Last Updated on February 28, 2025
What if you could deliver the perfect ad to the right person at the ideal moment—without lifting a finger? Programmatic advertising makes this possible, revolutionizing how businesses reach their target audience with ad campaigns. But how does ad server work? And why is it shaping the future of digital marketing?
In this article, we’ll unravel the mysteries of programmatic advertising, explore the processes and benefits of programmatic advertising, and reveal insights that can streamline your advertising strategy.
Ready to discover what’s driving this marketing revolution apart from DoubleClick Digital Marketing (DDM)? Let’s dive in AdTech!
What is programmatic advertising?
Programmatic advertising is the process of automatically buying and selling online ads through an intermediary via a real-time auction. All elements of the programmatic ad serving process are important and separate programmatic from other types of ad delivery.
Over the past 20-plus years, the Interactive Advertising Bureau (IAB) has found that “programmatic advertising has become a key element in most digital ad budgets for its scale and efficiency in targeting and placing digital advertising.”
By the way, we have already discussed the changing landscape of programmatic SEO with Thenuka, CEO of Daydream, and the importance of context in content creation.
Programmatic ads stats
The world is moving towards programmatic advertising. Banks, FinTech, governments, B2B and B2C industries, experts, and ordinary people use programmatic ads.
Here are the statistics you must be aware of:
- In 2024, global programmatic ad spend reached an estimated $595 billion, with spending set to approach $800 billion by 2028.
- The United States remains the leading programmatic advertising market worldwide, but marketers from countries such as China or the United Kingdom also embrace the benefits of programmatic buying more vividly than ever.
- The marketing automation software market is on track to reach $10 billion by 2030, with ad revenue set to double compared to 2022.
- In 2023, first-party consumer insights (82%), purchase data (73%), targeting (64%), attribution (55%), and brand-safe environment (41%) were the 5 key features of retail media.
- US programmatic connected TV (CTV) ad spending was on its way to hitting $21.5 billion in 2024.
- US programmatic podcast ad spending surged 41.3% to reach $166.3 million.
- 19% of advertisers are increasing their programmatic spending due to better return on investment (ROI) and ad performance.
Marketers who don’t integrate programmatic advertising technology into their marketing strategy lose their time and competitiveness, depriving themselves of even the possibility of catching up with the competition in the future. Programmatic advertising is already transforming e-commerce in unimaginable ways.
How does programmatic advertising work?
When a user visits a web page, his information is passed to a service that places programmatic ads. The program determines which ads will be of interest to him and starts an auction. The ad that offers the highest bid is displayed. This happens in the fraction of a second that the site loads, so the user doesn’t even notice—they just see the ad.
The auction happens thanks to the supply-side platform (SSP) and the demand-side platform (DSP). These are key elements of the programmatic advertising ecosystem. They work together to automatically buy and sell ad space.
Marketplaces use the SSP to sell ad space, and advertisers use the DSP to purchase ads. SSPs provide access to multiple DSPs through ad exchanges. The demand-side platform analyzes available impressions and places bids based on advertiser criteria.
In doing so, there are different models of interaction between the advertiser (the one who places the ad) and the publisher (the one who owns the placement site):
- Real-time bidding (RTB): This is the most common model in programmatic advertising, where ad slots are sold and bought in real-time auctions.
- Private marketplace (PMP): In this auction format, advertisers bid for placement with a specific publisher. The peculiarity of such an auction is openness—you know exactly on which site you buy advertising space.
- Preferred Deal: This is a model in which site owners offer the advertiser a chance to “lock” advertising space at a specific price without an auction.
Programmatic is not a new type of advertising. The market has grown, and more and more advertising platforms are using algorithms for auction-based ad buying. Modern social media targeting is programmatic within a single site because ad spots are also allocated automatically.
Because of how automated internet marketing is, there is often confusion about what to classify as programmatic advertising and what not. It’s important to remember that programmatic is an ad-buying system, not a targeting parameter.
Most ad customization services work on programmatic technology, but not all programmatic advertising is contextual/targeting. It can take into account other parameters and uses more data.
Programmatic vs traditional advertising
Let’s try to understand what are the distinguishing features and advantages of programmatic ads through an ad server in 2025.
Real-time optimization
The decision to show programmatic display ads is made directly at the moment when the user visits the site. At that particular moment, algorithms analyze dozens of indicators: their behavior, matching interests, and location. Then, they decide that the user is suitable for your online advertising.
Programmatic advertising services get this information from a variety of sources:
- First-party data is collected directly from users through interactions on websites, CRM systems, social networks, and mobile apps.
- External organizations, such as ISPs, collect and sell third-party data. These can include demographics, psychographics, interest information, purchase intent, etc.
- Real-time platforms collect data on user actions on websites and advertising results.
In contrast, traditional advertising lacks the agility of real-time optimization. Adjustments are typically based on periodic reviews of campaign performance metrics data like viewability and CPM, often requiring manual intervention to tweak strategies. Changes in targeting or placements are slow, and ad campaigns can run suboptimally for days or weeks before corrections are made.
Media focus and demand generation
Placing ads on websites through an exchange platform usually comes as an add-on to a marketing strategy. This is not the best tool if the budget is limited. You need to attract sales here and now. Then, it is better to turn to context (to catch up with the “hot” audience) and other methods. Programmatic is great if the goal is to increase recognition, create demand, and expand the audience.
