Programmatic advertising explained

The definitions here come from the industry bodies and from Google's own help pages: IAB's An evolving framework for advertising automation (PDF), IAB Tech Lab's OpenRTB and ads.txt pages, Google Ad Manager's Programmatic Guaranteed vs. Preferred Deals and About Private Marketplace deals, the Display & Video 360 overview, Google's Display & Video 360 product page and About Display ads and the Google Display Network. We do not quote market-size figures or typical prices; no official source publishes a standard price for programmatic ads.

What programmatic advertising means

In plain terms, programmatic advertising is the automated buying and selling of ad space. Software decides which ad to show, to whom and at what price, often in the fraction of a second while a page or app loads. The ads can be display banners, video, audio or ads on connected TVs. Native ads, which match the look of the page around them, are often bought this way too; see our native advertising guide.

The word is used loosely. IAB, the US advertising industry body, notes that the term "programmatic" has become "ambiguous shorthand for some or all of a diverse range of platforms, tools, and processes in digital advertising". Instead of asking whether a buy is programmatic or not, IAB's framework looks at which steps of the buying and selling process (such as forecasting, decisioning and reporting) are done by software. That is a useful way to think about it: most digital ad buying today is automated in some way, and the real question is which kind of automated buying you are using.

DSPs, SSPs and exchanges

Three kinds of systems sit between an advertiser and a website or app:

• Demand-side platform (DSP): the buyer's tool. An advertiser or agency sets budgets, targeting and bids in a DSP, and the DSP bids on ad space across many sellers. Google's DSP is Display & Video 360; Google's overview says teams use it to "design creatives, organize audience data, purchase inventory, and optimize campaigns".
• Supply-side platform (SSP): the publisher's tool. A website, app or streaming service uses it to offer its ad space to many buyers at once and to set floor prices and rules.
• Ad exchange: the marketplace where bids from DSPs meet ad space from SSPs and publishers. In practice many SSPs run their own exchange.

The lines between these blur. IAB's framework says "DSPs (demand-side platforms) and SSPs (supply-side platforms) can be involved in a disproportionate number of functions, depending on implementation", which is why it suggests understanding the fees and functions of each tool you pay for.

Open auction and real-time bidding

The open auction is the version most people picture: any approved buyer can bid on an ad impression, and the highest valid bid wins. It runs on real-time bidding (RTB). IAB Tech Lab describes RTB as a way of transacting media that "allows an individual ad impression to be put up for bid in real-time". OpenRTB is the IAB Tech Lab specification that lets DSPs, SSPs and exchanges talk to each other in a common format.

The open auction gives you the widest reach and the least control over where each ad appears. You steer it with targeting, bids, and lists of sites or apps to include or exclude.

Private marketplace and programmatic guaranteed

Besides the open auction, buyers and publishers can agree deals that still run through programmatic systems. Google Ad Manager's help pages define them clearly:

Deal type	Price	Reserved?
Open auction	Highest bid	No
Private auction	Floor price	No
Preferred deal	Fixed	No
Programmatic guaranteed	Fixed	Yes

• Private marketplace (PMP): "Private Marketplace (PMP) deals refer to non-guaranteed programmatic deals." In Ad Manager this covers Preferred Deals, which have a fixed price, and "Private Auctions (non-guaranteed with a floor price)", where the publisher invites specific buyers.
• Preferred deal: the buyer and publisher agree a price and the buyer gets the first chance to buy at that price, but "Buyers aren't required to buy the inventory."
• Programmatic guaranteed: the price and terms are negotiated and the ad space is reserved. "Inventory is designated only for that buyer at that price."

These deals mostly suit advertisers who buy from specific premium publishers or streaming services. Our CTV advertising guide explains how this works for TV-screen ads, and retail media networks covers ads sold by retailers using their own shopper data.

