Eli5: how the fuck does programmatic buying work


The way ads are served, how networks like Facebook and Google get involved, how the “auction” between networks takes place – someone explain it to me plz

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Marketer defines their audience criteria in a bidding platform(eg females age 25-40 who make 100k per year, live in the northwest, expressed prior interest in purchasing Beauty products). These are the people in the internet they want to serve ads to. Marketer specifies the max amount they are willing to pay to serve this user an ad (eg. $3.25).

A user on the internet loads a page, there is an ad space available for this user.

The bidding platform sends out signal that this user is available to serve an ad. The bidding platform provides available data in the user. The signal goes out to all marketers on the bidding platform who have indicated they want to advertise to this type of user.

This user happens to fall into the category I described above, all marketers who are interested in this person automatically put in a bid via the bidding platform, the marketer bids go back and forth between interested parties until the max bid is reached (it could be more involved than just max bid in certain cases). Marketers who not interested in this user (marketers who are looking for males age 45+ who are automotive enthusiasts) never see this user and are not offered a bid.

Marketer who won the bid serves their organic face cream ad to the user.

All of the above happens in a fraction of a second.

This is why I find it funny when people are angry that a certain ad type was served to them on a particular site. The ads you are served have way more to do with you than the site you’re visiting LOL.

When you visit CNN.com, they don’t know what ads you’re seeing and they don’t control what ads you’re seeing. With a few exceptions of course (they probably prohibit pornographic ads from being served on their site, for example).

Online advertising is usually served through a network of digital advertising platforms, such as Google Ads and Facebook Ads. These networks are connected to a variety of websites and mobile apps, enabling them to serve ads to their users. When a user visits a website or mobile app, the network will typically run an “auction” to determine which ad should be served. This auction is based on a variety of factors, such as the user’s location, demographics, interests, and other data. The advertiser who is willing to pay the most for that user’s attention will typically win the auction and their ad will be served. The networks will also take into account factors such as the ad’s relevance to the user and the quality of the ad itself. This ensures that the user is served the most relevant and highest quality ads possible. Once the ad is served, the network will track the user’s interactions with the ad, such as clicks and conversions, and the advertiser will be billed accordingly. This is how networks like Google and Facebook make money from online advertising.

When it comes to online advertising, there are a few different ways that ads are served. The most common way is through a real-time bidding (RTB) process. This is a process in which advertisers bid in an auction-style format to have their ad shown on a website or app. When a user visits a website or app, the publisher’s ad server sends a request to the ad exchange, which is a marketplace for buying and selling ads. This request contains information about the user and the publisher’s desired ad format, such as banner ad, video ad, etc. The ad exchange then sends the request to the demand-side platform (DSP), which is a platform used by advertisers to purchase ads. The DSP then sends the request to the ad networks, such as Google and Facebook, which have pools of advertisers. The networks then submit bids for the ad space, and the highest bidder wins the auction. The winning bidder’s ad is then served to the user, and the advertiser pays the publisher for the ad space. The entire process usually takes place in a matter of milliseconds.