Programmatic advertising, explained plainly

Open a news site and an auction runs in the first 200 milliseconds. Your browser reports a free ad slot, several systems bid, the highest wins, the ad loads. This happens billions of times a day.

The parties and what they take

Add up that column. In unfavourable chains less than half your budget reaches the publisher. Advertiser association studies have repeatedly found figures around 50 to 60 per cent, with an unattributable remainder sometimes above 10 per cent.

The four ways to buy

1. Open auction. Anyone may bid: largest reach, least control, highest fraud risk.
2. Private marketplace. A publisher invites selected buyers. Better slots, higher price, a far cleaner environment.
3. Preferred deal. Fixed price, no guaranteed volume, you see the inventory first.
4. Programmatic guaranteed. Fixed volume at a fixed price, handled automatically. Effectively a direct booking with technical plumbing.

Small and mid-sized budgets almost always do better on levels 2 and 4. The open auction is cheap per contact and expensive per effect.

What you can and should control

• Viewability threshold. Demand at least 70 per cent viewable impressions, not the industry minimum definition.
• Inclusion lists. Work from a positive list of vetted publishers rather than a negative list. Positive lists are smaller, dearer per contact and considerably cleaner.
• Frequency cap. Three contacts per person per week is enough for most campaigns.
• Fraud verification. An independent service costs one to three per cent and regularly finds double-digit shares of invalid traffic.

When to skip it

If your target market is a few thousand people and you know the three trade titles they read, book there directly. You pay a higher cost per thousand and get more effect per pound, because no chain sits in between.

Automated buying pays when you need reach at a breadth you can no longer negotiate by hand.