What Is Programmatic Advertising? Definition, Examples, and Strategies

Digital advertising has come a long way since the first display ad was published online in 1994.

Back then, advertisers had to manually buy and place ads on websites, negotiating deals directly with publishers and relying on basic metrics to gauge performance.

Now, marketers can use programmatic advertising—a data-driven, automated approach that uses technology to buy and optimize digital ad placements—to reach the right audience at the perfect time and place.

Although adoption was initially slow, programmatic advertising spending started to surge in the early 2010s, fueled by advancements in AI and machine learning that revolutionized targeting and optimization.

Since then, US programmatic digital display ad spending has increased significantly, from $4.99 billion USD in 2013 to $156.82 billion USD in 2024. 

Meanwhile, channels like connected TV (CTV) and digital out-of-home (DOOH) expanded their reach, providing new opportunities to engage audiences at home and in public places.

As a result, global programmatic ad spend reached an estimated $595 billion USD in 2024 and is forecasted to reach nearly $800 billion USD by 2028.

Although programmatic advertising has existed for over two decades, with $9.56 billion USD expected to migrate from traditional advertising budgets to programmatic advertising between 2025 and 2026, it’s clear that its growth shows no signs of slowing.

Read on to learn the basics of programmatic advertising and why advertisers prioritize it in their media strategies for its precision, scalability, and efficiency.

What Is Programmatic Advertising?

Programmatic advertising uses advertising technology and machine learning to buy, sell, and optimize digital ad placements.

Unlike traditional advertising, which relies on manual negotiations and insertion orders, programmatic advertising uses automated technology to identify, bid on, and deliver ads across multiple advertising channels and devices based on real-time user data, browsing behaviour, and targeting criteria.

Examples of Programmatic Advertising Channels and Formats

Advertisers can place ads on various programmatic advertising channels on mobile, desktop, and other internet-connected devices.

Here are seven of the most common types of programmatic advertising channels and formats, with examples designed by the StackAdapt Creative Studio team:

Display

One of the oldest forms of digital advertising, display ads typically appear as banners at the top, sides, or within the content of webpages. They use eye-catching imagery, videos, or text to capture users’ attention and differentiate themselves from surrounding content on a website.

Native

Unlike display ads, native ads are designed to blend in seamlessly with the platform where they’re served, whether it’s a social media feed or the homepage of a major news site. They often appear as recommended, sponsored, or branded content and closely match the appearance and tone of surrounding content, making them less disruptive and often leading to higher engagement and click-through rates.

Video

Video advertising lets marketers capture viewers’ attention and strengthen brand awareness through visual storytelling. Advertisers can use programmatic video to target ads to audiences across various digital platforms, including websites and mobile apps, before, during, or after a video is played or while they’re scrolling through content.

As a result, EMARKETER reports that programmatic video ad spending is increasing faster than non-video ad spending and will reach $110.37 billion USD in 2025.

Connected TV

CTV advertising involves delivering video ads to viewers through internet-connected television devices, allowing advertisers to reach audiences with more precision than traditional linear TV. Similar to video, CTV ads often appear before, during, or after streaming content, such as a TV show, live sports, or movie.

CTV is one of the fastest-growing ad channels and will account for nearly 1 in 10 US dollars spent on digital advertising in 2025 (90% of which will be transacted programmatically).

Digital Out-of-Home

DOOH advertising uses digital billboards, signage, and screens to show ads in high-traffic areas. The classic example of a DOOH ad is an ad run on a digital billboard in Times Square. But you can run programmatic DOOH campaigns in various ad formats, sizes, and locations, such as shopping malls, bus stops, airports, elevators, stores, and other busy locations.

Unlike traditional out-of-home (OOH) advertising, which typically relies on static images or posters to capture someone’s attention, DOOH ads can be updated in real time and include videos, animations, and other interactive elements to make them more engaging. 

In recent years, DOOH has fueled the majority of OOH ad spending growth. The Out of Home Advertising Association of America reported that DOOH accounted for one-third of revenues in Q3 2024, a YoY increase of 7.3%.

