Programmatic ad buying is the use of Artificial Intelligence and machine-learning to buy advertising in real-time, instead of going through human negotiations and pre-set prices.
It uses an auction-based software, rather than manual negotiations. This gives you as the advertiser the ability to pay for impressions based on the value of the viewers of your ad instead of a flat CPM* fee across all impressions on a website.
*(Cost Per Thousand; A $2.00 CPM, that means an advertiser must pay $2.00 for every 1,000 impressions of its ad).
The software sends a bid for the ad view based on the value you have assigned to a variety of variables such as time of day, device, website, and audience cookie details, among others.
This increases both the targeting and efficiency of advertising.
You only pay for ads delivered to the right people at the right time and depend less on the “spray and pray” method of much of digital advertising.
Capturing the attention of consumers in today’s digital ecosystem is no easy task. There are millions of websites, applications, and digital properties being viewed across a variety of channels, all day, every day.
Having to use separate platforms to advertise on different channels and having to select the best places to put your advertisements in the digital world is an increasingly daunting task.
Programmatic advertising solves this.
Back in the Early Days
In the early days of digital marketing, ads were traded in much the same way you’d buy a regular magazine ad. Salespeople would reach agreements with advertisers to place a banner on a website for a specific time period. This meant the same banner was always displayed, no matter who visited the site.
The problem with this approach was targeting. If you chose to advertise on a large publisher’s website there was no way of knowing who saw your ads. Products aimed at an audience of people over the age of 50 could just as well be shown to 25-year-olds.
This brought on the birth of Real-Time Bidding (RTB), the first real instance of programmatic advertising.
As a visitor enters a website, a request is sent to an ad exchange with information on the website along with data on the visitor.
This information is then matched against available advertisers and a real-time auction takes place between the advertisers that match the criteria.
For instance, let’s say you visit a website that sells Jello pudding pops, but you don’t make a purchase. Later you visit CNN, and suddenly you see ads about Jello pudding pops everywhere!
These ads are placed in front of you with the help of Real-Time Bidding.
The company selling Jello Pudding Pops has stated: “I want to show my ads on these 10 websites, but only to visitors who previously visited my site and didn’t make a purchase.”
During the time it takes you to load the website, an auction takes place between the Jello people and everyone else who’s also interested in showing you ads.
The winning bidder gets to display its ad to you on the publisher’s website.
Programmatic platforms have been growing their inventory and database such that any format and any channel can be accessed programmatically today, including mobile, desktop, tablet, audio, digital outdoor, and connected TV.
Computers and algorithms make the ad buying, placement, and optimization process more efficient, removing mundane activities and cutting down on time-to-market.
Advertiser Precious Pets wants to sell more jeweled dog collars.
It hires a programmatic advertising platform that is able to identify online consumers by things like:
· Demographics (Female 18 – 29)
· Geography (Los Angeles)
· Interests (Large purses, tiny dogs, TikTok),
· Behaviors (Lunches out, trips to Cabo),
· Time of day (12:00 – 3:00 a.m.)
· Device (Smartphones)
The platform then uses real-time data to identify the best online audience(s) for the campaign and buys digital ad inventory through an auction based on everything available across multiple devices, in places the audience cares about.
Advertisements are personalized based on each consumer’s unique interests and behaviors.
Intelligent connections are made, insights are generated, and performance is optimized.
At the heart of every programmatic advertising platform is a proprietary machine-learning algorithm that analyzes campaign inputs and user behavior so real-time campaign optimizations can be made and audiences that are most likely to convert are identified and targeted.
The Benefits of Programmatic Advertising
There are multiple benefits of using a programmatic advertising platform for all your digital advertising efforts. First and foremost, programmatic advertising helps buyers and sellers make data-driven decisions and removes the guesswork from the ad buying process.
It’s good for your budget. Programmatic technology creates efficiencies by using machine learning to optimize campaign success, avoiding ineffective inventory.
Better targeting. You will be hard pressed to find a technology platform that allows you to target across as many different tactics, across devices, in real-time.
You can streamline your campaigns, consolidating campaigns in one system across devices and formats.
Is Programmatic the Future of Advertising?
Programmatic advertising enables marketers to more effectively funnel messaging across desired channels and optimize Share of Attention, to reach the most desirable markets and demographics, and use data to pinpoint new opportunities.
Through automation and machine learning, programmatic creates an environment that enables marketers to reach their most meaningful audiences more efficiently than ever before using digital media to deliver the best results.
Programmatic is not the future of advertising, it’s already here. If you are not taking advantage of its potential in some capacity already then you are missing out on the potential to save money and see better performance in your online advertising campaigns.
The earliest adopters will benefit the greatest from programmatic native advertising technology because it’s not crowded with content yet like the organic channels that most are relying on currently.