Before programmatic, all the inventory exchange used to carry out as direct deals. Advertisers and publishers went through an intensive process of negotiation. Starting with price, placing orders, to creative management and billing, everything used to be done manually.
Insertion orders were signed to seal the deal. Since everything was manually handled, publishers didn’t get much time to experiment with placements and offer a good user experience. We are not even discussing tracking performance and managing fraud clicks, yet.
Luckily ad tech evolved and we got programs managing the most of the operational tasks leading to the rise of programmatic advertising.
What is Programmatic Advertising?
Programmatic advertising is an automated system of selling and buying of digital inventory. It uses a system with multiple programs built inside it to carry out functions like selecting ad formats, adding floor price, allow targeting, generate required reports, and many more.
Consider this, you want to sell your 300×300 ad unit to a buyer looking to target males, aged between 18-30, living in California, interested in bikes and bid not below $0.5 CPM.
For such specifications a direct deal can be tricky, starting with finding such buyers and asking them to agree to your price.
However, with programmatic ads, you just need to create a bidding logic for the placement (300×300 ad unit), add all your requirements, and see bids coming in, in real time.
Programmatic advertising gives means to sell digital real estate faster and more efficiently while dodging major ad fraud. It can be categorized into two different separate sections, programmatic buying and programmatic selling. Naturally, these are just the two opposites that meet in the middle to exchange money for ad space. Technically speaking, both are just fancy ways of talking about automation, whether it is using automation and data while buying advertising, or selling using automated tools instead of a separate sales team calling companies that might be interested.
Define: Programmatic Selling
For publishers, programmatic selling has made everything easier by a multiplier of a hundred. No more sales teams calling people and no more worrying about empty advertising space, because they can utilize real-time bidding auctions or guaranteed premium placements exchanges that can be found from multiple providers, easiest of which to implement in comparison to the ROI is Google’s DoubleClick Ad Exchange.
Apart from Google, there are multiple other providers for advertising exchanges. However, when it comes to connections, nobody can beat Google. That is why it is a good place to start. With more experience, you can always move on to experimenting with different ad exchanges and compare their profitability and ROI.
The key term when it comes to programmatic advertising is efficiency. As mentioned, before programmatic, inventory was sold and purchased by human salespeople and buyers. Leading to human error and increased cost employing more people. With programmatic, use of software reduces cost and error caused by humans during multiple steps of exchange process.
Sounds like machine taking human jobs
Maybe. But, for good. With machine handling jobs like creating exhaustive reports, sending bulk requests to buyers, and managing billing, humans can put their time improving the inventory. They start with innovating their placements, create sophisticated campaigns for yield, and work on providing better user experience. Giving machines repetitive operational tasks allows humans to work with more creativity and strengthen strategies.
Define: Programmatic Buying
The other side of programmatic coin, programmatic buying is whether advertisers and marketers get to set up detailed campaigns to reach their audience. Initially, the buying process involved cold outreach to multiple publishers with campaign proposals. This included hundreds of manual hours to close a publisher, not to mention the painstaking negotiation process.
But with programmatic buying, advertisers simply can toggle a few buttons to create a campaign, define audience and set budget.
Another factor that programmatic buying has that hooked advertisers is the data driven side of it. The analytical capabilities and statistics offered by many of the ad exchanges and ad platforms, used by advertisers to control their campaigns, enable advertisers to see exactly how many people have seen the ad and how many people have actually clicked the ad, the different demographics their advertisement is reaching and way more.
This allows for advertisers to focus their advertising budgets more effectively, knowing they can actually target an ad down to the favourite colour of a user. And who knows, if your favourite colour is red, maybe next week you’ll see an advertisement for red t-shirts directed at you. And finally understand the true power of targeting.
Benefits of Programmatic Advertising
Reduce human error: Human brain is likely to forget numbers and confuse between names. However, a program won’t. By letting automation take care of numbers and constants, not only human error can be reduced, but also speedup the process.
Efficient targeting and retargeting: A well targeted ad benefits users, advertiser and publishers, then why not utilize it. Programmatic advertising allows detailed targeting from user demographics to device type. Not limited to that, it further allows advertisers to reach users who have previously shown interest in the brand via retargeting.
Better inventory management: With growing internet usage, publishers traffic is increasing and hence the need to better inventory management. Publishers now have diverse audiences that require segmentation which can be easily done by automations provided by ad platforms. Next, the management of all ad types, placements, and their impact on user engagement can easily be monitored by programmatic services.