Audio

Programmatic audio advertising allows advertisers to target listeners who are streaming podcasts, music, and digital radio. Similar to video and CTV, audio ads are placed before, during, or after streaming content. This can include before a podcast, in between songs in a playlist, or during ad breaks on a digital radio station.

Although a relatively new channel, US programmatic digital audio ad spend reached $1.85 billion USD in 2024, increasing 15.7% YoY and representing 26% of the total market. 

In-Game

In-game advertising allows advertisers to place ads directly in PC, console, and mobile games. In-game advertising often appears on billboards, posters, jerseys, and even interactive elements that enhance the gaming experience.

By seamlessly blending ads into virtual or realistic-looking environments (and even making them part of the gameplay without disrupting it), advertisers can enhance engagement and brand recall while maintaining an immersive experience for gamers.

Types of Programmatic Advertising Platforms

There are a number of platforms advertisers and publishers rely on for the buying and selling of programmatic advertising.

Demand-Side Platforms (DSPs)

DSPs are the primary method advertisers, agencies, and brands use to purchase digital ad inventory programmatically from websites, mobile apps, and other digital channels. 

Unlike a walled garden, DSPs provide access to the open internet and don’t restrict advertisers from purchasing ads through a single platform or ecosystem like Google, Meta, or Amazon, allowing them to bid on inventory from multiple platforms and publishers simultaneously.

Supply-Side Platforms (SSPs)

SSPs are platforms used by online publishers and digital media owners, such as websites, mobile apps, and streaming services, to manage, sell, and optimize their ad inventory. They act as intermediaries, connecting publishers with multiple ad exchanges, DSPs, and ad networks, enabling them to sell ad space to the highest bidders through real-time auctions. The goal is to improve ad performance for advertisers and maximize revenue for publishers.

Ad Exchanges

Ad exchanges are centralized platforms that automate the buying and selling of digital ad inventory through real-time bidding (RTB). Advertisers access ad exchanges via DSPs, while publishers connect through SSPs to list their available inventory. By analyzing data such as targeting criteria, budget, and ad placement opportunities, ad exchanges determine which ads are shown to users and at what price.

Data Management Platforms (DMPs)

DMPs collect and organize 1st-party and 3rd-party audience data from multiple sources (for example, website visits, CRM lists, and 3rd-party data providers). This data creates detailed user profiles that allow advertisers to segment, target, and deliver more relevant ads to audiences, ultimately improving campaign performance and conversion rates.

Types of Programmatic Advertising Deals

When it comes to buying inventory through programmatic advertising, there are four main types of deals that advertisers use for facilitating transactions:

Real-Time Bidding (RTB)

The most common method for facilitating programmatic advertising transactions, RTB is a media buying method in which advertisers bid on ad impressions through open auctions (​​sometimes referred to as open marketplaces) facilitated by ad exchanges in real time. 

In RTB, multiple advertisers compete simultaneously for the same ad slots, with the highest bidder winning the ad placement (and ultimately determining the final cost of the ad based on the amount of competition involved).

Open auctions provide advertisers access to a wide range of inventory, often at a lower cost than other types of programmatic deals (depending on the campaign goals, competition, and inventory quality involved).

Private Marketplace (PMP)

Unlike open auctions, where a wide range of advertisers can be involved, PMPs are invite-only, with only a select number of advertisers allowed to bid on inventory. Due to its exclusive nature, inventory is often limited and seen as more desirable than in the open marketplace.

Programmatic Guaranteed

Similar to traditional direct buy methods, programmatic guaranteed deals are a type of programmatic direct advertising where advertisers and publishers negotiate a fixed price for inventory, with the publisher guaranteeing delivery of a specific number of ad impressions. These deals are negotiated directly between advertisers and publishers and executed through programmatic platforms.

Unlike auction-based methods, programmatic guaranteed deals provide advertisers with predictable delivery and access to premium inventory, making them ideal for campaigns that require high-quality placements and guaranteed outcomes.

Preferred Deals

A form of programmatic direct, preferred deals (also known as programmatic non-guaranteed) allow advertisers to negotiate a fixed price with publishers for premium inventory. Unlike programmatic guaranteed deals, preferred deals provide flexibility by letting advertisers decide whether to purchase the available ad space. If an advertiser declines, the inventory is offered to other advertisers through open auctions or private marketplace deals.

