Programmatic Advertising: A New Wave of Digital Marketing

programmatic advertising

What is programmatic advertising? 
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Automation is the key to efficiency as well as higher return on investments (ROI) in most industries these days, and advertising is no different. As you might infer from the name, programmatic advertising refers to using computers and machine algorithms to determine the best use of advertising expenditures, targeting, and placements. Instead of negotiating, creating a request for proposals (RFP), and talking with other humans to run a campaign, programmatic advertising does away with all of this and utilizes technology to streamline the process to maximize your ad spend.

 

WHAT IS PROGRAMMATIC ADVERTISING?

Programmatic advertising uses technology, but that is certainly not the only difference between it and traditional ad buying. Instead, this type of advertising is more about a paradigm shift. Sophisticated computer algorithms work, based on a particular set of parameters, to determine which ad placements will have the highest ROI.

For example, suppose you have an ad for shoes. Your campaign goal is to have people buy these shoes after clicking your ad. You plug the campaign goal into the system and set up other parameters. The system will then use what it knows, and what feedback it gets from your actual ad, to determine the right placements.

The system might already know that not too many people are looking for shoes at 3 AM, so maybe it focuses at 9 AM to start. However, perhaps after a week, it learns that more people buy at 10 AM, and the cost per acquisition is cheaper then. Having discovered that, it tries to show your ad at 10 AM instead of 9 AM.

There are four types of automated bidding that you should know:

1. Real-time bidding:
Publishers sell ad space in real-time to advertisers. Each advertiser competes (in real-time) for the ad space and bids on it. The highest bidder’s ad appears on the platform.

2. Private marketplaces:
Publishers have an invite-only group of advertisers that bid on ad space. This setup provides more transparency for both parties. Publishers know what ads they’ll be showing and can be confident the ads will be of high quality. Advertisers see the inventory they’ll be bidding on programmatically.

3. Preferred deal:
A publisher and advertiser directly negotiate a rate for ad space that the advertiser may use in the future. The buyer is not obligated to make a bid, and the seller is not obligated to accept the request.

4. Programmatic guaranteed:
The advertiser and publisher reach an agreement for ad space given a specific price. The buyer always makes the bid, and the seller shows the ad for that price.

What Types of Ads Use This?

One of the best things about programmatic advertising is that it works across all advertising channels. These channels include display ads, video ads, and social ads.

Display ads are the placements that you see on many websites. You might see these advertisements in the header, footer, or sidebar of the site. Generally, marketers work with different ad platforms to target audiences. Google Ads, of course, is one of the most well-known display ads available. Advertisers receive reports of where their ads show up, how much it costs, and what the ROI is.

Video ads are incredibly popular in mobile apps, websites, and other platforms. Users tend to respond favorably to video ads since they are very interactive and a rich medium through which an advertiser can convey their message.

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Social ads are excellent for programmatic advertising. With all the data social networks have on users, advertisers can have highly-targeted ads. Indeed, advertisers can use social network data to determine not only who is most likely to respond, but also which ad format is best, the ideal time, and the perfect budget. For people new to these ads, social networks are often the most accessible programmatic advertising for beginners to try.

Why Use Programmatic Advertising?

It should be reasonably easy to see that this type of advertising eliminates much of the pain points of the buying process. Publishers retain control of their ad inventory, and advertisers only bid on the spaces they want.

Aside from that, though, how does this all help publishers and advertisers achieve a better ROI? More to the point, why should you use programmatic advertising?

First, it’s much more data-driven, which leads to superior results. You can target a very refined market segment with your ads. Instead of buying an ad on a newspaper site, for example, you can programmatically buy ads on the newspaper site only for people who like cars. Or, if you’re targeting a younger audience, you can only bid on views from a mobile device. Those are examples – in real life, you can target your ads better that much more efficiently.

Secondly, programmatic advertising helps marketers streamline their efforts. You don’t have to manage a bunch of contracts with companies. You have one deal with the company handling the advertising, and everything else is up to the parameters you set and the algorithm’s choices. This change means your business can focus more on the ads themselves and less on the logistics.

Finally, there’s real transparency in the process. Instead of trusting the publisher to show the ad, marketers can see the number of impressions, price, and actions taken. This real-time data lets advertisers make adjustments as necessary.

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How Can It Improve Your Marketing Strategy?

There are many significant benefits of using programmatic advertising across all advertising channels. Programmatic advertising also greatly improves the overall marketing strategy for most organizations.

In particular, advanced algorithms focus on finding the perfect audience so you don’t have to. Before, marketers had dual roles. They would find the ideal segment that met the parameters  to reach the target audience. Marketers would then enlist a team of creatives such as Graphic Designers, UX/UI Designers, and Copywriters. Now, teams of intelligent data scientists work on creating complex models for finding the perfect segments – advertisers merely need to bring in their creative team. 

 

In other words, marketers can get back to focusing on how best to pitch the product instead of trying to figure out who will see the ad!

Since computers do the bidding in real-time, you can also have access to real-time or near real-time reports. You can see your ad spend, results, and adjust your campaign quickly, rather than waiting days, weeks, or months to see how an ad performs.

Finally, the best way in which programmatic advertising improves strategy is that it opens up whole new audiences. Instead of focusing on one site or app, you can access millions. Even if a customer is on a platform you’ve never heard of before, as long as they fit your target market, programmatic advertising can show an ad to them!

PROGRAMMATIC ADVERTISING IS HIGHLY BENEFICIAL FOR MOST MARKETERS

There’s no question that this advertising method will grow over the coming years. It’s truly a game-changer in terms of advertising. Marketers no longer have to labor over where to show your ad, when to show your ad, and to whom to show it. Instead, they can define parameters like budget, target market, etc., and the system takes care of the rest. Campaign management becomes a breeze as marketers can focus once again on the basics – creating a phenomenal ad that attracts interest in the company’s products and services!