Worldwide, digital advertising rakes in more than $300 billion every year. That figure has been rising for years, and digital ads have finally surpassed traditional media.

One of the reasons for the meteoric rise of digital ads has to do with changes to the way ad spaces are sold. Many market places use a bidding system. Automated bidding systems have made buying ad space at competitive prices much, much easier.

How does automatic bidding work? This guide breaks it down for you.

The Bidding Process

Most platforms, like Google Ads and Facebook Ads, use a bidding system. This means advertisers bid on ad spaces. If you win the bid, then your ad is displayed to the user.

Different platforms use different criteria to judge bids. Google, for example, doesn’t only look at the monetary value of the bid. They also consider the quality of the ad and the advertiser’s reputation.

Advertisers are also analyzing how good any particular placement is for them. They’ll use AI to determine if a user matches up with their ideal customer. If it does, then the AI will go ahead and make a bid.

The most onerous part of this process is that these decisions have to happen in nanoseconds. The publisher has to place the ad space, the AI has to analyze it and place the bid, and the publisher has to decide on the best bid.

All that happens in a flash so that websites will load quickly for users.

Switching to Automated Bidding Systems

In the past, media buyers largely handled buying ad space. They’d contact a publisher and buy specific spaces.

Advertising platforms like Facebook and Google have made that model almost obsolete. Instead of buying space for so many impressions or a length of time, these platforms offer to bid on individual spots.

Since the decisions have to be made in fractions of a second, there’s no place for human decision-makers in this process. Instead, the automated bidding system will analyze the available ad spaces and make appropriate bids.

This speeds up the process. In turn, advertisers spend less time on media buying. Publishers can sell more of their ad space, and users have an uninterrupted website experience.

Benefits of Automated Systems

Automatic bidding usually goes hand in hand with programmatic advertising. Both offer plenty of benefits for businesses.

One is the increased reach programmatic ads have. You can run campaigns across many platforms and websites. In turn, you reach a larger audience.

You’ll also be able to take advantage of smart bidding. The automated system analyzes each available space against your campaign parameters. In turn, the system will spend your budget in a better way.

Put Your Ad Buying on Auto-Pilot

Automated bidding has made it faster and easier to buy the right ad spaces for your business. If you’re using Facebook Ads or Google Ads, chances are you’re already using this type of bidding. By understanding how it works, you’ll be in an even better position to take advantage of it.

Looking for the latest business news to help you boost your small business? You’re in the right place! Check-in with us often and discover all the latest trends.