A Plain-English Guide & Glossary to Programmatic Advertising

by | Aug 7, 2020

Programmatic ads give brands or agencies the ability to purchase within milliseconds because of the sophisticated ecosystem of algorithms. The buying and selling of ads happen in real-time through the automated system.

Here’s a brief definition of programmatic advertising: “the automated process of purchasing and selling ads that are online.” This method gives advertisers the ability to place their ads across 1000s of websites with little human interaction because of AI-powered algorithms.

Media Types of Programmatic Advertising

  • Display ads (banners)
  • Video: Pre-Roll, Mid-Roll and Post-Roll
  • Native Display ads
  • Native Video
  • Connected Television (CTV)
  • Digital Audio
  • Social ads
  • Digital Out-of-Home (DOOH)

Now, onto the acronyms, terms, and phrases you will encounter in the programmatic world

Ad Impression — A digital ad called from its source and counted once.
Ad Inventory — Space a publisher makes available for advertising.
Ad Tag — A snippet of web code that communicates with ad servers to make the correct digital ad appear on a webpage or in an app.
Blacklist — A list of IP addresses suspected to be either fraudulent or sources of spam and have been placed on an anti-spam database. There are open/public blacklist databases, but companies often keep their own private blacklists. Its opposite is a whitelist.
Brand safety — This technology ensures ads don’t appear in any context that might damage the brand image or reputation. With programmatic advertising, brands don’t always know where their ads will appear, so enacting a brand safety protocol should limit exposure to publishers whose content doesn’t fit with your brand.
CPM — Cost per thousand (M is the Roman numeral for 1,000). In the digital ad world, this is most often applied to the cost advertisers pay for impressions, though it can also be attached to clicks, video views, or other audience metrics.
CTV – “Connected Television” is real-time buying of live TV ads airing on internet-enabled over-the-top (OTT) devices or smart TV applications. CTV ads are sold as impressions using software automation and advanced data, reaching viewers who stream content on demand. Ad spots are purchased when viewers match your desired audience, creative messaging then appears in full-screen, 100% viewable environments.
DMP — Data management platforms allow agencies, publishers, and marketers to manage and merge a variety of data to break audiences into segments for improved targeting.
DCO — Dynamic creative optimization allows marketers to create multiple versions of the same ad from a single ad tag. This helps funnel the most relevant ads to individual users.
DOOH — “Digital Out-of-Home” refers to programmatic buying, selling and delivery of ads on digital billboards, screens and signage in environments accessible to the public. Electronic billboards along the highway, bus stop shelters, airport baggage claims, mall food courts and hotspot kiosks are examples of DOOH.
DSP — Demand-side platforms enable 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, this speeds the purchase of targeted advertising across a wide variety of publishers and platforms.
Exchanges — Auction-based, often highly automated digital marketplaces of display, video, and mobile inventory. These are open to advertisers, publishers, ad networks, demand-side platforms, and sell-side platforms.
First-party data — First-party data about visitor behavior collected directly by digital publishers. This type of information, such as subscription and social media data, is often more accurate—and seen as more valuable—than data coming from external sources.
Optimization — in digital advertising it refers to the process of changing the current inventory mix to improve a certain metric in order to increase a campaign’s potential to meet its desired objective or outcome
Programmatic A/B testing — The automated testing of different versions of an ad to determine the highest performers and to remove ineffective versions.
Programmatic Buying — the process of executing transparent media planning and buying using automation. In most cases, programmatic buying is fueled by the use of advanced audience data through digital platforms such as exchanges, trading desks and demand-side platforms (DSPs), which helps create operational efficiency for both the buy and sell sides. Agencies use programmatic on behalf of their advertiser clients to increase marketing efficiency, helping them get more out of media budgets.
Programmatic direct — where specified buyers get access to specified inventory that’s not necessarily available from an open marketplace or a supply-side platform (SSP).
Programmatic software — media buying, marketing and advertising software enables agencies and advertisers to make algorithmic purchases of advertising space in real-time using computers. The term “programmatic software” is commonly used to refer to demand-side platforms (DSPs). It is used to automate the buying, placement and optimization of media inventory via a bidding system and typically helps agency teams achieve cost and time efficiencies while simultaneously enabling better targeting of, and personalized messaging to, advertising recipients.
Programmatic TV — refers to TV inventory that is planned, bought and sold on impressions using system automation with the use of advanced audience data, creating value and operational efficiency for both the buy and sell sides.
Programmatic video — refers to the process of buying and selling digital video ads. This process uses real-time data to better target specific audiences in the right place at the right time. It is generally carried out using ad tech such as a DSP.
Price floor — The lowest price a seller will accept for impressions.
RTB — Real-time bidding enables the buying and selling of digital advertising through auctions in the fraction of the time it takes for a webpage to load. Auctions take place through media marketplaces such as ad exchanges, and the price is based on immediate demand.
Remnant inventory — A publisher’s non-premium inventory, usually sold at a discount by a third party through non-guaranteed programmatic buys.
Second-party data — This is first-party data owned by someone else, traded or shared by mutual agreement.
SSP — A supply-side platform is software enabling publishers to automatically sell display, video and mobile ad impressions, maximizing the prices they can charge for these. SSPs allow publishers to access large pools of potential buyers—ad exchanges, networks, and DSPs—in real time, and to set a price floor.
Targeting — This serves relevant advertising based on various criteria. There are different types of targeting: Behavioral (users), contextual (web content), demographic (age, gender, etc.) and geographic, among other criteria.
Third-party data — Information aggregated from platforms and websites owned by third parties. It comes from a wide variety of sources, such as surveys and panels, cookie-based tracking, opt-in digital tracking, public records, registration data, and offline transactions such as loyalty programs.
Trading desk — These perform digital media trading as a managed service and are seen as experts in data and technology. Those not owned by large agency holding groups are known as independent trading desks.
Viewability — a metric that tracks whether users can actually see the ads. measures whether an ad was served in a location where the user had an opportunity to view it. An ad impression is viewable if greater than, or equal to, 50% of the ad’s pixels appear in the viewable space of an in-focus browser tab for at least one second post ad-render.
Whitelist — A database of approved websites where an advertiser is happy for its ads to appear. It’s the opposite of a blacklist.

