PROGRAMMATIC ADVERTISING
Programmatic advertising is defined as the automated buying and selling of online advertising space. But actually, it’s much more than that.
The market for digital advertising space is run by ad exchanges, who operate computerized auctions that bring together both parties of the transaction:
Advertisers, who want to buy ad space on the internet.
Publishers, the website owners with digital space to sell.
Programmatic advertising takes the entire process to a new level. It uses algorithmic software that handles the sale and placement of digital ad impressions via ad exchange platforms – in a fraction of a second.
Programmatic also incorporates traffic data and online targeting methods to serve impressions more accurately, efficiently and at scale, which means better ROI for advertisers and publishers alike.
HOW DOES PROGRAMMATIC AD BUYING WORK?
Here’s the programmatic buying flow in a nutshell:
A person clicks on a website
The website owner puts the ad impression up for auction (SSP)
Advertisers offer bids for the impression (DSP)
The highest bidder wins the ad impression
The ad is served on the website to the user
The user (hopefully!) clicks on the ad and convertsDespite the many steps involved, this entire process happens in an instant. What’s more, the competing bids are calculated by algorithms and a host of analytics to automatically determine the most cost-effective bid.For example, if the user who clicked on the website is a strong potential customer for your ad, based on their historical surfing data and online profile, the bid served for your impression will be higher.
WHAT IS A DEMAND-SIDE PLATFORM (DSP)?
In every purchase of online ad space, there are two sides: the buyers (advertisers) and the sellers (publishers). Each side uses a computerized platform to facilitate the transaction on the ad exchange: publishers use Supply-Side Platforms (SSP) and advertisers use Demand-Side Platforms (DSP).
A DSP enables advertisers to purchase ad impressions on publisher websites, made available via ad exchanges and networks. It also enables advertisers to target certain audiences via data such as location, age, previous online behavior and more. The advertiser enters bids for ad space via the DSP, and the DSP automatically allocates ad impressions to abased on the advertiser’s bid price and audience targeting preferences.
TYPES OF PROGRAMMATIC ADVERTISING
In the world of digital media buying, you’ve probably come across the concept of Real-Time Bidding, or RTB.
RTB, is just one type of programmatic advertising. While static auctions for online ad space involve the purchase of thousands of impressions upfront, RTB enables bidding for individual ad impressions, which makes it much more focused than bulk ad buying.
Besides RTB, programmatic also includes other advanced forms of automated ad buying, such as “programmatic direct”, when an advertiser buys guaranteed ad impressions on specific websites or from selected publishers. With programmatic direct buying, advertisers can be assured ad space on specific publisher sites, however there is less capability to finetune audience targeting.
Many programmatic buyers use both RTB and programmatic direct to ensure the best digital ad placement mix.
WHAT ARE THE BENEFITS OF PROGRAMMATIC ADVERTISING?
Programmatic advertising provides a host of benefits that were unimaginable just five or ten years ago. And it is getting more sophisticated as new ad tech comes onto the scene. Here are some of the key advantages of programmatic advertising…
REACH
Programmatic advertising supports multiple ad exchanges and networks, which gives advertisers access to far more ad space on thousands of websites at once. Advertisers can advertise at scale at affordable prices and with no extra work.
TRANSPARENCY
Programmatic advertising gives advertisers and publishers real-time access to data about ad placements and activity, which helps to maximize transparency. The next step is achieving transparency in programmatic costs, which is a key issue facing the industry.
DRIVING REAL ENGAGEMENT
Programmatic advertising goes beyond impressions. It supports advanced targeting, such as contextual targeting, interest targeting, and lookalikes, to help advertisers reach high-quality audiences at scale and maximize their CTRs and conversion rates.
RELEVANCY
Programmatic ad buying gives advertisers access to a massive ad inventory across multiple ad exchanges and networks with a click of the mouse, including premium inventory and private marketplaces with high-quality traffic. With programmatic, advertisers can make sure to maximize the relevancy of their ads for specific targeted audiences and improve ROAS.
IS PROGRAMMATIC THE FUTURE OF MARKETING?
When it comes to programmatic, the future is already here. Programmatic advertising spend is increasing every year, and the remarkable growth extends beyond display ads to native advertising, mobile advertising and video advertising. By 2023, programmatic video advertising spend in the US is forecast to reach close to $75 billion.