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How Does Programmatic Advertising Work

Programmatic advertising is a method of buying and selling digital advertising space in an automated manner, using algorithms and real-time bidding (RTB) systems. Here's how it generally works:

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1. Data Collection and Targeting

Advertisers or marketers define their target audience based on various criteria such as demographics, interests, browsing behavior, location, device type, etc. Data management platforms (DMPs) collect and analyze vast amounts of user data from various sources, including cookies, mobile IDs, CRM systems, and third-party data providers.

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2. Inventory Availability

Publishers make their advertising inventory available on ad exchanges or supply-side platforms (SSPs). This inventory includes ad space on websites, mobile apps, videos, and other digital platforms.

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3. Real-Time Bidding (RTB)

When a user visits a website or app, the publisher's ad server sends an ad request to an ad exchange or ad server. Advertisers, through demand-side platforms (DSPs), analyze the available ad impressions based on the user data and bid in real-time for the impressions that match their targeting criteria.

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4. Ad Serving

Once the winning bid is determined, the ad is served and displayed to the user on the publisher's website or app. This entire process happens in real-time, allowing advertisers to reach their target audience with relevant ads at the right moment.

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5. Continuous Improvement

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Programmatic advertising allows for continuous optimization and refinement of campaigns based on data-driven insights. Advertisers can A/B test different creatives, messaging, and targeting strategies to improve the effectiveness and efficiency of their campaigns over time.

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