How Does Programmatic Advertising Work?

To understand how programmatic advertising works, let’s explore a basic example you’ve probably experienced countless times in your day-to-day life: seeing a display ad while visiting a website.

Here’s a step-by-step breakdown of how the whole process works:

Step 1: Campaign Setup

Let’s say an advertiser wants to promote a new product or service using programmatic advertising. First, they choose a specific goal for their campaign—such as increasing brand awareness, driving website traffic, or maximizing conversions—and use a DSP to create and manage the ad campaign, setting the targeting criteria and budget.

Step 2: Initial User Interaction

The whole process starts when a user visits a website—for example, a news site or blog—with available ad space. The website’s SSP identifies the opportunity and notifies an ad exchange that an impression is available for auction.

Step 3: The Auction Initiates

The ad exchange acts as a digital marketplace, sending bid requests to DSPs like StackAdapt. This request includes pseudonymized details about the user and information on the ad space (such as the type of content on the page and dimensions of the ad).

Step 4: The Bidding Process Begins

The DSP uses machine learning to evaluate the impression’s value and places a bid. It considers factors like the advertiser’s target audience, budget, and goals, determining how much the DSP is willing to bid for the impression. For example, if the user fits the advertiser’s ideal customer profile and the website aligns with the campaign’s overall objectives, the DSP may bid higher.

Step 5: Bid Selection

After that, the ad exchange collects bids from connected DSPs and determines the highest bidder in real time. The winning DSP is notified, and the ad creative gets displayed to the user on the publisher’s website.

Step 6: The Ad is Served

The selected ad is instantly displayed to the user on the website, all within a fraction of a second—faster than the page can even fully load.

Step 7: Campaign Optimization

After the ad gets served, marketers can track metrics like impressions, clicks, conversions, viewability, and engagement rates to understand the impact of their campaigns. They can use this data to adjust targeting, budget allocations, and creative elements for future campaigns.

Although the process may differ slightly for other channels like CTV, DOOH, or programmatic video, much of it remains the same—namely, the use of automation and data-driven targeting to deliver ads to the right audience at the right time and place.

Benefits of Programmatic Advertising

Unlike traditional forms of digital advertising, programmatic advertising provides advertisers with access to broader inventory, targeting options, and insights that can help them optimize campaigns and reach their ideal audience with more precision.

Here are seven of the major benefits of programmatic advertising:

1. Efficiency

Instead of manually managing placements or setting up campaigns on multiple platforms, advertisers can automate the ad-buying process across various channels, devices, and formats from a single platform.

2. Cost-Effectiveness

Although DSPs like StackAdapt provide access to premium inventory, advertisers don’t have to break the bank to access it. Even mid-market brands and agencies can compete with major companies and access unique, hard-to-reach audiences with the right budgeting, bid strategies, and targeting criteria.

3. Flexibility

Unlike other forms of advertising, most programmatic campaigns aren’t set in stone. Advertisers can easily adjust targeting parameters, swap out creatives, and scale their campaigns up and down based on campaign goals and performance, all in real time.

4. Reach

Programmatic advertising allows advertisers to reach a massive audience by serving ads on thousands of different websites, apps, and streaming services—from globally recognized platforms to national media companies—all over the world. 

5. Targeting

Although the audience you can reach with programmatic advertising may be huge, you don’t have to cast a wide net. Advertisers can get super granular with their campaigns and target users based on their demographics, interests, behaviours, and even what they’re reading about online, helping them reach the right audience at the right time.

6. Transparency

With programmatic advertising, there’s little second-guessing. Advertisers can choose where their ads get placed, see how they’ll appear, track how much they’re spending, and know who’s viewing their ads, helping them optimize their campaigns and rest easy knowing their ads appear in brand-safe environments.

7. Real-Time Measurement

Rather than waiting weeks to see the results of ad campaigns, advertisers can access detailed insights on reporting in real time, helping them pivot their programmatic strategy and make adjustments—even while campaigns are running—to maximize performance.

Implementing a Programmatic Advertising Strategy

If you’re new to programmatic advertising, here’s a high-level overview of everything you need to do to get started running programmatic campaigns.

