Can someone explain programmatic advertising in simple terms?

Programatic advertising is not a marketing channel in the same way you would think of Social Media Marketing or Search Engine Marketing (SEM). Rather, programmatic refers to the method that is used to select which ads are shown to the end user for available ad inventory. This method includes the advertiser selecting a “bid”, or how much they are willing to pay for certain metrics (CPM, CPC, etc), setting a budget, and buying the ads through a programatic auction.

The original form of programatic advertising was SEM. In a program such as AdWords, you select how much you are willing to pay for users to click on your ad (or more recently, how much you are willing to pay for an online conversion) when they search for certain keywords. An auction then takes place when that keyword is searched factoring in the different bids as well as other factors, such as quality score. Google then programmatically chooses which ad will be shown. Facebook and other major advertising platforms use the same or similar programatic process for selecting which ads are shown.

See some more detailed information on how the Google and Facebook auctions work here:
https://support.google.com/adwords/answer/142918?...
https://www.facebook.com/business/help/4302911769...

Often when people refer to “programatic” in the industry, they are referring to programatic display advertising. Before programmatic display, the previous method involved buying impressions in chunks at a certain CPMs. I would be surprised if you are currently buying using this traditional method as programatic buying is much more common.

Whether or not you should use programatic display advertising comes down to your business objective. If you are looking to drive cheap direct conversion, it is probably not your best bet. I would exhaust all your options in SEM and Social before looking at display advertising at all.

One tactic you may want to consider though is remarking via programatic display. You can send display ads to users who have shown certain behaviors on your site, but have not yet bought (see graphic below). This could include users who have visited your marketing landing page, users who have viewed certain products and countless other options. A good place to start with display remarking would be through Google AdWords.