What is Programmatic Advertising?
The automated buying and selling of digital advertising space using algorithms and real-time bidding technology.
Programmatic advertising is the automated buying and selling of digital advertising inventory using software algorithms and real-time bidding (RTB) technology. Instead of manual negotiations, programmatic platforms use data and machine learning to purchase ad space automatically, targeting specific audiences across websites and mobile apps in milliseconds.
Why It Matters
Programmatic advertising increases efficiency by automating time-consuming manual processes and enables precise targeting at scale. It provides better campaign optimization through real-time data analysis and allows advertisers to reach audiences across multiple platforms. Publishers benefit from increased competition for their inventory, often resulting in higher eCPMs.
How to Calculate
Programmatic performance metrics include: Win Rate = (Won Auctions ÷ Total Bids) × 100%, Bid Response Rate = (Responses ÷ Requests) × 100%, eCPM = (Total Spend ÷ Impressions) × 1000, and Average Clearing Price = Total Spend ÷ Won Auctions.
Industry Benchmarks
| Category | Average | Good Performance |
|---|---|---|
| Display Programmatic | $0.50 - $2.00 CPM | $3.00+ CPM |
| Video Programmatic | $5.00 - $15.00 CPM | $20.00+ CPM |
| Mobile Programmatic | $1.00 - $4.00 CPM | $6.00+ CPM |
| Connected TV | $15.00 - $30.00 CPM | $40.00+ CPM |
Best Practices
Use first-party data for better targeting and higher performance. Implement proper brand safety measures and fraud detection. Set appropriate bid floors to maintain inventory value. Utilize multiple demand sources to increase competition. Monitor viewability and ad quality metrics alongside basic performance indicators.
Examples
A retail brand uses programmatic advertising to retarget website visitors across 10,000+ mobile apps, achieving 3x higher conversion rates than broad targeting. A gaming company implements programmatic video campaigns that automatically optimize bids based on user LTV predictions.
Notes
Programmatic advertising accounts for over 85% of US digital display ad spending. Privacy regulations and cookie deprecation are driving evolution toward contextual targeting and privacy-preserving technologies. Header bidding and server-to-server integrations are improving auction efficiency and reducing latency.