What Is Programmatic Advertising and Is It the Future? – Exploring Benefits

programmatic advertising

Programmatic advertising is a method of buying and optimizing digital advertising in a highly automated and data-driven manner. It involves the use of technology, algorithms, and real-time bidding to automate the purchase of ad inventory and the targeting of specific audiences. The primary goal of programmatic advertising is to deliver the right ad to the right person at the right time, based on factors like demographics, behavior, interests, and other data-driven criteria. It streamlines the ad-buying process, offers precise audience targeting, and allows for real-time optimization, making it an efficient and effective approach in the digital advertising landscape.

Benefits of Programmatic Advertising 

Programmatic advertising offers many benefits for advertisers and marketers, which have contributed to its widespread adoption in the digital advertising industry.

Efficiency and Precise Targeting

Programmatic advertising automates the ad-buying process, reducing the time and effort required for manual ad placements. This efficiency can lead to cost savings and more streamlined campaign management. Advertisers can use data to target specific audiences based on demographics, behavior, interests, and other criteria. This precision ensures that ads are shown to the most relevant users, increasing the chances of engagement and conversions.

Real-Time Optimization

Programmatic platforms continuously analyze data to adjust ad placements, bids, and strategies in real time. This optimization improves campaign performance and ROI by ensuring that ads are displayed when they are most likely to be effective. Did you ever notice that you tend to get texts for pizza delivery around dinner time?

Increased Reach and Cross-Device Targeting

Programmatic advertising can access a vast network of websites, mobile apps, and digital platforms, allowing advertisers to reach a broad and diverse audience. This wide reach can be especially beneficial for brand awareness campaigns. Programmatic advertising can target users across various devices, ensuring a consistent and cohesive user experience as people switch between desktops, smartphones, tablets, and more.

Transparency, Control, and Data-Driven Insights

Advertisers have a level of transparency and control over where their ads appear, with the ability to set preferences and exclude specific websites or content categories. Programmatic platforms generate valuable data insights, helping advertisers understand campaign performance, user behavior, and engagement patterns. These insights inform future marketing decisions and strategies.

Cost-Effectiveness, Retargeting, and Personalization

Real-time bidding in programmatic advertising can help advertisers get the best value for their ad spend by bidding for impressions at competitive rates, which can lead to cost savings. Programmatic advertising allows for retargeting strategies, enabling advertisers to re-engage users who have previously interacted with their brand. Personalization based on user behavior and preferences enhances the user experience. Also, programmatic advertising can accommodate both small and large advertising budgets, making it a scalable solution for businesses of all sizes.

Types of Programmatic Media Buying

Real-Time Bidding

Often referred to as an open auction or open marketplace, Real-Time Bidding (RTB) has become synonymous with programmatic media buying due to its widespread adoption. In RTB, ad slots are accessible to all bidders and are allocated through a real-time auction. The highest bidder secures the advertising space, and this process unfolds instantaneously, allowing advertisers to select available ad slots. It’s important to note that in RTB, the highest bidder doesn’t have to pay their bid amount to secure the slot. RTB operates on a second-price auction model, where the highest bidder is only charged $0.01 more than the second-highest bidder. This system continues for subsequent bids. However, RTB lacks transparency for advertisers, as they are aware of the general category of publishers but are unaware of the specific publisher websites where their ads will appear.

Private Marketplace 

The private marketplace (PMP) operates similarly to RTB but with one crucial distinction—it is exclusive to invited advertisers. In this private or closed auction, publishers reserve premium ad inventory solely for select advertisers. Many Demand-Side Platforms (DSPs) offer their own Private Marketplaces, which are accessible only to their users or customers. PMPs are commonly employed by websites and publications with a broad audience reach. In contrast to RTB, advertisers using a PMP have full knowledge of the websites where their ads are displayed, providing them with the ability to accurately measure the return on investment (ROI) of their advertisements.

Preferred Deals

In preferred deals, advertisers have the privilege of selecting ad inventory at a fixed price even before it becomes available on private marketplaces or open auctions. This approach, also known as spot buying, involves a more refined negotiation, with both parties agreeing on pricing, targeting, and other parameters beforehand. Advertisers are granted a preview of the publisher’s ad inventory and are not obligated to make any immediate purchases. To make informed decisions, advertisers can utilize a Demand-Side Platform to understand their target audience and decide whether to acquire the ad impressions.