Step 1: Define Your Goals and Overall Objectives

Ask yourself what you’re looking to achieve with your campaign. Is it building brand awareness? Generating new leads? Boosting sales by retargeting past customers? Increasing foot traffic? Knowing your overall goals and objectives will help you set up your campaign for success and understand if you’re hitting the mark.

Step 2: Know Your Target Audience

Casting a wide net can lead to wasted ad spend. Analyze your existing customer data to identify key demographics, interests, and behaviours, and segment your audience, so you can tailor messaging, creatives, and targeting to make the biggest impact.

Step 3: Choose the Right Platform

Research and evaluate the various DSPs on the market to find one that fits your brand or agency’s needs. Before making a decision, consider important factors like ease of use, access to inventory, targeting options, and reporting capabilities. 

Use peer-to-peer review sites like G2 to see what users at brands and agencies think of specific programmatic platforms. (Fun fact: StackAdapt is consistently ranked the #1 DSP by G2. See how we stack up to other DSPs.)

Step 4: Account Setup

Once you’ve signed up with a DSP and gone through onboarding, make sure any tracking mechanisms—like pixels or tags—are set up correctly, so you can successfully monitor any user interactions with your ads and track performance.

Step 5: Build Your Creative Assets

Design creative assets based on the specifications of each channel. Test different messaging, visuals, and calls to action to see which ones perform the best with your target audience. 

Need help? Learn about the StackAdapt Creative Studio or download our guide on creative best practices.

Step 6: Set Up Your Campaign

Choose the programmatic deal that suits your goals, determine your overall budget, select a bidding strategy, and set your targeting parameters.

Step 7: Launch Your Campaign

It’s time for your campaign to take flight. Double-check all your campaign settings, and get ready to monitor the results as they roll in, just in case you need to make any adjustments.

Step 8: Analyze the Results

Use the reporting tools provided by your DSP to track campaign performance and see how you’re performing against your goals. Use these insights to make adjustments, optimize your campaign, and inform the strategy for your future campaigns.

Setting KPIs and Measuring the Effectiveness of Your Programmatic Advertising

Once your campaign is launched, it’s time to measure the results to know if you’re achieving your goals. Here are some programmatic advertising KPIs and metrics you can use to monitor and evaluate your campaign performance.

• Impressions: Impressions measure the total number of times an ad is served during a campaign. An impression is counted each time a creative is loaded on a webpage, app, or screen and displayed to a user.
• Clicks: Clicks measure how many times users interact with your ad by clicking on it. This metric helps you gauge how effectively your target audience is engaging with your ads.
• Click-Through Rate (CTR): The CTR is the percentage of users who click on your ad after seeing it. It’s calculated by dividing the number of clicks by the number of impressions and multiplying by 100. The higher the CTR, the more effective your ad engages your target audience.
• Conversions: A conversion occurs when a user completes a specific action you’re tracking—for example, making a purchase, booking a demo, or signing up for a newsletter—after interacting with your ad, helping you evaluate the success of your campaigns. 
• Cost Per Acquisition (CPA): CPA measures how much it costs to achieve a specific campaign goal, like making a sale, generating a lead, or driving an app install. The total campaign spend gets divided by the number of conversions attributed to the campaign to calculate the CPA, helping you evaluate the efficiency and profitability of your programmatic campaigns.
• Cost Per Completed View (CPCV): CPCV measures the cost of getting a user to watch your video or CTV ad to completion. It’s calculated by dividing the total campaign spend by the number of completed views.

The Future of Programmatic Advertising

Programmatic advertising is constantly evolving, thanks to emerging channels, changing privacy legislation, and new technologies.

Like almost any other industry, the rise of AI and machine learning is fuelling this change, providing new opportunities in programmatic advertising for targeting and personalization.

As programmatic advertising continues to evolve in the coming years, expect generative AI and AI-driven algorithms to play a larger role in how advertisers create and serve ads, with programmatic platforms using AI to analyze webpage content, dynamically adjust creatives, and optimize bids to place ads with more precision. To learn more, read StackAdapt’s guide to leveraging AI for programmatic. 

Ready to get started with programmatic advertising? Request a demo of StackAdapt.

Programmatic Advertising FAQs