What is Programmatic Advertising? Complete Guide 2024

To talk about programmatic advertising, we first need to understand how digital advertising works in general. Yes, that advertising that feels closer to us, which doesn’t seem as “complex” initially or as inaccessible as the term “programmatic” might sound. In this article, we’ll tell you what this concept is about: its beginnings, evolution, technologies, advantages, disadvantages, future trends, and much more.

Introduction to Programmatic Advertising

To understand digital advertising, we need to go back to the early days of the internet and how this business emerged.

As internet traffic began to increase, the companies owning that traffic (those visitors) saw the opportunity to monetize those visits and began offering spaces on their websites to display third-party ads.

The task was far from simple, as many steps were required to activate an advertising campaign. Here are just a few examples to give you an idea of how complex it was:

1. The advertiser had to decide on which sites to display their ad with a high degree of uncertainty, as understanding a website’s audience profile was often a challenging task.
2. The site owner had to find advertisers, show them the daily visit counts, the audience profile, and their behavior on the site. With this information, they aimed to attract brands looking to invest in advertising.
3. The advertiser had to contact each site owner via email or phone to understand their statistics and gauge the potential reach this website could offer their brand.
4. They then had to agree on a pricing model for the advertising space, negotiate, and finalize a purchase of that space.
5. Creative pieces were then sent via email, and the campaign began, which was very complex to measure, particularly in terms of the reliability of those reports.

Due to these significant challenges, an industry that continued to grow found solutions to these problems:

1. A way was created for brands to easily find a list of websites to promote their brand, sorted by price, buying model, and audience profile, creating a version of what DSPs (demand side platforms) are today.
2. Software solutions were also created that allowed different sites globally to connect to a marketplace. They connected to a demand hub in a coordinated manner via a protocol. This accelerated the growth of site offerings within DSPs, providing brands with more options, ease, and scalability for advertising. Additionally, website owners had an automated way to connect with their clients: advertisers. They stopped using emails!
3. Audience providers, known as DMPs, appeared. These were software solutions with databases of people classified by different criteria. These databases could connect to DSPs, allowing advertisers not only to choose the website to display their ad but also to advertise to a specific audience profile.
4. The problem of measurement was solved by creating what is now known as an AdServer, which monitored traffic passing through its servers.

So, to advertise on the internet, we primarily need three components. Of course, a detailed analysis can reveal dozens of elements, but for the purposes of this article and to contribute to lowering barriers related to the topic, we’ll mention only the main elements representing the dynamics of programmatic buying:

1. Advertiser / Brand: The company or person seeking to deliver an ad or message to a specific target audience. They create, design, or produce the message that will be sent via the DSP.
2. Target Audience: The group of people identified as qualified to evaluate the value proposition and therefore will receive the message. We can reach them by buying data in a DMP or simply selecting the inventory (places or sites where ads will be displayed).
3. Advertising Space: This is where the ad will be shown. It’s the place where the target audience can view the ad depending on multiple factors determined by the technologies involved (the inventory). These are all the websites connected to the SSP used in each case.

These three components exist throughout the digital advertising ecosystem, whether in what we commonly call the programmatic ecosystem or in all-in-one advertising solutions or walled gardens like Google Ads, Meta, TikTok Ads, Taboola, or Amazon. They all have a technological architecture that connects brands with audiences within an advertising space.

 

 

Okay, but then, where does this differentiation between programmatic and non-programmatic advertising come from?

In the digital marketing industry, programmatic advertising is typically referred to as a set of tools that, when interconnected correctly, allow us to build our own DSP + DMP + SSP + AdServer system using different independent providers for each component as needed for each campaign’s goal.

Walled garden solutions are usually excluded from the concept of programmatic advertising due to the inability to select these components in a personalized way: for example, Meta does not allow us to select the audience from any DMP, but only from the one already integrated within its tool.

As we will see later, programmatic advertising can be very powerful if used well by an expert team, and it can also complement investments in all-in-one or walled garden platforms very effectively.

Programmatic advertising is undoubtedly a key tool to reach specific audiences in a personalized and efficient way across innovative media. It is based on the buying and selling of ad spaces through an automated method that segments audiences using specifically selected data and algorithms. Thus, ads will be automatically shown to the most suitable audience, optimizing the return on advertising investment. We will delve a bit deeper into this next.

Now that we have covered the basics of this topic, we can introduce more complex concepts that will give you a good idea of what programmatic advertising is. We also hope this information brings you a bit closer to a world that can sometimes seem out of reach.

