For every business, being strategic and fully understanding the ins and outs of programmatic advertising before making the transition is critical for long-term success. You could have a brilliant ad, but the campaign will never reach the intended audience without the right strategy and the right targeting. This is where programmatic advertising shines when leveraged well.
Programmatic advertising can be found everywhere: from the websites you visit to the ads on YouTube – and even new formats like interstitial podcast ads or short clips on your connected television. The medium represented over $96 billion of digital display transactions in the US in 2021. This guide on programmatic advertising lays the groundwork for a successful programmatic campaign, telling you everything you need to know about how it works and how to leverage programmatic targeting for success.
What is programmatic advertising?
The term programmatic refers to how digital ads are sold or bought and programmatic advertising is the process of using technology to automate several aspects of the ad purchasing process. It is more efficient to purchase this way and allows for stronger optimization of digital campaigns.
Programmatic advertising can be used to strategically plan and execute campaigns for specific audience segments, geographic locations, or across multiple channels like video, mobile, display, and Connected Television (to name a few).
This methodology of planning and automating ad buying is effective for advertisers and brands irrespective of size since it does away with the “hit or miss” results of traditional display advertising campaigns. With the strategic planning and adjustments made possible through programmatic, reliance and efficiency increase. Algorithms also help advertisers better understand the best way to spend their ad money.
Programmatic advertising works especially well when building a long-term connection with your audience. It gives advertisers the upper hand for scalability and optimization, helping them create iterative campaigns for improved results. With programmatic advertising, brands can place ads in relevant channels and target the appropriate audiences for better results and improved ROI.
Some must-know programmatic terms are:
- Demand-side platforms (DSP): Platforms that let media buyers automate and optimize digital ad space purchasing.
- Supply-side platforms (SSP): The other end of the spectrum – publishers use SSPs to manage and sell ad space on their own apps or websites.
The benefits of programmatic advertising
Programmatic advertising makes it easier for advertisers to access a broader ad space inventory and leverage effective audience targeting. Some key benefits of programmatic advertising include:
- Reach larger audiences: Advertisers can reach larger, more relevant groups than when purchasing ad inventory from several disparate sources.
- Increased flexibility: Advertisers and buyers can make adjustments to ad campaigns transparently and flexibly.
- Better targeting: There is less wasted ad spend as targeting is more effective and weighed against impressions.
- Efficiency: Both sellers and buyers can achieve better returns on their respective investments.
How does programmatic advertising work?
Programmatic advertising requires advertisers to have an automated, ongoing connection with publishers (those with ad space to sell). Through this connection, advertisers can manage ad inventory. This connection is made using software instead of individual, manual negotiations. Additionally, with programmatic advertising, advertisers can pay for ad impressions instead of paying a flat rate across all platforms. Advertisers can also leverage both sell-side and demand-side platforms to buy across open networks.
For programmatic advertising to work, advertisers need to properly manage their audience, placements, budget, bidding strategy, creatives, and assets. Companies need to mention and specify target audiences, interests, and other essential parameters when leveraging programmatic advertising. These parameters can include:
- Demographics: age, gender, location
- Interests: medical news, new devices, health information, etc.
- Devices: laptops, desktop computers, tablets
- Behaviors: trends in the medical field
Programmatic platforms like DSPs will use this data to target appropriate audiences. The DSP bids for ad spaces on relevant apps, publications, and websites in real time. Once the relevant audience starts reacting to ads, organizations can view core KPIs like sign-ups, click-throughs, and impressions.
Types of programmatic advertising
Programmatic advertising is categorized based on how ad inventory is purchased. The most common forms of programmatic advertising are:
- Real-time bidding: Advertisers purchase ad space on an open marketplace. Ad auctions happen in real-time where millions of microtransactions can take less than 100 milliseconds to complete.
- Preferred deals: In this type of programmatic advertising, advertisers can choose the ad spots they want before they go to an open or private marketplace.
- Private marketplace: In a private marketplace, publishers set agreements with advertisers for ad space. This type of bidding lets websites set their ad space at the best price possible.
- Programmatic guaranteed: In this form of programmatic advertising, there is no bidding process. Instead, the ad placement process is automated. In this form of programmatic purchasing, both buyers and publishers can manage and regulate inventory.
Common methods for ad targeting with programmatic advertising
Programmatic advertising is based on efficient targeting. Here are some common targeting methods:
Audience targeting
Ads are shown to audiences based on data and potential user interest. Cookies from websites may be used to gather this data for relevant targeting, although there are cookieless data strategies that are gaining momentum. In practice, this means that when a targeted user visits your site, they will shown your ads later when scrolling YouTube or watching a streaming service.
Contextual targeting
In this form of targeting, ads are shown based on the website’s context and content. So if an advertiser is selling a health tech product, they might target users on health blogs, publications, or wellness-related platforms and apps.
Geotargeting
Brands can also target customers based on their location. Data from the current or past locations of users is used to target, ensuring the right customers are reached in the right places.
Keyword targeting
This form of ad targeting focuses on using specific keywords to reach the right audience. This is very similar to contextual targeting and its execution is most often seen in search and social media ads.
Retargeting
This method refers to the act of re-engaging audiences who’ve previously interacted with your brand. This can be through cookies or a tracking pixel.
What’s next for programmatic advertising?
The future of programmatic advertising is vast given the strategy’s potential. Many ad-tech companies are now turning to automation and artificial intelligence to build even greater efficiency into the media buying journey.
Automation
Automation in programmatic advertising is already prevalent, however, advances in artificial intelligence technology have helped increase the efficiency, relevance, and profitability of ad placements. Big data insights, GPT-3, and augmented intelligence solutions will also continue to impact marketing automation initiatives.
More than a demand-side platform
There is disintermediation on both the DSP and SSP side of ad tech. There is also a paradigm shift in programmatic advertising with both platforms stepping into each other’s traditional boundaries.
For example: solutions like illumin focus on the entire consumer journey to holistically enhance advertising outcomes. illumin offers media planning, media buying, real-time intelligence, and more all in one place, reducing marketing costs and enhancing desired business outcomes.
Increased personalization
Ad tech now requires high-level personalization and real-time measurement. It is going to continue to be essential to make decisions based on accurate data and insights – all while prioritizing user privacy.
Artificial intelligence and machine learning
Artificial intelligence (AI) is already used to find patterns, analyze actions, and predict future user behavior. AI can also be used to find the best times and locations to place ads.
Bottom line
Programmatic advertising is not new, in fact, it is as old as the digital banner ad itself. But the late 2000s saw a staggering evolution in the medium and programmatic platforms are more capable than ever. And now, Current technologies like AI are bringing an exciting edge to the world of programmatic. Programmatic advertising is a major facet of modern advertising and its ability to serve media to users at different points in their purchasing path is essential to long-term, digital success.
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