Programmatic Advertising

What Is Programmatic Advertising?

October 29, 2020

Since the birth of the internet, companies across industries — but particularly in e-commerce and retail — have sought new and innovative ways to put data-driven marketing front and center to target and capture consumers’ attention. Digital advertising, now including video/TV, voice, social and native advertising, has long played a key role in transforming the online user experience as well as being one of the fastest-changing aspects of internet technology and user monetization. Programmatic media buying, one of the farthest reaching and ubiquitous types of online advertising and marketing, already accounts for anywhere from 63% to 85% of all display advertising, and this number only promises to increase in the coming years.

But what exactly is programmatic advertising?

What Is Programmatic Advertising?

Programmatic advertising, in its most basic form, is automated, real-time buying and selling of ads. Successful programmatic ad buying involves a mix of targeting, efficiency building and automation that empowers companies and brands to buy ad impressions within an automated bidding system. The automated bidding system is usually a kind of real-time auction that automatically buys and allows for optimization of programmatic ads.

The beauty of programmatic advertising is that companies can eliminate a great deal of manual work and introduce machine learning and AI to help make the process more efficient, targeted and accurate to deliver:

  • Greater transparency: Know exactly where advertising budget is going.
  • Real-time, dynamic optimization and metrics: Get immediate insight into ad performance, and adjust and test while campaigns/ads are still live.
  • Precision targeting: Send the right message, at the right time, in the right place to the right person.
  • Multichannel reach: Extend reach to all the digital touchpoints where users are active.

More fundamentally, programmatic advertising has the potential to offer more targeted reach and better ad performance.

Programmatic Ads

Programmatic ads make up the advertising inventory that these aforementioned better ad performance results hinge on. Programmatic ads are developed to target a specific audience using data and information about how consumers are using the internet, i.e., what they search for or show interest in. Programmatic ad-buying techniques are ideal for helping companies find the consumers who are most likely to be interested in their offerings and products, and tailor display ads to those consumers. The results of these programmatic ads are evaluated in real-time, so brands can adjust and re-develop on the fly, more closely aligning their offer and message to the demands of the individual consumer. These results can also provide an instant indication of ad and overall campaign performance.

What Is Programmatic Buying?

At the heart of programmatic ads and programmatic ad buying is user intent. How can a user’s intent be ascertained and understood, and immediately fed back into the ad-buying process? It’s possible to target the right ad to the right person at the right time, and with data and technology, programmatic buying iteratively, though in real-time, builds this relevance. Programmatic buying automates and synchronously improves ad buying all while letting the company/advertiser have more control and transparency over the process.

What the basic benefits of programmatic buying boil down to: it removes the guesswork and considerably speeds up buying, rollout/publishing and feedback/insight.

The Where and What-for of Programmatic Media

The magic of programmatic buying wouldn’t be possible were it not for the consolidation of digital and programmatic media. In the past, if an advertiser wanted to place an ad somewhere, it was manual and human: the advertiser would, in a basic scenario, approach an individual publisher (this could be a website or a company with a family of websites/online properties) and set up ads to run on that site. The more ads desired, the more legwork required.

Thus, ad networks and exchanges emerged to help match up supply and demand, and programmatic media and ads were born. It’s more involved than this cursory description, and it can involve a variety of automated technologies that help ease the process of media buying. Different elements make up the programmatic ecosystem:

  • Demand-side platform (DSP): Software that allows advertisers to buy ads across different platforms (based on demand)
  • Supply (or sell)-side platform (SSP): Software that allows publishers to sell display, video and mobile ad impressions in real time
  • Ad exchanges: This is where demand and supply meet up. A DSP connects to the exchange to match up with/bid on ad inventory

There are different kinds of programmatic media as well:

  • Real-time bidding (RTB): Auction-style action determines ad pricing, and any advertisers or publisher can operate in this arena.
  • Programmatic direct: Publishers can sell inventory directly to advertisers for a fixed price/CPM (cost per mille).
  • Private marketplace (PMP): Selected advertisers gain access to these restricted auction-style ad sales.

It’s fair to say that, despite the complex, “black box” nature of programmatic media buying, it has shaken up the landscape, making it easier and more efficient to run and optimize ads and understand how and where advertising money is best spent.

What Is Programmatic Marketing?

The programmatic landscape has opened all manner of new marketing opportunities, propelling programmatic media into the spotlight as a springboard as part of a more comprehensive marketing strategy. Programmatic marketing is a way to harness those opportunities and build a marketing strategy around them. The marketer’s dream is to be able to personalize marketing at scale to deliver an individually tailored ad to a single customer across a multichannel spectrum.

Programmatic marketing gets advertisers as close to this ideal as is possible today. That is, a programmatic marketing strategy aims to reach consumers — yes, you guessed it — at the right moment, at the right place, with the right message, and capitalize on this — or learn from it when the highly targeted approach doesn’t seem to resonate. The real-time nature of programmatic gives instant feedback as to what is working (or not) for consumers, letting the advertiser focus on optimizing ads for relevance, timing and/or context based on real-time data.

More Than Data, More Than Technology

Data-driven marketing is about more than technology, even though collecting and using data and feeding it into programmatic ad strategies and solutions rely heavily on technology. At its core, though, even programmatic advertising is about people, both the marketers whose jobs are made easier, and consumers whose needs are more accurately met. Programmatic, if done right, is not only about optimizing advertising but also about optimizing time. That is, marketers doing advertising see:

  • Better, more relevant results – faster
  • Better advertising ROI
  • Less manual, tedious and low-value work
  • Less waiting for results/instant ability to retool ads and campaigns

Ready to learn more about the programmatic ad revolution? Our experts can help you develop and implement your programmatic advertising strategy.