 

Technologies of Programmatic Advertising

To do this, we will discuss some technologies present in digital advertising, but specifically worth mentioning in programmatic advertising due to the possibility of customizing them or their differentiation from the closed advertising world (walled gardens).

• Real-Time Bidding (RTB) Algorithm: This is a software or algorithm powered by artificial intelligence or machine learning, which defines when to show an ad, what ad to show, where to show it, and to whom to show it. It is a system that will take into account a large number of variables to define the most appropriate way to distribute ads. Each DSP and SSP communicate considering real-time bidding parameters. To give a very simplistic example, if a brand is willing to pay more for a space than another, that ad will have priority and therefore will be shown first, the cost of showing it will be higher, but the space will be secured. In contrast to this logic, if an ad shows more signs of rejection than another by the audience viewing it, it will lose priority within that inventory. Thus, the algorithm’s equation will determine second by second under what conditions and at what price these ads are shown. Each DSP will charge us a fee called Tech Fee, which among other things monetizes the use of these algorithms.
• Data Management Platforms (DMPs): These allow collecting, storing, and analyzing audience data in real time, facilitating the delivery of ads to specific users based on their interests, behaviors, and demographic characteristics. They are platforms that automatically connect to DSPs and allow us to buy different sets of audiences to show them the brand’s ads.
• Demand-Side Platforms (DSPs) and Supply-Side Platforms (SSPs): These platforms facilitate the process of buying and selling online ad spaces. DSPs allow advertisers to bid for ad impressions in real-time. There, they upload their images and videos, set up campaigns according to budget, and define audiences to show those ads. On the other hand, SSPs allow owners of ad spaces (inventory) to maximize their revenue by selling ad impressions automatically. They allow, for example, an online newspaper to sell its spaces automatically for banners without needing to talk to an intermediary.
• Ad Exchanges: Platforms that facilitate the buying and selling of advertising inventory in real time through automated auctions. These platforms connect buyers (advertisers) with publishers (space owners) and allow the purchase of ad impressions individually, based on the audience and context.
• AdServer: These are platforms that can connect to our entire advertising ecosystem, allowing us to monitor with great detail what happens with the internet traffic we are paying for, who sees our ads, under what conditions, where they see them, how many times they see them, among other factors. The AdServer is a complementary tool to the analytics usually provided directly by DSPs. It is a second, impartial look at what happens with our advertising investment.

 

Advertisers seek to buy ad spaces on platforms called DSPs, and publishers or ad space owners make their inventory available on platforms known as SSPs. Ad Exchange is the platform that will connect both and allow the purchase of ad impressions according to audience segmentation, which will be done through DMPs. All of this, which happens in seconds, will be possible thanks to technologies like Machine Learning that DSPs use for RTB, which enable real-time data analysis.

These technologies are not necessarily independent but work together to optimize the process. Therefore, it is important to have an expert team capable of maximizing their benefits.

Many providers of these technologies offer several of these components in an integrated solution under the same umbrella, as we will see below.

Main Technologies to Consider

There are many providers for each component of a programmatic advertising strategy. For this reason, we will mention the main technologies that Boomit has used and fully trusts.

Google DV360

Yes, after all we talked about earlier, you might be surprised to know that Google, besides offering a closed solution, also offers a DSP. The truth is that outside the closed solutions there is business, and Google knows how to take advantage of it too, with a very complete solution that also connects to YouTube. You will find in Google a very flexible tool connected to the main SSPs worldwide, both in a Web and Mobile environment, making a wide variety of ad formats and ad spaces viable.

DV360 is the evolution of Google’s old platforms, DoubleClick Bid Manager, Campaign Manager, Studio, and Audience Center, offering comprehensive management of the Programmatic environment. In some ways, Google always tends to bundle its solutions, even within an open environment to the complexity and customization that Programmatic offers. Within DV360, we have different SSPs and DMPs with integrated modules for campaigns, audiences, creativity, inventory, and insights, which work together to simplify the entire campaign process, from planning and creativity to optimization and result measurement.

In addition to automating the bidding process and having direct access to a variety of publishers and advertising exchange platforms, DV360 has advanced audience segmentation capabilities and an integrated creative space to design ads and preview locations.

Amazon Advertising

This is Amazon’s DSP, which, in addition to providing access to its inventory within the well-known Amazon Marketplace, works as a comprehensive programmatic solution, offering SSP, DMP, and AdServer solutions that are very well positioned worldwide. Amazon Advertising is positioned as a very solid platform in the United States.

