Programmatic Demystified

Programmatic Demystified 

Written by: Stefanie Beach, Founder & CEO, SMB Media Consulting


If you are new to programmatic the most confusing part of getting started are all of the acronyms. Here is a quick down and dirty guide to help you navigate through all the jargon and better understand what you need/want to go live with a programmatic strategy:


So what exactly is programmatic?

Programmatic advertising is a term used in digital marketing that describes the fast-growing computer-based automated buying, selling, placement and optimization of digital advertising.


In contrast with traditional media buying, programmatic buying involves the use of software to purchase digital ads in real time. Its auction-based technology ensures efficiency and scale at a reduced advertising cost. And while there are a lot of moving parts, once you break it down it really is simple to understand.


  • (RTB) Real Time Bidding is the means by which advertising is bought and sold on a per impression basis via programmatic instantaneous auction.
  • Open Market/Exchange is a public RTB auction in which any buyer or seller can participate.
  • (DSP) Demand Side Platform: A technology platform through which buyers (advertisers, ATDs or agencies) can plan, target, execute, optimize and analyze digital media. Examples: The Trade Desk, MediaMath
  • (SSP) Supply Side Platform: A technology platform with a single mission of enabling publishers to manage and monetize their digital advertising inventory. Examples: PubMatic, OpenX
  • (DMP) Data Management Platform: A centralized computing system for collecting, integrating and managing large sets of data and applying it to your advertising strategy. Examples: Lotame, Adobe
  • Exchanges: A technology platform that facilitates the buying and selling of online media advertising inventory between an advertiser and thousands of publishers. It is what brings the buy and sell side together. Examples: Rubicon, AppNexus
  • Header bidding: Publishers offer inventory to multiple ad exchanges simultaneously before making calls to their ad servers. The idea is that by letting multiple demand sources bid on the same inventory at the same time, publishers increase their yield and make more money.
  • Wrapper tag: A string of javascript that simultaneously collects multiple bid requests and responses before passing them through to an ad server. The wrapper also collects various ad tech tags for services such as tracking, analytics and viewability that are implemented throughout a publisher’s webpage without having multiple partners’ tags on the publisher’s pages. 
  • (CPM) Cost per Thousand - It is the cost an advertiser pays for one thousand views of an advertisement.


Programmatic Direct: The non-auction based approach to buying digital display media which can be either guaranteed or non-guaranteed.

  • (PMP) Private Marketplace/Exchange is an invitation only RTB auction where one publisher or a select number of publishers invite a buyer to bid on inventory based on pre-negotiated deal terms. However, the buyer can cherry pick the impressions they want to bid on.
  • (PMPg) Private Marketplace Guaranteed deals allow guaranteed volume and price but does not ensure the guaranteed placement and allows the brand to still pass on the impression.
  • (PMPp) Private Marketplace Preferred gives the deal higher priority access to inventory, but does not guarantee the inventory volume.
  • (AG) Automated Guaranteed provides buyers with all of the traditional guaranteed volume, price and delivery they are used to but flows through programmatic pipes.
  • Deal ID is a unique number of an automated ad buy that matches buyers and sellers based on a variety of criteria negotiated beforehand.


Auction Dynamics:

  • 1st Price Auction: All bidders simultaneously submit bids, so that no bidder knows the bid of any other participant. The highest bidder pays the price they submitted.
    • Example: If you bid, $40 CPM, you pay $40.
  • 2nd Price Auction: Participants submit bids without knowing the bid of the other people in the auction. The highest bidder wins, but the price paid is the second-highest bid.
    • Example: If you bid, $40 CPM, and the next bid is $12, you’d only pay $12.01. 
  • Floors: are the minimum CPM a publisher is willing to sell their inventory for.
  • Max Bid: is the maximum CPM an advertiser is willing to pay.
  • Clearing price: What the winner actually pays at the end of the auction.


Data terms:

  • 1st party data  is YOUR data. This can include data from behaviors, actions or interests demonstrated across your website(s); data you have in your CRM; subscription data; social data; or cross-platform data from mobile web or apps.
  • 2nd party data is basically your first party data that you are getting directly from the source. You can make a deal with a particular publisher or partner brand, whether through your DMP or elsewhere, to offer specific data points, audiences, or hierarchies to that other company.
  • 3rd party data is generated on other platforms and often aggregated from other websites. There are many companies out there that sell third-party data, and it is accessible through many different avenues.


For more information or insight into implementing a programmatic first strategy feel free to reach out for a free consultation.


We look forward to hearing from you.


Stefanie is the founder and CEO of SMB Media Consulting. Being in digital advertising since 2006 and working on the buy and sell side of the business has given her a unique approach to clients business. She lives in the Bronx with her wonderful husband Nick and 6 year old daughter Audrey.