Programmatic Advertising
What is programmatic advertising?
Programmatic advertising is the automated bidding and placement of ads on a given platform. Traditional ad placement involves a long, tedious process of negotiations, bidding, contracts, and requests for proposals. Programmatic, on the other hand, streamlines the process into mere seconds. How? Using machine learning and AI to handle the sale and placement of digital ads. [1] More specifically, programmatic advertising uses historical traffic data and online targeting methods to put these ads in front of people who are the most likely to want to see them, which helps to improve conversions and ROI for your business.
Benefits of programmatic advertising
There are several benefits to using programmatic advertising in your ad campaigns, including:
Relevancy
Programmatic advertising helps ensure that ads placed in front of your target audience are relevant to their interests and preferences through superior targeting capabilities. Fifty-eight percent of advertisers note that the main drivers for their investment in programmatic are the ability to better use data and for the benefit of targeting efficiencies. Gaining access to premium inventory at scale ranked at third place in driving programmatic investments for advertisers, which saw substantial growth from 20% in 2020 to 50% in 2021. [2]
Real-time data and analytics
Advertisers can optimize their campaigns by gaining access to real-time data and reporting how their ads are performing at that moment.
Reach
Programmatic advertising allows users to choose from an abundance of platforms and websites for the placement of your ads. Additionally, you have the option to advertise at scale, enabling users to use their resources more efficiently.
Conversions and ROI
While a lot of advertising methods focus on clicks, programmatic focuses on conversions. Clicks are certainly valuable regarding expanding reach, but they don’t matter much if they don’t turn into leads or conversions. With programmatic advertising, conversions can increase due to better ad placement. Additionally, with advertisers reporting the need for greater control of inventory and at a lower cost, it’s not surprising that supply chain transparency ranks as their primary concern, seeing a significant increase over last year (60% in 2020).
How programmatic advertising works
Programmatic advertising distinguishes itself by automating the bidding and placement of ads. There are several components to this method of advertising, including the publication and advertiser’s side. Below are some key terms to know before getting started with programmatic:
What is the ad exchange?
An ad exchange is an online marketplace in which advertisers and publishers can bid on advertising space as well as buy and sell digital inventory. It enables advertisers to make the media buying process more efficient and cost effective since they don’t need to negotiate with publishers individually to place their media. Today’s digital market happens in real-time with bids happening on the back-end while users load the page. This can expedite and simplify what used to be a long and tedious process of negotiating. However, there are some disadvantages to this model including the increased potential for ad fraud or difficulty in tracking which websites ads appear.
What is an ad network?
An ad network offers ad placements from a specific number of websites. It is a technology platform that connects publications to advertisers who want to purchase digital inventory. The ad exchange often features different ad networks in the auction.
What is a DSP?
Demand Side Platform (DSP) is an automated buying platform where advertisers go to purchase digital ad inventory. It allows buyers to manage multiple accounts on one platform.
What is the difference between an SSP and DSP?
DSP is the advertiser side of the ad exchange. SSP is the publisher side of the exchange.
Types of programmatic advertising
For advertisers, there are a few different types of programmatic advertising to choose from.
Programmatic guarantee
With programmatic guarantee, the advertiser is guaranteed ad impressions on certain websites as well as assured ad space on specific publishing sites.
Real-time bidding (RTB)
Real-time bidding automates auctions for online ad space, enabling advertisers greater control over costs and the channels and platforms where they want to publish.
Private Exchange Buying (PMP)
Privacy Exchange Buying (PMP) is a private auction for ad bidding versus a public marketplace. PMP allows publishers to choose which ads appear on their page and maintain exclusivity.
How to use programmatic advertising
Traditionally, ad placements consisted of the following steps
Advertisers offer bids for impressions
Highest bidder wins the placement
The ad is placed on the chosen website
The user clicks the ad and it converts
On the other hand, programmatic advertising takes these steps and condenses them to work in an instant. Competing bids are calculated by algorithms and analytics to determine the most cost-effective bid and placement for your ad.
Getting started with programmatic advertising
Getting started with programmatic advertising is a relatively easy process that includes the following steps:
Identify what your goals are
Determine who your target audience is
Select your DSP
Set up your ad campaign
Optimize your ad campaign using AI and analytics
Programmatic: The Future of Advertising
Programmatic can offer many benefits to advertisers, but it is only one component to a robust and effective AI advertising strategy. As we look toward the future of advertising, we can expect a greater use of AI advertising tools. When these tools are combined with your marketing mix, it can help brands better tailor their messaging, place ads on the right platforms and allow you to engage with your consumers more effectively.
Are you ready to learn more about the benefits of programmatic advertising?
Sources
IBM Watson Advertising
Attitudes to Programmatic Advertising Report, IAB
The performance data and client examples cited are presented for illustrative purposes only. Actual performance results may vary
depending on specific configurations and operating conditions.
Please note: Compliance applies to legal regulations (actual laws) not industry standards (although some industry standards are
supported by legal regulations).