 

Xandr (Microsoft Invest)

The platform recently acquired by Microsoft, now called Microsoft Invest, which also has Netflix’s global inventory under its control, is also part of our star technologies.

Xandr’s core functionality includes a modern approach to audience targeting and segmentation, surpassing older methods like cookie-based targeting. It offers multi-device targeting capabilities and buying modes based on ad visibility. Its infrastructure is designed to simplify how advertising is accessed and optimized, always aiming for the market price most suitable for advertising auctions.

Xandr, DV360, and Amazon Ads present similar general features. They all allow access to almost the same inventories except for specific agreements, such as YouTube with Google for obvious reasons, Netflix with Microsoft, or Amazon with its own DSP. In particular, Xandr has allowed us to achieve better results when the central project goal is to lower CPM to maximize reach and impressions, but due to the dynamism of the advertising environment, it is complex to make a statement beyond personal experience.

 

Mediamath

Another leading platform we can mention is Mediamath, which provides features similar to the previous two mentioned. In this case, we can highlight that Mediamath is a platform that is simple and intuitive to use compared to DV360 and Xandr. This can be an advantage if you want to delve into the world of programmatic DSPs and do not have a highly experienced team.

In contrast, the entry barriers for advertising on Mediamath are quite high in terms of minimum investment, so if you are not a brand with a high budget for campaigns, you will hardly be able to get access to an account and qualified support directly from the company.

 

Lotame

This is a platform (DMP) that allows us to collect, organize, and activate audience data from multiple sources. Like Mediamath, it is a relatively simple technology to use and they have dedicated support that greatly assists in managing the purchasing processes. The company is very careful about privacy-related aspects, as they handle people’s data and devices and must comply with international regulations to the letter.

In addition to using it as a platform itself, from Boomit, we have made specific agreements to impact niche audiences within certain inventory sets for a campaign. We have had excellent results on several occasions. You will find Lotame connected to both Google DV360, Xandr, and Mediamath.

 

Magnite

If you are not the inventory owner, you will hardly use this tool. But we consider it important to mention it as one of the leading companies in SSPs. Magnite has developed all kinds of solutions within the advertising architecture, but one of its strongest is its SSP. From Boomit, we have repeatedly connected to the inventory provided by Magnite to maximize the results of the campaigns we implement for our clients. These platforms already have native connections with the main DSPs.

 

Fyber

We couldn’t miss mentioning a technology specialized in the mobile environment. This company develops solutions for mobile app developers to connect their products and monetize them efficiently. If you have an app and are willing to show ads to your users, Fyber is one of the leading mobile SSPs with automated technology that aims to maximize user earnings in your app.

Additionally, Fyber provides DSP-side solutions, including an interesting feature called Offer-wall, which uses incentive dynamics for users of different games to perform actions within an app in exchange for benefits.

Within this same profile of platforms and companies, we can also mention Ironsource and Tapjoy, technologies widely used by Boomit’s technical teams for the Mobile Apps ecosystem.

 

Sizmek (by Amazon Advertising)

To conclude the description of this set of technologies, we must mention an AdServer, one of the two vying for market share alongside Google’s, of course.

Sizmek Adserving solution allows you to obtain much deeper and reliable information regarding:

• Who is viewing your ads.
• Where they are viewing them.
• How long they are viewing them.
• What level of overlap your ads are having across your media distribution.
• Reliability of the reports delivered directly by the platforms.

Boomit’s technical team opinion: This tool is for companies that already have a certain maturity in their advertising investments, as it generates an incremental cost in CPM. For this investment to be profitable, we should be investing above USD 150-200K per month.

Additionally, it is a tool that requires significant dedication from the team for setup and deployment.

The information it provides is truly valuable, especially as an impartial referee outside your DSP, DMP, and SSP provider.

We always recommend using Sizmek in cases where the advertising strategy is heavily based on the Google ecosystem, and vice versa if we are using an ecosystem with a predominant Amazon component (less common outside the United States).

Next, we’ll tell you how you can integrate programmatic advertising into your marketing strategy.

 

What is Needed for Programmatic Advertising?

