Programmatic advertising just means using computers to sell advertising space, but the innovations this new system has created are staggering. It is in real-time, processed in milliseconds, based on real data, targeted and much more profitable.
To start here is an introductory video on programmatic advertising and below are ten key terms in the industry.
- Ad Request: An ad request is counted whenever the publisher’s site requests ads to be displayed.
- Coverage: (Ad requests that returned ads / total ad requests) * 100. Low coverage means many of your ad requests are not being returned, while high coverage means they are and more revenue is being generated.
- Impressions: A single instance of an online advertisement being displayed. An impression is counted for each ad request that returns one ad to a site’s ad units.
- Real-Time Bidding: Refers to the buying and selling of impressions through real-time auctions. It usually takes place on an ad exchange and happens in the time it takes a webpage to load.
- Second Highest Bid: The industry rule dictates that the highest bidder wins the auction but pays the price set by the second highest bidder. Competition within an ad exchange drives up the value of an ad placement as more advertisers bid on the same space.
- Floor Price: A minimum value set for the price of an ad placement that assures no advertiser will pay extraordinarily low prices in the absence of competition.
- CTR: The clickthrough rate is the percentage of impressions that led to a click.
- CPC: The cost-per-click is the amount you earn each time a user clicks on an ad. CPC is calculated by dividing the total revenue by the number of clicks received.
- CPM: The cost an advertiser pays for 1,000 ad requests of an advertisement.
- eCPM: The effective CPM is the (Total revenue / Impressions) * 1000. This metric determines the relationship between the publisher’s earnings from ad revenue and the total number of impressions the publisher has given the advertiser. It is a useful performance measure for the value and effectiveness of advertising units.
This is just an introduction, but check back to the blog for more discussion at the intersection of mobile design and advertising. The booming success of programmatic advertising is a tremendous opportunity for online publishers.
If you haven’t already, it is a great moment to get started and benefit from the advances in ad tech and monetize your content.