Advertisers programmatically name the next big thing. This is because they have seen a steady increase in programmatic ad spend over the past decade, mostly in display advertising and compared to traditionally buying digital media. The forecast for 2021 is even better, which makes it a model worth exploring if you haven't already.
Here's a simple guide to programmatic advertising, how advertising campaigns work, how to optimize them, and why you should use them. It's an area that is largely obscured by heavy jargon and technical details that often make it seem complicated. So this guide is simplified.
Introduction to Programmatic Advertising
Programmatic is an online system that uses data to automate the buying and selling of ads across formats and channels. Although the program started out as an intermediary for the automation of display ads and email, it has since evolved to cover nearly all media including digital out-of-house (DOOH) ads, ads for mobile apps, native ads and audio promotions. It's easy, fast, and a streamlined way to buy and sell ads.
The automation provided by programmatic enables publishers and ad buyers (e.g. you, your company, or your agency) to bid for any ad space on the World Wide Web. This could be a YouTube display ad or a banner on a niche website.
The only difference (compared to traditional ad buying processes) is that within microseconds the system (basically a computer) takes into account a large number of parameters in order to auction a given ad space to the most suitable buyer. This is where the power of data comes in, helping advertisers target ads and achieve their ultimate goals.
In most cases, the one who offers the highest wins the advertising space. But there are many other factors that play a role. Here is a brief overview of the critical aspects of the program.
Programmatic jargon simplified
- DSP – Demand-side platform; Used by brands and agencies to help decide which ads to buy
- SSP – Supply side platform; Publishers use this to sell their ad space
- DMP – data management platform; is used to store and use various types of data
- Advertising networks – intermediaries or brokers who marry buyers and sellers
- CPM – cost per mile; Price an advertiser pays for 1,000 views or clicks
- CPC – cost per click; Price an advertiser pays for clicks
Types of programmatic advertising
Here are some of the most common types of programmatic advertising:
Real-time bidding (RTB)
This is the most common type, an open auction where the highest bidder gets the space. The only downside is that the advertiser doesn't know which publisher site their ad is showing on until it's live.
Private Marketplace (PMP)
Exclusive bids on advertiser invitations only. You can choose the publishers, which is a key advantage over RTB.
A controlled form of PMP where advertisers can select ad space based on various factors such as traffic numbers and the publisher's target audience.
Instead of bidding, publishers and advertisers negotiate a one-to-one deal here. Advertisers have a huge impact on this type of media purchase.
Data types used
With data playing an important role in program planning and new privacy and security regulations like the GDPR come into effect, it is important to understand what types of user data are used here. A brief overview.
First party data
- Data provided by your users during direct communication
- High quality information, but limited range
- Examples: Transaction history and buying behavior are examples
Third party data
- Secondary data, originally owned by another advertiser or publisher, is usually agreed through an agreement
- Used for scaling
- Example: A cloud kitchen that receives information from an e-commerce website
Third party data
- Aggregate data from a wider audience and is usually obtained through combined user behavior
- It offers a long range, but carries the risk of hits and errors
Example: Receive data from SimilarWeb
Top channels for programmatic advertising
Programmatic covers almost all ad formats, understandably except for offline media such as print. This has resulted in programmatic advertising being available across channels.
- Video ads – Ads that appear in videos, in front of videos or in search results on video platforms such as YouTube
- Show advertisements – They appear in the headers, footers and sidebars of websites
- Native Ads – They appear like regular content; In-article ad is an example
- Digital Out-of-Home (DOOH) – Targeted advertisements on offline public platforms such as cinemas
- Social media – Optimized ads sent to users based on their interests; enables strong optimization
- Audio ads – Ads in front of audio tracks and between podcasts (e.g. Spotify)
Top programmatic advertising tools
While giants like Google and Amazon rule the programmatic roost as platforms, there are several third-party tools and ad exchange platforms that you can use to achieve better campaign optimization. Here are some of the most popular.
A list of programmatic tools:
- AdClarity – Support with ad optimization
- Genius monkey – Provides additional support for programmatic ad tracking
- Jelli – Supports purchasing audio ads through programmatic
A list of the ad exchanges:
Benefits of Using Programmatic Advertising
Most importantly, programmatic enables advertisers and publishers to optimize their ad targeting, which leads to better ROI numbers. However, there are several reasons why it caught on and why agencies and the Big Five are putting their money on it.
Here are some of its attractive advantages:
- Bigger insights – Provides real-time performance reports that can be used for future campaigns
- Better targeting opportunities – Several factors allow advertisers to optimize and better target their ads
- more transparency – With PMP and Programmatic Guarantee, advertisers can see the performance and logs of their ads in real time
- Cost effectiveness – Better targeting and optimized ads mean better ROI and lower losses
- Safer – Prohibits fake bot traffic and other deceptive subsystems; offensive participants are prohibited
Programmatic advertising is growing so fast that it has to influence other advertising and marketing formats. It has the ability to break the thin line between itself and search-based marketing (PPC) like google ads and bing ads. But no one is complaining because it promises higher ROIs and a streamlined approach to getting ads online. Maybe it's the big thing.