What is an advertising algorithm?
It is a set of rules that instruct a software to perform a certain task. When used by a DSP (Demand Side Platform), among other tasks, algorithms are used to bid for, and secure online advertising placements within certain pricing goals and targeting parameters, on an open Advertising Exchange.
In the online advertising space algorithms are also used for machine learning. When the same DSP's algorithm is used over a longer period of time, this tend to yield more and more efficient results. Such as a better CTR (Click Through Rate), lower CPM (Cost Per Thousand), and lower CPA (Cost Per Acquisition).