How a small business can get access

There are three realistic routes:

• Platform tools you already have. A Google Ads Display campaign buys automated placements across Google's network without a separate DSP contract. Google says "The Display Network helps you reach people as they browse millions of websites, apps, and Google-owned properties (such as YouTube and Gmail)." Our Google Display ads guide covers setup, targeting and placements. Retailers, streaming services and some audio platforms run their own self-serve ad tools too, such as those in our retail media networks and CTV guides.
• A full DSP through sales or an agency. Enterprise DSPs are usually not sign-up-and-go. Google's own page describes Display & Video 360 as "end-to-end campaign management for enterprises in one tool", and its help center says "Talk to our sales team to get started with a new Display & Video 360 account". Many advertisers reach DSPs through an agency that already holds a seat.
• Self-serve DSPs. Some DSPs let smaller advertisers sign up online with a card. Their minimums, fees and inventory differ, so read each one's own terms before you commit.

Whatever the route, ask what you pay for media and what you pay in platform, data and agency fees. IAB's framework stresses "understanding the cost models and fees associated with automated technologies".

Brand safety

Automation opens up huge numbers of sites and apps, which brings a risk: your ad can appear next to content you would never choose. IAB's framework says the growth in inventory has made it hard for buyers to keep ads away from "salacious, violent, or other controversial material". The tools it lists include verification platforms that check inventory before bidding, lists of trusted publishers to include and bad actors to block, and private marketplaces.

Two more checks are worth knowing:

• ads.txt and app-ads.txt. IAB Tech Lab's ads.txt lets publishers "publicly declare the companies they authorize to sell their digital inventory", "making it harder for bad actors to profit from selling counterfeit inventory". Good DSPs let you buy only from authorized sellers.
• Placement and content exclusions. In Google Ads you can exclude sites, apps and content types; see placement exclusions and the brand safety section of our Display guide.

IAB also warns against going too far: "overly restricting supply access to a small number of trusted sources" can cut off reach and useful performance data. Start with sensible exclusions and review the placement report rather than blocking almost everything.

Measurement basics

• Viewability. An impression only matters if the ad could be seen. IAB calls an ad's "opportunity to be viewed by a human" one of the criteria for judging inventory quality, and points to the Media Rating Council for viewability guidelines.
• Placement reports. Check which sites and apps actually showed your ads, and exclude the ones that bring no results.
• Conversions, not clicks alone. Many programmatic ads are seen rather than clicked. Set up conversion tracking (see Google Ads conversion tracking) and tag your landing page links with UTM parameters so results show up in your analytics.
• Frequency. Automated buying can show the same person the same ad many times. Use frequency caps where the platform offers them (see Google Ads frequency capping).

Where to start (our view)

This is our opinion, not a rule from any platform. For most small businesses, programmatic starts inside tools you can run yourself: a Google Display or Demand Gen campaign for retargeting and awareness, or a retailer's or streaming service's self-serve ads if your customers are there. Set up conversion tracking first, keep brand-safety exclusions on, and give a campaign enough time to collect data before judging it. A full DSP through an agency makes more sense once you have a clear audience, creative that works, and a budget large enough that fees and minimums are a small share of spend.

For help planning ads and the pages they send people to, see our services.

Frequently asked questions

What is programmatic advertising in simple terms?

It is buying ad space through software. Instead of booking ads with each website by hand, a platform bids for ad space automatically, often in real time, based on the targeting and budget you set.

What is the difference between a DSP and an SSP?

A demand-side platform (DSP) is the buyer's tool for bidding on ad space across many sellers. A supply-side platform (SSP) is the publisher's tool for offering its ad space to many buyers. They usually meet in an ad exchange.

What is a private marketplace (PMP)?

A private marketplace is a set of non-guaranteed programmatic deals between publishers and selected buyers: preferred deals at a fixed price, or private auctions with a floor price. Programmatic guaranteed is different because the ad space is reserved for one buyer.

Can a small business use programmatic advertising?

Yes. The easiest route is a tool you can run yourself, such as a Google Ads Display campaign or a retailer's or streaming service's self-serve ads. Enterprise DSPs such as Display & Video 360 are usually accessed through their sales team or an agency.

Is Google Ads programmatic advertising?

Display campaigns in Google Ads buy placements across websites and apps automatically, so they are a form of programmatic buying. Search ads also run on an automated auction, but people usually mean display, video, audio and CTV ads when they say programmatic.

How do I keep programmatic ads off unsafe sites?

Use the platform's content and placement exclusions, buy only from sellers listed in publishers' ads.txt files where your platform supports it, check the placement report regularly, and consider a private marketplace for sensitive campaigns.