Programmatic advertising has received a lot of attention over the past couple of years and for good reason. It provides tremendous control of message delivery for the smart advertiser. Programmatic covers display, video, audio, search and numerous Outdoor formats. Because of the numerous variables that can be influenced by programmatic advertising it has turned digital advertising from “spray and pray” to a laser focused medium.
What Is Programmatic Advertising
But what is programmatic advertising and how does it work? Programmatic advertising is the automated buying and selling of online advertising. Digital advertising has become increasingly complex. With tens of millions of websites and different ways to promote from display to video, audio etc. choosing the best option is daunting. Enter programmatic. An advertiser identifies exactly who they want to reach, age, gender, income, location, interests etc. and computers and algorithms make the ad buys based on the specified parameters. Then the real magic happens. Results are examined by the algorithms and then through machine learning (artificial intelligence) campaigns are optimized so they become even more efficient.
Programmatic advertising occurs in real time, in an auction-based system. Because auctions take place in milliseconds this can seem baffling at first glance. When anyone clicks on a web page that has advertising space that is configured for programmatic advertising, the publisher of the page puts up an ad impression for auction in an ad marketplace. The ad marketplace then runs an auction among advertisers interested in displaying an ad to that specific customer that just clicked on the page. There may be many advertisers competing in this auction. Whichever one is willing to bid the most wins the auction, and then their ad is displayed to the customer when the page loads. Because the bids are already determined this process can occur before a page loads.
Advantages of Programmatic Advertising
There are numerous advantages to the advertiser. First, they only pay for impressions and clicks they want. In the early days of digital advertising advertisers bought inventory directly from publishers. A company selling upscale women’s coats might buy advertising on Vogue.com. But men go to that site. And some women on the site may not be able to afford the coats advertised. Those impressions would be wasted. Programmatic advertising is site agnostic, it does not care what site advertising is served to. It only cares that the ad is served to a woman who can afford the coat being advertised.
Programmatic advertising is performed in real time with real-time reporting and measurement. This allows for greater transparency and control. The advertiser knows who saw the ad and what action they took. Now, an advertiser can make optimizations quickly and based on solid data. And the targeting capabilities are beyond compare. Programmatic advertising relies on dozens of data providers who specialize. Some data providers focus on peoples’ financial standings, others look at peoples’ interests and others on individuals’ behaviors. An advertiser can target precisely, but at scale. At any time, there are billions of people on the internet, so the reach is huge.
If there is a down-side to using Programmatic Advertising it is the cost and complexity. Access to programmatic is gained through a Demand Side Platform (DSP). These are multi-layered programs that require large ad spends to access. A good digital advertising agency will have DSP access and do all of the technical work for you. If you want to learn what programmatic can do for your business, please contact us for a free consultation.