Programmatic buying or “real-time bidding” refers to the buying and selling of online ad impressions through real-time auctions that occur in the time it takes to load a web page. These auctions are usually facilitated by ad exchanges or bidding platforms.
How programmatic purchasing works
As ad impressions are loaded into a user’s web browser, information about the page being viewed and the user is passed to an ad exchange, where the ad is auctioned. The winner loads on the website almost instantly, as the whole process takes only milliseconds to complete.
You can recognize if a user has previously been on a site looking at a specific pair of pants, for example, and therefore you can be prepared to pay more to the page you are interested in to put ads on it.
Calculation of prices in programmatic purchasing
The price of impressions is determined in real time based on what buyers are willing to pay, hence the name “real-time bidding”.