For example, you’re advertising a sports store and want to reach new users. PPC will show the ad to a person who, a week ago, searched for “buy a soccer ball” in the right neighborhood. A programmatic algorithm will show the right ad to a user who came in to read an article about sports, lives near the store, and is nearby right now.
Thanks to big data and online auctions, programmatic not only processes existing demand but also creates new demand.
Cross-platform capabilities
RTB technology offers powerful cross-platform options. For example:
- Cross-device targeting allows advertisers to show users ads on dozens of sites simultaneously regardless of operating system.
- Omnichannel reach. Programmatic allows for the combination of media advertising, video, social networks, mobile applications, and even digital outdoor advertising. This approach allows you to create a consistent brand image across all consumer touchpoints.
- Unified ad campaign management means more precise targeting, user experience, and personalization for each user.
- Limiting the number of times a user sees an ad across all their devices. This keeps audiences from getting saturated and optimizes budgets.
- Following the user. Programmatic allows you to make ads that “follow” the user across all devices and platforms, telling a brand story. It’s not about retargeting but about dynamic optimization, which means that content adapts to different devices and situations. For example, on your work computer, you will see a calm banner with information about the campaign, and in the evening, on a smart TV, you will see a short emotional video ads that demonstrates the values of the same brand.
Traditional advertising typically operates in silos, with separate planning and execution for different channels. A television ad, a print campaign, and a billboard require distinct strategies, making it difficult to maintain cohesive messaging. Cross-platform tracking is minimal, as traditional methods lack the technology to monitor and optimize audience engagement across various media in real time.
The need for systematicity and investment
To achieve results, you need to set a competitive bid. Otherwise, other advertisers will win the auction. This is a tool for playing a long game. In addition, the budget is usually written off for displays, not for clicks.
Analytics services and automation of receiving requests (CRM, online chat, call tracking) and subscriptions to foreign applications can absorb a large part of the budget. Nevertheless, programmatic ads ROI can be much higher than Google Ads ROI if set up properly. The interface is much more comfortable than that of Google Ad Manager.
Programmatic advertising challenges and how to overcome them
The programmatic advertising ecosystem is filled with transformative opportunities but is equally well-endowed with its share of obstacles. From battling ad fraud to navigating the post-cookie era, every new development presents unique challenges that require strategic planning, technological innovation, and continuous adaptation by advertisers.
Ad fraud
Programmatic is still highly troubled by ad fraud, causing large financial losses. Solving it means dealing with solutions, such as partnering with cybersecurity firms to identify and block fraudulent ad impressions before they’re purchased. Initiatives like Ads.txt and App-ads.txt also play a crucial role in filtering out unauthorized traffic. However, staying ahead of sophisticated fraud techniques demands ongoing vigilance and rapid adaptation to emerging threats.
Inventory quality
As spending on programmatic advertising continues to rise, ensuring high-quality ad placements remains a very critical challenge. Advertisers need to lock in ad inventory that aligns with brand values and reaches target audiences with efficiency. This involves direct relationships with trusted ad networks and using programmatic tools to ensure ads appear in relevant, brand-safe environments.
Creative limitations
Sometimes, this inherent automation of programmatic advertising can choke creativity. Dynamic Creative Optimization and other ad creative technologies would play their part, letting advertisers unleash creativity by pushing more personalized, involving ads. It gives a more effective scaling option, as these options have creative appeals necessary for an effective reach towards the audiences.
Brand safety
The risk of ad placements next to inappropriate or controversial content is a major concern for advertisers. To mitigate this, working with DSPs that take brand safety seriously is important. Integrating pre-bid solutions and keeping an updated blacklist of undesirable sites can further improve ad placement quality.
Programmatic Advertising in 2025: New Reality
The recent interest in programmatic advertising is explained by two letters—AI. Hot AI startups already prove that. Neural networks are being actively integrated into programmatic to better predict consumer behavior and personalize ads. Choosing exchanges with AI and machine learning can achieve better customization of programmatic ads, but their privacy remains a thin spot.
Issues around new ethics and data security are important for both advertisers and programmatic ad buyers. In a world where everything is driven by algorithms, it’s imperative that ads remain relevant and ethical, and that data is stored securely. Otherwise, a brand will lose customers and even reputation.
For example, imagine a person with financial problems would receive luxury real estate ads. Or competitors will get a base of loyal customers that you have been collecting for months. To avoid such situations, developers are constantly improving algorithms to make ad placement safer and more relevant.
In addition to ethical and security trends, the platforms for advertising are also changing. Smart TV and podcasts (audio) have seen an increase in popularity over the past year. When the person selects a platform for programmatic ad buying, it is important to consider the availability of these ad formats. They deliver great results because the relevant ads are served in a personal, almost intimate setting.
Conclusion
It’s important to talk about the peculiarities of evaluating the effectiveness of programmatic advertising. First, you should use multitouch attribution or multichannel evaluation along with data management platforms (DMP). This is the only way to understand how programmatic advertising affects conversion rates. Secondly, the instant auction format forces you to observe the “here and now” statistics. To do this, it’s important to keep an eye on reports within the DSP.
The main thing is to use programmatic ads functionality wisely. The automatic purchase of media and outreach advertising can only be part of a strategy, but in no way is it the start or the only component. Programmatic gives you facts that streamline your decision-making. It is fantastic, just like targeting warm leads on LinkedIn.
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