Programmatic advertising - meaning & explanation of programmatic advertising
What is programmatic advertising? Usually referred to as programmatic advertising, programmatic advertising is one of the key developments in modern online marketing. It refers to the automated, data-based buying and selling of digital advertising in real time. Instead of booking advertising space manually, algorithms decide within milliseconds which ad is shown to which user - and at what price.
The approach has fundamentally changed digital media buying: more efficient, more precise and significantly more scalable than traditional booking models.
The most important facts in brief
Programmatic advertising refers to the automated, data-based buying and selling of online advertising space in real time.
Adverts are not booked manually, but are displayed to users who match the target group using algorithms.
The centrepiece is real-time bidding (RTB), in which each individual advertisement is auctioned in milliseconds.
The advantages are greater efficiency, precise targeting, real-time optimisation and full measurability of the campaigns.
Programmatic advertising is now standard in digital marketing and can be used across all channels (display, video, audio, DOOH).
What does programmatic advertising mean?
Programmatic advertising describes the automated trading of online advertising space via technological platforms. It is based on user data, target group segments and real-time auctions.
The goal: the right advert, at the right time, to the right person, at the right price.
The traditional manual process of requesting quotes, negotiating prices and making fixed bookings is no longer necessary. Instead, software takes over the entire process - from addressing the target group to delivery and optimisation.
Programmatic advertising explained simply
With programmatic advertising, the process is simplified as follows:
A user opens a website or app
The available advertising space is offered in an auction
Advertisers automatically bid on this impression
The advert with the highest (and most relevant) bid wins
The advert is displayed in real time
This entire process takes less than 100 milliseconds - faster than the blink of an eye.
The most important components of programmatic advertising
Several systems interact to make programmatic advertising work:
Demand-side platform (DSP)
Advertisers control their campaigns via a DSP. This is where:
Define target groups
Bids are set
Budgets are controlled
Creatives are played out
Well-known DSPs are, for example, Google Display & Video 360 or The Trade Desk.
Supply-side platform (SSP)
Publishers use SSPs to offer and monetise their advertising space. The aim is to achieve the best possible price for each impression.
Ad Exchange
The Ad Exchange is the marketplace where supply (SSP) and demand (DSP) come together. This is where the real-time auction takes place.
Data Management Platform (DMP)
A DMP collects and structures user data, e.g:
demographic characteristics
interests
surfing behaviour
Purchase intentions
This data is crucial for precise targeting.
Real-Time Bidding (RTB) - the centrepiece of programmatic advertising
The best-known method in programmatic advertising is real-time bidding (RTB). Each individual advert is auctioned separately.
Important:
An advertising space is not bought as a lump sum
Instead, each impression is evaluated individually
In addition to the bid, qualitative factors also play a role, such as
Relevance of the advert
target group fit
historical performance
Programmatic advertising vs. traditional online advertising
Traditional advertising | Programmatic advertising |
|---|---|
Manual booking | Fully automated |
Fixed placements | Real-time impressions |
Broad target groups | High-precision targeting |
Little flexibility | Dynamic optimization |
Programmatic advertising not only replaces processes, but also fundamentally changes the logic of media buying.
Targeting options in programmatic advertising
A key advantage of programmatic advertising is the enormous range of targeting options:
Demographic targeting (age, gender, income)
Geographic targeting (country, city, radius)
Behavioural targeting (surfing & purchasing behaviour)
Contextual targeting (environment & content)
Retargeting (addressing users again)
Lookalike audiences (similar users)
The better the database, the more efficient the campaign.
Advantages of programmatic advertising
Programmatic advertising offers clear strategic advantages:
Efficiency & scalability
Automation saves time and reduces manual errors - ideal for large campaigns and international scaling.
Precise targeting
Advertising budgets are not scattered, but used in a targeted manner.
Real-time optimisation
Bids, creatives and target groups can be continuously adjusted based on performance data.
Transparency & measurability
KPIs such as:
CPM
CPC
can be analysed at any time.
Disadvantages & challenges
Despite all the advantages, programmatic advertising also brings challenges:
Complexity of the systems
Dependence on data quality
Ad fraud & brand safety
Data protection (GDPR, cookies, consent)
Almost impossible to implement without an experienced programmatic agency
Clean consent management is essential, especially in Europe. Many DSPs only accept agencies or companies with minimum turnover on the platform.
Programmatic advertising in the marketing mix
Programmatic advertising is used today for
Display Ads
Video Ads
CTV/ATV
Native advertising
Digital Out-of-Home (DOOH)
Audio ads (podcasts, streaming)
In Game
Programmatic advertising is therefore not a channel, but a technological purchasing logic that works across all channels.
How do I measure programmatic advertising?
Goal | KPIs |
|---|---|
Brand building & brand awareness. From the basics of brand perception to the “mere exposure effect” to curiosity about your brand/products. | Reach, average frequency, share of voice, brand sentiment |
Consideration and interest. Users should learn more about your brand/products and, if necessary, consider them in the decision funnel. | Clicks, interactions, conversions, leads |
Purchase. A product from your brand is purchased. | ROAS, ROI, sales, subscriptions, ACOS |
The three main methods for measuring your programmatic advertising campaign are impressions, clicks and actions. However, they are only the beginning. It is also possible to measure key performance indicators (KPIs) that are related to your business objectives. You can find a useful guide in the table above. Here you can find out which statistics and OKRs are relevant to your objective.
Conclusion: Why programmatic advertising is standard today
Programmatic advertising has established itself as an integral part of modern media strategies. Automated media buying, data-based decisions and real-time optimisation enable a level of efficiency and precision that cannot be achieved with traditional booking models. Companies can address target groups granularly, use budgets in a controlled manner and continuously optimise campaigns.
However, small and medium-sized enterprises (SMEs) in particular face a key challenge:
The technical, strategic and data-driven complexity of programmatic advertising is high. DSPs, SSPs, tracking setups, consent management, brand safety mechanisms and ongoing optimisation require in-depth specialist knowledge and operational experience. Errors in the structure or setup quickly lead to inefficient budget utilisation, wastage or a lack of transparency.
An experienced programmatic agency ensures that:
Target groups are clearly defined and set up based on data
Budgets are efficiently allocated and continuously optimised
Data protection and brand safety requirements are adhered to
Campaigns remain measurable, scalable and economically viable
For SMEs, this means that programmatic advertising unfolds its full benefits not through access to the technology, but through the right strategic and operational implementation. A specialised agency acts as a translator between technology, data and marketing objectives - and makes programmatic advertising truly profitable.
FAQ - Frequently asked questions about programmatic advertising
Programmatic advertising is the automated buying and selling of online advertising in real time, controlled by data and algorithms.
No. Programmatic advertising is used for display, video, audio, native, and even digital out-of-home advertising.
Google Ads is an advertising system. Programmatic advertising is a higher-level purchasing logic that also works outside the Google ecosystem.
Yes – provided that target groups, tracking, and budget are clearly defined. Even smaller budgets can be used efficiently. However, depending on the defined region, we recommend a minimum monthly media spend of €2,000. Given the costs of campaign development and setup, however, a higher budget (> €5,000/month) makes sense in order to achieve a good balance between agency costs and media spend.