Programmatic Guaranteed

Programmatic Guaranteed, sometimes referred to as programmatic direct or automated guaranteed, adheres to a more traditional approach to media buying. In this method, advertisers and publishers engage in one-on-one negotiations to determine the terms of their collaboration. Unlike the other media buying methods discussed, Programmatic Guaranteed does not involve a bidding process. Ad inventory is sold directly to the advertiser following negotiation. Programmatic Guaranteed provides advertisers with flexibility in selecting ad inventories, determining prices, specifying audience targeting, and setting frequency caps. This approach is typically favored by advertisers who have a clear idea of where they want to place their ads and possess substantial advertising budgets.

Popular Programmatic Advertising Channels

Display Ads

The term “display ads” encompasses various forms of online visual advertising. However, within the realm of programmatic advertising, the term specifically pertains to ads positioned in the header, footer, or sidebar of websites or apps.

Advertisers and publishers collaborate with display networks like Google, Microsoft, or Snapchat to streamline the acquisition and sale of advertising slots. Publishers earn revenue based on the data gathered from clicks and impressions, which is managed and reported through the display network.

Video Ads

The popularity of programmatic advertising is on the rise, with video emerging as one of the most favored mediums for content consumption.

There are three primary types of video ads:

In-stream Ads: These ads are integrated within the video player itself. For example, the commercials shown before a YouTube video fall under this category. In-stream ads come in three subtypes:

Pre-roll: These ads appear before the video content commences.

Mid-roll: Mid-roll ads interrupt the content by appearing in the middle of the video, often disrupting the viewing experience.

Post-roll: Post-roll ads are displayed after the video content concludes.

Out-stream Ads: Out-stream ads are positioned between online articles. They can be embedded within the content or displayed as pop-up windows.

In-display Ads: In-display ads are not presented within the video player but rather in search results or video recommendations.

Social Ads

Social media platforms gather extensive user data to enhance their targeting capabilities. Programmatic social advertising leverages this data to determine the ad’s audience, format, optimal timing, and frequency limitations. This valuable information empowers advertisers to refine their advertising budgets effectively.

Moreover, social ads extend beyond platform-based advertisements. Programmatic influencer marketing automates influencer campaigns by identifying suitable influencers, engaging their participation, and automating campaign management based on audience dynamics and campaign performance.

Native Ads

Native ads seamlessly blend with the appearance and tone of the platform where they are displayed. In programmatic native advertising, advertisers collaborate with a Demand-Side Platform to select impressions for purchase and determine their pricing, while publishers offer their advertising slots through a Supply-Side Platform (SSP).

Unlike programmatic display ads, which typically occupy the header, footer, or sidebar of a webpage or app, programmatic native ads have the flexibility to appear in various other locations within the content.

Digital Out-of-Home 

Digital Out-of-Home (DOOH) advertising represents a technologically advanced evolution of traditional out-of-home advertising. In the conventional DOOH sales model, advertisers had to engage with the network directly to negotiate audience targeting, pricing, screen selection, and other parameters through manual processes.

Despite its initial complexity, programmatic DOOH operates on the same principles as Real-Time Bidding and programmatic direct in terms of media buying processes.

Although measuring and attributing results in programmatic DOOH remain challenging due to its relative newness, advertisers can leverage its features, such as geofencing, to execute targeted and highly engaging retargeting campaigns.

New Target has a wealth of expertise in programmatic advertising that has transformed the way our clients reach and engage with their audiences. By harnessing the power of programmatic advertising, we’ve equipped our clients with the ability to pinpoint their ideal customer segments using data-driven insights and real-time bidding and even engaging in geofencing marketing.

This precision in targeting has resulted in higher conversion rates, reduced advertising costs, and a significant boost in the return on investment for our clients. The automation and optimization inherent in programmatic advertising have allowed us to continuously fine-tune our targeted campaigns, ensuring that every ad impression counts.

A global team of digerati with offices in Washington, D.C. and Southern California, we provide digital marketing, web design, and creative for brands you know and nonprofits you love.

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