To effectively incorporate this tool, proper planning is necessary:

Specialists in the field: Programmatic advertising requires trained personnel to manage and optimize your campaigns effectively. You’ll need professionals with experience in data analysis, campaign optimization, and digital media strategy to maximize the benefits of this type of advertising. This experience should be specific to the technologies you intend to use, meaning you’ll need a team with previous experience in creating and optimizing advertising campaigns within the DSP you’re using, as well as experience in interconnecting various providers selected based on campaign objectives and budget.

Clear and achievable objectives: Programmatic advertising is not suitable for every case. Make sure you are well advised in this regard. Avoid being led by unrealistic illusions about what you can achieve with these technologies. Clearly define what you want to achieve, what level of risk you are willing to take, and based on that, request your technical team to propose a specific strategy and architecture to achieve the objectives.

Access to technology: Many of the platforms mentioned earlier in this Performance Trend have stringent requirements to start using them. Plan ahead to avoid surprises when a DSP requires a minimum investment commitment or a DMP does not provide the audience at the expected CPM. You’ll need access to specialized platforms and tools such as Demand-Side Platforms (DSPs), Data Management Platforms (DMPs), and Supply-Side Platforms (SSPs). These tools will allow you to buy and sell advertising inventory in an automated manner and optimize the performance of your campaigns.

These are some of the essentials to maximize the opportunities offered by programmatic advertising.

Advantages of Programmatic Advertising, Strengths, and Weaknesses

Next, we’ll tell you what its advantages are and also those weaknesses that must be considered when implementing it in a strategy.

Advantages:

• Flexibility and control: The primary advantage of programmatic is the flexibility to build your own advertising architecture by customizing audience providers, ad space, and pricing models.
• Transparency: These types of advertising architectures are usually more transparent because you can closely control each component of the advertising cost you are paying. When you pay a certain CPM, that price is composed of multiple sub-prices. This occurs on any platform, whether programmatic or not. The difference is that in programmatic, you can know how much your audience provider, RTB software provider, SSP, DSP, and AdServer are charging you. This way, you take control of your costs and can make strategic decisions by removing or replacing providers in each of these cost layers.
• Precision in segmentation: Programmatic advertising allows for precise segmentation based on demographic and behavioral data, ensuring that ads are shown to the right users and thereby increasing campaign effectiveness and investment optimization. This isn’t fundamentally different from non-programmatic advertising, but here we highlight accessing niche audiences that are often impossible to reach in closed solutions (walled gardens).
• Cost efficiency: Due to the transparency of cost components, extensive inventory reach, and variety of providers, the programmatic ecosystem is less monopolistic. This often allows for advertising strategies with lower costs but equivalent or even superior reach compared to closed solutions.
• Access to different and high-impact formats: Programmatic advertising providers make significant efforts each year to differentiate themselves from closed solutions. One of the aspects that sets them apart the most are the ad formats offered. Depending on the DSP you use and the inventory providers, you can access innovative ad formats such as Rich Media, Connected TV, Digital Out of Home, Digital Audio, Augmented Reality, among others.

Weaknesses:

• Risk of fraud: Just as personalization is an advantage, it also poses a risk, as technical errors can occur and crucial aspects of an advertising strategy can be overlooked. It’s important to work with reliable partners and use third-party verification tools to ensure maximum transparency, visibility, and security. This is where specialists in the field play a crucial role.
• Technical complexity: Programmatic advertising can be complex and require significant technical knowledge to implement and optimize campaigns successfully. Therefore, it may be necessary to consider working with specialized partners or agencies.

Programmatic advertising offers significant advantages in terms of automation, innovation, precision, efficiency, and flexibility, but also presents challenges in terms of transparency and technical complexity.

 

When is it Recommended to Add Programmatic Advertising to Your Strategy?

At Boomit, we recommend using programmatic advertising in the following cases:

• You need to diversify your media strategy because you have already reached high saturation levels in current “Walled Garden” channels (Google, Meta, TikTok).
• You have a strong goal to lower your CPM and maximize your reach.
• You need to innovate in terms of ads and advertising spaces.
• You need a niche audience that you are not finding in your current media mix.
• You need greater control and transparency over what is happening with your advertising investment.

At Boomit, we recommend building a customized strategy for each company and objective. If your business is just starting out in the digital world, we help you build your entire marketing and advertising ecosystem so that you can start investing on solid foundations that allow you to grow profitably.

Alternatively, if you want to enter new markets and don’t know how, we will help you step into those geographies and measure the potential for your business.

Based on your project’s objectives, our team will identify which programmatic technologies are most suitable to achieve them. We will define which DSP, audience, inventory, ad format, and technology costs the project will have to ensure its success.

