Developer’s Guide to Programmatic: Part 1 – Understanding the Value Chain

By Masami Hirata, EVP of Global Marketing
Wednesday, October 19, 2016 / 2 min read

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The Mobile Developer’s Guide to Programmatic is a five week series of articles to help bridge the gap between the worlds of ad tech and mobile app monetization. Below are the basics on programmatic, followed by the first article in the series.

Programmatic advertising is changing the way that mobile game developers monetize, bringing in new sources of demand, more fill, and increased revenue. In a recent eMarketer study, US advertisers are projected to spend $21.22 billion in 2017 on mobile ads served programmatically, a 37% YOY growth rate which in-app advertising is a key driver.  

Why the high expectation for mobile in-app programmatic growth? According to eMarketer:

  • Mobile users spend the majority of their time using apps; Web visits are frequent, but fleeting.
  • 79.3% of consumers’ time is spent with apps, with roughly 20% using the mobile Web.
  • In mobile, the ad dollars are following consumer behavior, so 73.2% of ad spending (that’s display plus search) is going to apps.

Programmatic buying is extremely efficient with its ability to pair rich audience data with ad inventory and advanced targeting. We’ll dive more into this area in the article series.

With ad tech companies like Fyber powering the mobile monetization evolution, both publishers and advertisers are becoming more comfortable with programmatic. The result is programmatic rapidly gaining adoption across multiple channels and ad formats. However, the business of programmatic buying can be complex even for the most sophisticated developer with years of technical and business experience. The article series will help clarify some of these complexities, starting with the Part 1 article below which provides an overview of the value chain.

The Programmatic Value Chain

Ad tech companies sit between advertisers, who are trying to reach consumers on smartphones and other devices, and the developers that attract those people with their apps. These companies use data and algorithms to create, target and automate the delivery of ads with precision and incredible speed.

Ad tech companies can loosely be defined based on whether they primarily serve advertisers (demand) or developers (supply). 

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Advertisers can include global Fortune 500 brands such as Coca-Cola, as well as e-commerce companies and retailers like eBay. Mobile app and game developers can be advertisers as well, particularly when they are trying to advertise to acquire new users for their apps.

Publishers can include major media companies like The Guardian and AOL/ Huffington Post, as well as smaller, independent news and entertainment sites. On mobile, the definition of publisher expands to include app developers of all types, including games, communication, social and entertainment apps.

There are many acronyms in the world of ad tech, some you may not be familiar with. Here’s a list of the most important ad tech terms and acronyms you need to understand to help you navigate this value chain:

  1. Programmatic buying: The use of software to buy and sell digital advertising, allowing buyers and sellers to use complex delivery rules, targeting and optimization algorithms to serve the right ad for every request
  2. RTB: Real-time bidding (RTB) is a subcategory of programmatic buying. It’s the practice of buying and selling of ad space in real time, on a per-impression basis
  3. Ad Serving: Technology used to place ads in apps; Lets publishers sell, manage and deliver their ad inventory to demand sources
  4. Ad Exchange:  Platform for selling and buying online advertising inventories, facilitating the buying process between demand (advertisers, media agencies, ad networks) and supply (app developer, publisher)
  5. DMP: A data management platform (DMP) is a warehouse used to store and analyze data generated from ad campaigns, ad impressions etc.; Used by publishers, ad exchanges, ad networks etc. for the use of ad targeting
  6. DSP: A demand-side platform (DSP) allows buyers to manage their campaigns and run them automatically on multiple ad exchanges through one interface
  7. SSP: A supply-side platform (SSP) is a software solution app developers can use to manage and optimize their monetization strategies. SSPs tap into many sources of advertising demand and give developers tools to manage these demand sources centrally
  8. Trading desk: An ad tech platform, geared towards advertisers and agencies, facilitating the buying of digital advertising, often through programmatic buying

Next week in Part 2 of the series, we’ll break down how programmatic buying works vs. the traditional way digital media buys happen.

In the meantime, if you have any questions about Fyber, feel free to contact our experts here.