How Programmatic Advertising Works — In Simple Terms

Online advertising has long moved past guesswork banners and phone-call negotiations. Today, it’s a complex, multilayered automated system. You open a news article and don’t even realize it: within milliseconds, dozens of brands have already bid for the right to show you a banner. By the time you’ve finished the first paragraph, someone has already made money.

All of this is programmatic advertising.
It runs in the background: automated systems decide for themselves who, where, and when to show an ad — and they do it faster than you can blink.

At Membrana Media, we help publishers earn more and show ads in ways that don’t annoy readers: increasing revenue, improving user experience, and making advertising truly smart.

If you’ve never worked in AdTech but want to understand how it works — you’re in the right place. Let’s break it all down without complicated terms, so clear that even a child could get it.

What is programmatic, and who invented it?

Programmatic advertising is a way to buy and sell ads automatically. Instead of manually agreeing with website owners about which banner to place, where, and when, systems do everything automatically, in real time, and at massive scale.

Everyone benefits:

• Advertisers reach the audience they need;
• Publishers sell ad space at market price;
•  Users see more relevant (and therefore less annoying) ads.

But it wasn’t always like this.

How the industry agreed: from chaos to OpenRTB

Before ads became smart and fast, they were… manual. Literally.
An advertiser would find a website, open their email, and write to a manager: “Hello, we’d like to put a banner on your homepage. How much?” Back came an Excel or PDF price list: a banner here — $500 per week, a banner there — $200. Simple. Or the opposite: horribly complicated.

Negotiations took weeks, designs had to be approved, JPG or even .swf files (yes, those still existed) were emailed around. Creatives were manually placed in code or the CMS. Then, you just hoped someone would actually see the banner.

Targeting, especially contextual targeting, didn’t exist. Ads were shown to everyone indiscriminately, regardless of interests or behavior. You might visit a lasagna recipe page and see an ad for a cement mixer.

As for reporting, if it existed at all, it was only on clicks. A 0.07% CTR was considered a success. And if someone saw the banner but didn’t click — well, too bad.

The number of websites kept growing, users grew even more, and manual work became increasingly inefficient. Something faster, more precise, and automated was needed. Enter programmatic.

Interestingly, programmatic wasn’t someone’s “genius idea on a napkin,” but rather an industry evolution driven by a few key players:

1. Right Media launched its ad exchange RMX in 2005 — one of the first places where bids were set automatically. In 2007, Yahoo bought the company for bout $680 million, signaling that ad automation was the future.
2. DoubleClick, a banner ad leader since the 1990s, was acquired by Google in 2007 and became the foundation of Google Ad Manager — a cornerstone of the modern programmatic ecosystem.
3. Former Right Media employees founded AppNexus (now Xandr) in 2007, a platform that refined the idea of real-time auctions (RTB).

But there was a problem: all these platforms spoke different “languages.” SSPs had one API, DSPs another, some used XML. The industry urgently needed a single protocol to connect it all.

Between 2010 and 2011, IAB Tech Lab introduced OpenRTB — an open standard for communication between SSPs, DSPs, and exchanges. The first mobile version of OpenRTB launched in February 2011, and by January 2012, OpenRTB became an official IAB standard.

Why does this matter?

Before OpenRTB, thousands of websites had to be manually connected via custom APIs. After, you just connect to an SSP, and all DSPs “understand” it. An advertiser launches a campaign and their DSP can reach Vienna and Vancouver under the same protocol.

Everything happens automatically, instantly, and transparently — no hacks or homegrown integrations needed.

Without OpenRTB, programmatic wouldn’t have scaled or become the powerful mechanism we see today.

How it all works — step by step

1. The user visits a site, Say someone opens a news article. As the page loads, the site signals:
“I have an ad space. Who wants to buy it to show an ad to this user?”
This is called an ad request — and it’s immediately sent to an auction.

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2. Advertisers bid in the auction
The auction happens in fractions of a second. It’s called RTB (Real-Time Bidding).
Put simply, the bidding process looks like this:
— “I’ll pay 10 cents, show my banner!”
— “I’ll offer 15, and I have a video!”
The highest bid wins. That ad is instantly displayed on the user’s screen. The whole process takes about 300 milliseconds — roughly the time it takes us to blink.

3. How do they know what to show?
Through data. Collected via cookies, pixels, browsing history, interests, geolocation, and many other parameters.

Ad systems analyze user behavior and decide which ad is most suitable. This is part of what’s called prebid analytics.

Interesting: despite loud announcements, Google backed off its plans to disable cookies under regulatory pressure. Still, the entire market is moving toward more privacy. Safari and Firefox have been blocking third-party cookies for years. In the U.S., Safari holds a 65% share, significantly impacting ad technologies.

Who does what in the programmatic ecosystem

To avoid confusion, let’s break down the main players in automated ad buying and selling — and how they interact using standards.

1. Publisher — the website owner providing ad space.
2.  Ad Server (like Google Ad Manager) — the system managing ad delivery. It can directly send requests to DSPs (via Open Bidding).
3. SSP (Supply-Side Platform) — the publisher-side technology. SSP helps sell ad space, manage bids, and block unwanted advertisers.
4.  DSP (Demand-Side Platform) — the advertiser-side platform where buying parameters are set. Examples: Google DV360, The Trade Desk.
5.  Ad Exchange — the ad marketplace where SSPs and DSPs meet and the actual auction happens.
6. DMP (Data Management Platform) — helps collect and use user data for targeting.

Membrana Media here is an experienced mediator between the site and the ad ecosystem. On one side: a publisher who wants to earn but doesn’t want to dive into the nuances of SSPs and DSPs. On the other: ad platforms needing clear, high-quality inventory.

Membrana handles this entire dialogue: helps set minimum bids, filters out unwanted advertisers and topics, configures custom formats and auctions. And if needed, brings in new partners without extra headaches for the editorial team.

In other words, it makes monetization more efficient, transparent, and flexible. So that the technology works for the publisher — not the other way around.

What do publishers need to know?

 Programmatic isn’t just a “turn on and make money” button. To generate significant revenue, a few conditions matter:

1. Sufficient traffic. No traffic — no auction. Traffic from big cities and high-spending audiences is especially valuable.
2. Clean and clear site structure. Ads must load quickly and be properly labeled — otherwise, an SSP simply can’t sell them.
3. Mobile optimization. Most impressions today come from mobile. If the site is slow or broken on mobile, revenue is lost.
4. Transparency and brand safety. Publishers can’t fully control this: DSPs themselves determine what a page is about and exclude “risky” topics, such as war, violence, and disasters. If content is monotonous and focused only on anxiety-inducing news, monetization drops. Advertisers eagerly pay for safe topics — tech, sports, fashion, and family. The more diverse and balanced the content, the higher the chances for stable revenue.
5.  Flexible format setup. Standard banners no longer perform as well. Video, rewarded ads, interactive formats — these are what truly drive revenue.

But even the smartest technology won’t work if the site isn’t ready. To achieve stable ad revenue, the site (and especially the editorial team) needs to stay sharp and responsive to audience signals.

Here’s what publishers increasingly face:
— Users develop banner blindness;
— Yet they get irritated by overly intrusive ads — especially on mobile;
— Advertisers want partners who speak their language.

If all this is taken into account — instead of just “throwing up banners” — programmatic becomes a powerful growth engine, for both revenue and user experience.