Who’s Involved in Programmatic Advertising

It might seem that deals take place between a publisher and advertiser, but most of the time it is not that simple. Many parties are involved in the process:

Advertiser (Buyer, Demand Side) – companies that want to buy digital ad space from publishers and put their message in front of their target audience.
DSP (Demand-Side Platform) – software used by demand-side actors to buy publishers’ inventory in a programmatic way.
Ad Agencies – these are companies that work with advertisers to run their advertising campaigns.
Publisher (Seller, Supply Side) – creators of the engaging content across the Internet. Advertisers are interested in working with them because of high traffic volume.
SSPs (Supply-Side Platform) – software for publishers to make their inventory available for sale and increase revenue.
Ad Network – organizations that work with publishers to manage their inventory and sell it to advertisers and/or agencies.
Ad Exchange – a programmatic marketplace that allows online publishers and advertisers to buy and sell ad inventory through auctions.
Third-Party Data Aggregators – companies that sell pre-packaged audience categories to advertisers to help them in impression selection.
Data Management Platforms (DMPs) – organizations that manage data for both publishers and advertisers.
Open Marketplace – virtual action place, with buyers bidding on the billions of ads every second.
Private Marketplace (PMP) – invitation-only real-time bidding auctions where one or several publishers invite chosen advertisers to buy their inventory.

Some Common FAQs at Precision Reach

How will programmatic benefit my advertising? Programmatic empowers you to buy across thousands of sites focusing only on the audience you’ve chosen, rather than managing individual channels or buying ads across dozens of ag media sites. This saves you time and money; allows you to be nimble as you can track, analyze and adjust ad campaigns over time; and makes it easy to reach consumers with the “right message at the right time” across all of their devices.

What are your media types and what do I need to know about them?

Display Banners. The advertiser or agency provides the following banner sizes: 970×250, 300×600, 728×90, 160×600 for desktop, 320×50 for mobile, and 300×250 for both desktop and mobile.
Pre-Roll Video. The advertiser provides their own video content, most commonly 15- or 30-second spots that can be both skippable and non-skippable.
Native Ads. This content advertising is cohesive with the page content and assimilated into the design of the website app. You supply the image, logo, title, description and call to action. We optimize the layout for mobile, desktop and tablet devices.
Digital Audio. Serve 15- or 30-second radio spots to reach farmers on the go through live streaming networks like Spotify, Pandora and iHeart Radio.
Connected TV. 1:1 people-based ad buying on streaming Smart TVs or Over-The-Top devices like Apple TV, Roku, Hulu, Sling, Direct Now and many more.

How is programmatic purchased? Ad space is bought and sold in a digital auction, just like eBay, using real time bidding (RTB) that takes place in milliseconds.

How do you sell programmatic? Campaigns are sold on a cost-per-thousand (CPM) impressions basis, ranging based on the media type and demographic criteria of each campaign.

What is an ad impression? An impression occurs when the ad is delivered to one person. Each impression is auctioned off individually within milliseconds of the webpage opening, and the winner gets to serve their ad.

What are ad tags and how are they used? Tags are codes inserted into webpages to track various metrics and activities. Creative Tags display the creative and track impressions and performance, while Activity Tags–sometimes called “pixels”—track sales leads, click activity, time spent on site, etc.

What is a cookie? A cookie is the mechanism for websites to store data locally. This is what saves your login sessions, site visits, etc. Here are the two types of cookies:

What is a KPI? A Key Performance Indicator is a measurable value; a goal that demonstrates how effectively a company is achieving its marketing objective. For programmatic campaigns, the most common are: Impressions Served, Click Through Rates, Video Completion Rates, Ad Viewability and Conversions.

Do you have benchmarks for click rates and video plays? While every campaign is different for Click Thru Rates (CTR) and Video Completion Rates (VCR), they are mainly dependent on the creative being used and a specific call to action. Here are Precision Reach benchmark metrics for the past 12 months:

We provide third-party reporting for every campaign, including: impressions served, clicks, video completion rates and ad viewability.

What is retargeting and how do you use it? Programmatic retargeting allows you to target previous visitors to your site with display and video ads as they browse the web. Precision Reach includes retargeting at no extra charge for your campaign, providing you with a “retarget pixel” to place on various pages of your website. You can limit the number of retargets per visitor.

Is it possible to “geo fence” at local conferences, trade shows or even my competitor locations? Yes, you have options to radius target around any physical address location. At farm shows for example, Precision Reach utilizes a mobile-only delivery within the fence; then applies a “demo overlay” using Farm Market ID data to reach your target ag audience at hotels, restaurants, WIFI hotspots, etc. during the event. We typically use an 800-meter mobile fence for the event itself, with a 5 to 20-mile radius for the “demo overlay” to ad-serve to the farmers’ laptops, tablets and smart phones during their show visit.

Is there a short video we could share with clients? Click here for 2-minute intro video and here for 8-minute intermediate explanation on Programmatic Advertising.


Programmatic advertising is growing year over year with no decline in sight. Especially using first-party data programmatic to precisely target your best customer prospects. For more insights on Ag data-driven programmatic advertising, email Sales@PrecisionReach.com or call Bob Schenck @ 847-778-1886.