be targeted according to demographic data such as age or gender, and by geography, where a user’s IP address is used to determine their location.

 

 

Third-party data is information that is aggregated from platforms and websites owned by third parties. It comes from a wide variety of sources including surveys and panels, cookie-based tracking, opt-in digital tracking, public records, registration data, and offline transaction information such as loyalty schemes.

 

 

Trading desks perform digital media trading as a managed service, and are seen as experts in the use of data and technology. Those not owned by large agency holding groups are know as independent trading desks.

 

Viewability 
 

Viewability is an advertising metric that tracks whether users can actually see impressions. For example, some impressions may be on a part of a webpage that the user did not scroll to.

 

A white list is a database of approved websites where an advertiser is happy for its ads to appear. It's opposite number is a black list.

 

Win rate is a ratio that is used to measure the effectiveness of bid strategy. It is calculated by dividing the total number of impressions won by the total number of bids submitted.