Luckily ad tech evolved, and we got programs managing most of the operational tasks leading to the rise of programmatic advertising. This improves ROI for both advertisers and publishers.
The fall of third-party cookies (which have grown quickly over the past 20 years) has raised concerns regarding the future of programmatic systems. Despite being on the verge of transformation, programmatic ads will continue to play a crucial part in digital marketing.
According to the Economic Times, programmatic advertising makes up 72% of the total market of digital displays. The amount spent on programmatic advertising by US marketers reached $106 billion in 2021, a 41% growth year over year. According to eMarketer, this figure will reach $123.2 billion this year in 2022.
This article will help you if you’re interested in knowing more about programmatic advertising and its functions.
What is Programmatic Advertising?
Programmatic advertising, or programmatic display, is an automated selling and buying digital inventory system. It uses a system with multiple programs built inside it to carry out functions like selecting ad formats, adding floor prices, allowing targeting, generating 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 display 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.
Defining 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, the 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 display advertising is efficiency. As mentioned, before programmatic, inventory was sold and purchased by human salespeople and buyers. Leading to human error and increased costs of employing more people. With programmatic, the use of software reduces the cost and error caused by humans during multiple steps of the exchange process.
Sounds like machines are taking human jobs
Maybe. But for good. With machine-handling jobs like creating exhaustive reports, sending bulk requests to buyers, and managing bills, humans can put their time into improving inventory. They start with innovating their placements, creating sophisticated campaigns for yield, and working on providing a better user experience. Giving machines repetitive operational tasks allows humans to work with more creativity and strengthen strategies.
Defining Programmatic Buying
The other side of the 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 the audience and set a 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 advertisers to focus their advertising budgets more effectively, knowing they can target an ad to a user’s favourite colour. 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
The 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 can human error be reduced, but it also speeds up the process.
Efficient Targeting and Retargeting
A well-targeted ad benefits users, advertisers 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 automation 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 display, reporting quickly became popular because it offered an advanced understanding of growth opportunities to the ad operations team. With the help of programmatic, publishers can create exhaustive reports to track performance, find opportunities, and improve yield.
The introduction of programmatic allowed global advertisers and marketers to reach 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 a growing yield. We have initiatives like ads.txt by IAB to curb domain spoofing and an 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 involves the process of creating bid requests, hosting auctions, choosing a winning bid, and finally displaying it on a 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 is 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 servers rather than browsers, saves loading time and speeds 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 the part of inventory ensuring better profit and reduced fraud.|
|Programmatic Guaranteed||Guaranteed inventory is offered in exchange for a fixed price. The price and inventory are negotiated prior, and the insertion order is signed. However, the process remains automated, and exchange is conducted within ad platforms.|
|Programmatic Direct||This is a programmatic version of a direct deal, where publishers and advertisers negotiate the deal directly. However, the campaign is set up and run via an ad platform, giving benefits 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 on their websites thanks to out-stream video ads and automation 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 are a few names that are thrown around in programmatic environments:
This advertising platform buys inventory from publishers, SSPs, and exchanges, then segment it and sells it to the highest bidder. Increasing revenue for publishers takes a small revenue share from publishers and advertisers.
Supply-Side Platforms (SSPs)
These are mostly responsible for managing publishers’ inventory, finding suitable buyers for them, and communicating with servers.
Demand-Side Platforms (DSPs)
The advertiser’s half of the process is managed by demand-side platforms. They offer campaign management, targeting enablement, and CPM optimization based on the budget for advertisers.
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. The Ad Exchange is responsible for managing both supply-side and demand-side campaigns and matching them for higher yields.
Data Management Platforms (DMPs)
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 for 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)
It is evident today that the future of programmatic advertising is very bright, and it is the best time to step into the boat. When it comes to smaller brands, accessibility has increased to a great extent, and marketers can now make use of programmatic advertisements to reach their target audience more easily.
Whatever the demographics and markets, automated systems expand the reach, creating scope for newer opportunities as well. It’s better not to miss out on this opportunity and make the best of it while you can. The addition of many programmatic platforms is proof that programmatic is the future of ad tech.
FAQ Related to Programmatic Advertising
The recent Programmatic Advertising trends are:
a) First-party data solutions and Sunsetting cookies
b) Growth of connected TV
c) Growth of white-label software
d) Video advertisements
e) Gaming on smartphones
f) Contextual ads
g) Programmatic audio
h) Rise of Digital out-of-home ads
The best place to start for those new to Programmatic Advertising is by doing some research. Learn about programmatic by attending webinars, listening to podcasts, and networking with others on best practices. As soon as you’re prepared to get going, start by creating your audience profiles, advertising plan, and KPIs.
This will assist you in determining which programmatic ad networks and exchanges are best for you. Also, don’t forget to read the Playbook, which contains information on using Programmatic Advertising on the Outbrain native ad network.
Despite the fact that Programmatic Advertising spending is on the rise, many digital marketers still struggle due to a lack of understanding of how Programmatic Advertising functions.
Programmatic Advertising is a particularly efficient approach to increasing brand recognition among large audiences because of its reach and scope. Consider using programmatic to distribute your message if your advertising campaign is targeted at the consideration/awareness stage.