What Programmatic Ads Are and How They Work

Programmatic advertising is big — so big that marketers devote around 54% of their budgets to it, according to Statista. But is it the right investment for your business?

You may have heard that programmatic is highly effective but costlier than other digital ad options. That can make it a trickier choice.

At Zoe Marketing & Communications, we’ve helped businesses navigate digital marketing since 2020 and work with high-quality programmatic providers.

Read on to get more grounded in what programmatic is, what it can bring to your business — and your possible next steps.

8 key things to know about programmatic ads and how they work

1. What programmatic advertising is

Programmatic refers to buying digital ads via an automated bidding system. Tech companies — called trade desks and demand-side platforms (DSPs) — secure ad space across websites, apps and more. Marketing agencies manage the process for businesses.

Buying and selling happen in real-time, with ads targeted based on browsing behaviors and interests. The goal? Get people to click, visit your landing page and take action.

2. Who ads show up for

Programmatic allows precise audience targeting, including:

• Location: City, state, ZIP code
• Demographics: Age, gender, household income
• Interests: Content and videos viewed, recent searches
• Behavior: How often they visit certain sites

For example, if you want to reach 20-40-year-old outdoor enthusiasts in Illinois, you can.

Even with growing opt-outs, cookies and third-party trackers still gather substantial data, helping pinpoint ideal audiences.

3. Where ads appear and what they look like

Programmatic ads run across various platforms, including:

• Websites and apps (as banner, display and pop-up ads)
• Social media (Facebook, Instagram, LinkedIn)
• Pre-roll video (ads before online videos)
• Streaming TV (on platforms like Hulu)
• Targeted email marketing (delivered to opt-in recipients)

Different tactics influence where your ad appears. Display ads offer the most targeting options, while retargeting serves ads to users who previously engaged with your content.

4. How programmatic differs from other digital ads

Unlike search engine marketing (SEM), which relies on keywords, programmatic uses behavioral data to serve ads proactively.

It also differs from social media ads, which only target users on a specific platform.

The best approach? A blend of marketing tactics, tailored to your goals.

5. How long to invest in programmatic

Consistency is key. Aim for at least three months — one to let the algorithm learn and two more to optimize.

Tweaks may be needed along the way, such as adjusting creative or targeting.

6. Which businesses benefit most

Programmatic works for businesses at all stages. It’s especially useful for branding and reaching people who may not yet be searching for your product.

Because it’s behavior-based, it keeps you in a buyer’s line of vision before they even realize they need you.

7. Why you need an agency

You can’t buy programmatic ads directly — only through a marketing agency. Think of it like buying a car. You don’t go to the manufacturer; you work with a dealer.

An agency ensures your ads run on high-quality sites, tracks performance and refines campaigns.

8. What programmatic costs

Costs vary based on ad quality, platform and targeting. Generally, expect a cost per thousand impressions (CPM) of $1-$15. Agencies may also require minimum ad spends.

Next steps for successful programmatic ads

Programmatic advertising is powerful, but it requires expertise. You’ve learned how it works, where ads appear, and why working with an agency is essential.

If you’re ready to explore programmatic, talk to us at Zoe Marketing & Communications. We’ll guide you through your options.

Still researching? Learn more about other ad types:

• What search engine marketing (SEM) is and how it works
• The top types of social media ads and how they work