While traditional channels necessitate direct deals, digital channels can operate programmatically or directly.
How Digital Media Buying Works
There are three components in the programmatic buying structure:
- Demand-side platforms (DSP). This is where advertisers and ad agencies – that is, media buyers – set up their campaigns, bid on ad inventory, and optimize their ads. It’s one-half of the automated exchange marketplace and allows media buying from multiple sources in real time.
- Supply-side platforms (SSP). This is the other half of the exchange marketplace. It’s where publishers sell their ad inventory.
- Ad exchanges. These are virtual marketplaces that connect the DSPs to the SSPs, so that advertisers and publishers can buy and sell ad inventory through real-time bidding (RTB). Marketplaces can be open, meaning anyone can join, or private, where publishers limit who can participate in the auction.
You may have also heard of ad networks, which could be considered a fourth component in this media-buying ecosystem. These platforms aggregate ad inventory from various sources and match it to advertisers’ needs, serving as intermediaries in the process. Think Google Adsense or Meta Audience Network.
But, as a quick note, programmatic buying also allows direct deals. This is known as programmatic direct buying, which sounds pretty confusing since these are usually two opposing types. The key difference is that ad inventory is sold at a fixed cost per thousand impressions (CPM), with no bidding.