 

The Future of Programmatic Advertising

This advertising modality has experienced significant evolution in recent years. In 2023, automation in the purchase of advertising spaces represented 72.3% of total investments in digital media, according to data from IAB Spain. It is projected that this figure will increase to 80% by 2024. Here are some trends we expect to see in the future:

• Increased personalization: As artificial intelligence and machine learning technologies continue to advance, we can expect greater capabilities for precise ad personalization and segmentation based on target audiences. Real-time bidding promises to be more efficient thanks to more sophisticated Ad Exchanges capable of processing information faster.
• Visual advertising: Facing a more demanding and saturated audience, visually appealing ads will have an advantage in improving brand recognition. Creative teams will be challenged in an environment where we compete for user attention on screens.
• Integration of data from multiple sources: With changes in first-party and third-party data, and the proliferation of devices and digital channels, integrating data from multiple sources will become even more important in programmatic advertising. This will allow advertisers to obtain a more complete and holistic view of their audiences and optimize their segmentation and personalization strategies.
• Advancements in measurement and attribution: Precise measurement of the impact of programmatic advertising campaigns will remain a key focus area in the future. We expect advancements in attribution measurement that will enable advertisers to better understand the customer journey and the impact of each touchpoint on purchasing decisions.
• Increased emphasis on transparency and security: Transparency and security will continue to be major concerns in the world of programmatic advertising. Advertisers and publishers will continue to demand greater visibility and control over where and how ads are displayed, as well as more effective measures to combat ad fraud and protect their brand.
• Growth of audio and CTV: With the increase in online audio content consumption and the rise of connected devices like smart speakers and smart TVs, significant growth in programmatic advertising in the audio and connected advertising space is expected. This will open new opportunities to reach audiences through innovative ad formats and emerging consumption contexts.

Data and Statistics on Programmatic Advertising

It’s fascinating to see data on how digital advertising has gained strength since the early days of the internet and how advertising investment is distributed among the different forms available today.

We recommend being critical of this information, which is extracted from multiple sources and often constructed based on metrics inferred from public reports whose variables may differ slightly in equivalence.

In the following graph taken from Dentsu’s insights website, we can see how:

• Digital advertising surpassed outdoor advertising in 2006.
• It exceeded print media advertising in 2014.
• It surpassed traditional television advertising in 2017 and has continued to grow rapidly.

By 2025, digital advertising investment is estimated to exceed $500 billion.

Below, we can see how these investments were distributed in the year 2023 according to the categorization we were analyzing in this Boomit Performance Trend.

 

Out of the total global advertising investments, 50% went to the digital environment, totaling USD 424.3 billion. This might surprise you, but the reality is that the digital segment still has a lot of room to grow. With the penetration of mobile devices and increased screen time by users, significant growth is expected in the coming years.

Of that subtotal, USD 302 billion was allocated to automated buying, namely programmatic buying. Within that programmatic buying subtotal, USD 237 billion went to the major closed solutions (Walled Gardens) such as Google, Meta, Pinterest, X, TikTok, etc. This left the open programmatic advertising sector with a total of USD 65.7 billion in 2023.

What this shows is that Walled Gardens dominate the digital advertising market with their all-in-one solutions and the growth of their flagship products:

• Google Search
• YouTube
• TikTok
• Pinterest
• Facebook
• Instagram
• X
• Among others

If you want to know how this portion of the business is distributed among the industry’s key players we mentioned, we present this chart based on information from The Wall Street Journal in 2021. These numbers may have changed in the past two years, but it is the closest information we could find to complement this report.

 

Final conclusions

As we’ve discussed throughout this article, programmatic advertising is a tool worth incorporating into your marketing strategy, as it is part of the evolution of digital advertising.

As such, it offers a key advantage, which is the opportunity to create a custom advertising architecture in terms of audience provider, ad space, and pricing model, thereby creating a robust ecosystem independent of major advertising monopolies.

It allows for real-time automated operations and detailed segmentation, resulting in a more precise impact of your ads and better return on investment. Moreover, your ads can be displayed on innovative platforms to reach your target audience in ways different from traditional communication methods.

While we understand it’s a complex architecture requiring expertise in strategy, data analysis, and technology, at Boomit we have a team of specialists in Programmatic Advertising Services. Boomit’s paid media team can devise a tailored plan for your business, guiding you towards achieving the best results and becoming the next success story.