Create exhaustive reports: After the evolution of programmatic, reporting quickly became popular because it offered an advanced understanding of growth opportunities to the ad operations team. With help of programmatic, publishers can create exhaustive reports to track performance, find opportunities, and improve yield.
Increased demand: Introduction of programmatic allowed global advertisers and marketers reach to any publishers with relevant audiences. In return, it increased demand volume on publishers traffic allowing them to better monetize their traffic.
Prevent ad fraud: Looking at yield benefits, fraud prevention methods were soon automated. Many ad networks, SSPs, and exchanges added advanced fraud prevention programs to their platforms, to avoid fraud with growing yield. We have initiatives like ads.txt by IAB to curb domain spoofing and inbuild traffic tracker by Google Analytics to filter out invalid traffic in place.
What Are the Types of Programmatic Advertising?
Basis the type, further the programmatic sales model is designed for the exchange. Here are some of the popular ones:
|Real time bidding||A real time auction completed in a split second involving the process of creating bid requests, hosting auctions, choosing a winning bid, and finally displaying it on webpage. Generally, RTB is carried out by supply-side platforms or ad exchanges|
|Header bidding||Another real time auction running on a user’s browser designed to increase demand by calling in multiple partners to bid simultaneously.|
|Open bidding (EBDA)||Google’s counter to header bidding, where auctions run on Google server rather than browsers, saving loading time and speed up the process. With EBDA, publishers can leverage Google AdX demand and compete it with header bidding.|
|Private auctions (PMP)||A private auction where only the demand partners invited by publishers can bid on a part of inventory ensuring better profit and reduced fraud.|
|Programmatic guaranteed||Guaranteed inventory is offered in exchange of fixed price. The price and inventory is negotiated prior and insertion order is signed. However, the process remains automated and exchange is conducted within ad platforms.|
|Programmatic direct||This is a programmatic version of direct deal, where publishers and advertisers negotiate the deal directly. However, the campaign is set up and run via an ad platform, giving benefits of both direct and programmatic.|
|Preferred deal||Before inventory goes for real-time auction, a few buyers get exclusive access to inventory. This is where they can actually see the inventory first before buying it. Otherwise, the inventory is taken to open auction.|
These are just a few popular ones, many other methods (like daisy chaining) came and went within the programmatic universe as per their updated versions made to the market.
Evolution of Programmatic Advertising
Programmatic display or programmatic banner contributes to display advertising. It includes an exchange of inventory to show banners of the brand, when clicked leads to the advertiser’s landing page.
YouTube ads are popular examples of programmatic video ads. However, website publishers are also running video ads to their websites thanks to outstream video ads and automations offered by ad platforms like Google Ad Manager to easily implement them.
Publishers with audio services like Google Play Music, Spotify, SoundCloud, and TuneIn monetize their audio inventory via programmatic audio. Unlike video ads, audio ads are yet to make it to the mainstream.
Addition of Programmatic Advertising Platforms
The evolution of programmatic gave rise to multiple platforms that made inventory monetization more profitable but complex at the same time. Here a few names that are thrown around in programmatic environments:
Ad Networks: This advertising platform buys inventory from publishers, SSPs, and exchanges, then segments it and sells it to the highest bidder. By increasing revenue for publishers, it takes a small revenue share from publishers and advertisers.
Supply-side platforms: These are mostly responsible for managing publishers inventory, finding suitable buyers for them, and communicating with servers.
Demand side platforms: The advertiser-half of the process managed by demand-side platforms. They offer campaign management, targeting enablement, and CPM optimization based on budget for advertisers.
Ad Exchanges: This can be seen as a pool of inventory, organized and segmented for global advertisers to access, bid, and win as per the minimum requirements imposed by respective publishers. Ad exchange is responsible for managing, both supply-side and demand-side campaigns and matching them for higher yields.
Data management platforms: Publishers get tons of user data as users visit their websites, similarly, bid operations generate data valuable to optimize future campaigns. To store, manage, and utilize all this data, publishers often use data management platforms.
Fraud prevention platforms: Just like optimization, there is a need of platforms to take care of security and maintain minimum standards in business practices. This is managed by fraud prevention platforms like Interactive Advertising Bureau (IAB) and Media Rating Council (MRC)
Future of Programmatic
Programmatic is the present and future of ad technology.
A report by Statista showed 2020 programmatic ad spending to be $127 billion and expected to grow up to $147 billion by the end of 2021.
Programmatic advertising is constantly changing. New technologies, regulations, and opportunities keep on making it better. The ad tech environment has stabilized enough to contribute a good amount to the global economy. The addition of many programmatic platforms is a proof that programmatic is the future of ad tech.