In the marketing world, there are many confusing terms floating around, and if you want to succeed, you’ll need to know what they mean.

Brands around the world have realized the importance of having a digital advertising strategy. They’re actively using banners, social media ads, videos, and retargeting to connect with their audience, improve their online visibility, and build their brand identity.

But with digital marketing terms such as “ad impressions” and “CPM” being thrown around, it’s clear that there are many marketing terms that you need to learn before you can become an expert in the digital advertising scene.

This post focuses on what is programmatic advertising and the common terms and acronyms you’ll come across when working with a programmatic advertising company.

What is programmatic advertising?

Programmatic advertising definition is the automated buying and selling of advertising space through an elaborate bidding system. It allows advertisers to buy ad impressions on publisher sites through real-time auctions, making the whole process more effective and efficient.

According to eMarketer, more than 80 percent of digital display advertising is programmatic, with businesses impressed by the efficiency and transparency it offers. Programmatic platforms accommodate many ad formats and channels thanks to their built-up inventory and database. 

With programmatic advertising explained, let’s now look at the important terms you’ll encounter as you navigate the digital advertising world.

Man using a pen on a tablet

1. Ad exchanges

An ad exchange is a computerized platform where advertisers and publishers meet to agree on the cost of displaying ads. It functions like the trading floor of a stock market, but digital advertising space is what’s getting traded.

Ad exchanges are operated through real-time auctions where ad purchases are made when a visitor loads a website.

2. Ad impressions

Ad impressions are the number of digital views a piece of advertisement receives. Every time an ad is fetched from its source, that’s counted as an impression. It doesn’t matter if the ad was clicked or not as long as it has been delivered to someone’s feed. This is the most common measurement unit in digital advertising.

3. Ad network

An ad network is a platform that connects different publishers/sites and offers ad inventory on those sites to advertisers. Ad networks sell ad inventory at an increased margin because they can help advertisers reach people more effectively through their network of publisher sites. Google AdWords is one of the prominent examples of an ad network.

4. Ad inventory

Ad inventory is the ad space that publishers make available on their sites for advertising. Ad inventory is classified as premium, remnant, or long tail. Ads published on premium inventory connect advertisers to a highly valuable audience. Remnant inventory is a publisher’s non-premium assets, and it’s usually sold at discounted rates. Long-tail ad inventory is the inventory from unpopular sources that are bundled together and sold to advertisers to help them reach highly-targeted niche audiences. 

Inventory full of boxes

5. Ad server

This is a platform that distributes digital ads to end devices like computers and mobile phones. It also captures the performance metrics of those ads, using the same method to measure ad activity to ensure a fair comparison.

6. Ad tag

An ad tag is a special code on a website that communicates with the ad server to ensure the right digital ad is displayed on a webpage or within an app.

7. Blacklist and whitelist

A blacklist is a record of websites, and IP addresses suspected to be fraudulent and have been listed on anti-spam databases. Such websites are sources of spam, and as an advertiser, you wouldn’t want your ads to be displayed there. There are public blacklist databases available to all, but companies sometimes have their own private blacklists.

A whitelist, on the other hand, is a list of approved websites where an advertiser wants their ads to appear. Advertisers create whitelists to ensure their ads aren’t displayed on low-quality websites that can damage their reputation. 

8. Brand safety

Brand safety is the act of ensuring ads aren’t shown in any context that can ruin a brand’s image. The automation of advertising means that advertisers may not always know where their digital ads will appear, and brand safety limits the exposure of the ads to improper content on a publisher’s site.

9. Bot traffic

This is non-human traffic that’s generated by bots. Bots can mimic the human view of an ad to create fake ad impressions.

10. Cookie sync

This is the process of linking the cookie ID from one technology to another. Cookie syncing empowers advertisers to improve their bidding process and target users more effectively.

11. Cost per action (CPA)

CPA is the average cost of a specific action as defined by the advertiser. The action could be clicking a specific link, time spent on a website, or subscribing to a newsletter. Advertisers should note that CPA is expensive and carries a higher cost.

Coins near a black calculator

12. Cost per mile (CPM)

CPM is the most common method for web advertising, and it’s the cost advertisers pay for 1000 ad impressions.

13. Data management platform (DMP)

A DMP is a centralized platform that collects, manages, and sorts data such as cookie data. Advertisers can combine data from the platform to create comprehensive user profiles to improve their targeting.

14. Deal ID

This is a unique identifier assigned to a programmatic ad buy to help the buyer and seller identify each other. The deal ID contains the special agreements of a buy, such as the price of the purchased inventory.

15. Demand-side platform (DSP)

A DSP is a platform that allows advertisers to purchase ad placement (display, mobile, video, and search ads) automatically. Buyers define the ad creative and control the ads’ distribution, and then the DSP determines the best possible inventory to place the ads to help them reach their target audience. DSPs also report on the performance of the ads to help advertisers optimize their campaigns.  

16. First party data

This is the data collected by publisher sites concerning visitor behavior. It often includes subscriptions, CRM, and social data. First party data is more valuable than data obtained from external sources because it has a higher degree of accuracy.

17. Price floor

This is the minimum price a publisher will accept for ad inventory.

18. Real-time bidding

Real-time bidding is the process of buying ad inventory through real-time auctions. The process involves a bid request and response. The bid request is triggered when a visitor lands on a webpage. The request data (location, website, browser history, and device) is offered for sale on an ad exchange. A DSP linked to the ad exchange responds to the offer with different ad creatives and their price. The highest bid wins the placement, and the ad is distributed. This whole process happens automatically and in milliseconds.

Brown wooden law hammer

19. Second party data

Second party data is first party data owned by someone else. The data can be purchased directly or shared by mutual agreement.

20. Supply-side platform (SSP)

This is a software platform that allows publishers to sell ad inventory. SSPs are often linked to ad exchanges to help publishers access potential buyers. Publishers set their floor prices and can bundle their inventory for private marketplaces.

21. Third party data

Third party data is data that’s aggregated from websites and platforms that are owned by third parties. This data comes from various sources such as surveys, cookie-based tracking, public records, registration data, opt-in digital tracking, and offline transactional data like loyalty schemes.

22. Trading desk

A trading desk is a centralized, service-based organization that facilitates programmatic ad buys for its clients across all channels. It serves as a managed service layer typically on top of a licensed DSP and other audience buying technologies. In addition to display ads, trading desks also give advertisers access to native, social, paid, video, and TV ads.

There are two types of trading desks: agency trading desks and independent trading desks. The difference between the two is that large agencies own agency trading desks, while independent trading desks are owned and operated independently.

23. Win rate

The win rate is a measure of the effectiveness of your bid strategy. It’s calculated by dividing the number of bid placements won by the number of bids submitted. 

Programmatic advertising is the automated process of buying and selling ad inventory through an elaborate bidding system. It is preferred by many advertisers and agencies because of its enhanced efficiency, scalability, and reach.

The traditional advertising model is inefficient and lacks a functional way to determine the return on investment. Programmatic advertising relies more on sophisticated AI and less on humans to complete the purchase of ad inventory, increasing efficiency, and transparency of the ad buying process. 

The programmatic industry has a lot of jargon that can make it difficult for you to navigate the digital ad space. We at Growth Marketing Genie have explained the meaning of these terms to help you master this form of media buying taking over the ad industry.

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