Programmatic Advertising You Need to Know

By Team Writer - Last Updated on February 26, 2020
Programmatic advertising explained

Engaging in online business is not an easy task especially when the requirements for it are not sufficient. The best thing to have in business is to ensure the right tools are in place for the business to grow.

In today’s world, business owners must strategically look for ways to make their business more unique than all of the rest. We know maintaining a business is not as easy as starting a business and that is why there are specific tools you should use to make your business more solid.

As technology continues to develop, new tools and techniques are stealing the spotlight to make life and business easier. We get to use new technological and digital machines to aid our business initiatives. When you look around you get to see similar businesses such as yours improving and becoming more successful and you begin to wonder about what they are doing that you should implement.

There are several ways of achieving success in business, but none beats programmatic advertising. It is the secret magic of business. There are billions of websites, applications, and digital properties being viewed across a variety of channels, all day, every day.

We separate platforms to advertise on different channels and having to select the best places to put or advertisements in the digital world is an increasingly but daunting task. This has been created to reduce hectic ways of purchasing ads for businesses.

Most people in the business world still find it hard to give up the traditional way of preparing or making ad tags which can be menial but labor-intensive. With this programmatic advertising, humans have more time for optimization and improvement of ads.

Programmatic Advertising Statistics

  • 62 percent of marketers use programmatic advertising to achieve brand objectives.
  • Mobile programmatic ad revenues will account for 43% of US mobile display-related ad revenue in 2018, up from only a 6% share in 2013.
  • Nearly 75 percent of senior marketers are allocating a portion of video spend to programmatic buying.

Indeed, the ability to use consumer data at scale to optimize ad campaigns on the fly is probably the biggest promise of advertising automation, a.k.a., programmatic advertising. For the people behind the scenes, time gained back to dedicate toward more creative endeavors is a huge plus, too. Additionally, programmatic advertising reduces costs on both the buying and selling sides.

You would also like to know that more than two-thirds of US digital display ad spending is programmatic and mobile programmatic ad revenues account for 43% of US mobile display-related ad revenue in 2018, up from only a 6% share in 2013. Nearly two-thirds (65%) of marketers surveyed are set to spend more money on programmatic advertising in 2016.

In other countries programmatic advertising has been taken as the spotlight of business. Programmatic transactions for digital display account for 86.4% of the market in Canada this year, even though global privacy reform and device tracking protections are making it more challenging to execute.

The programmatic advertising industry is growing at unprecedented rates according to eMarketer year over year spending has increased approximately 30% and it is set to top $39.10 billion in 2018 in the US alone.

What is Programmatic Advertising

Programmatic advertising is the process of automating the buying and selling of ad inventory in real-time through an automated bidding system. Programmatic advertising is the automated buying and selling of online advertising. This automation makes transactions efficient and more effective, streamlining the process and consolidating your digital advertising efforts in one technology platform.

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.

Programmatic advertising enables brands or agencies to purchase ad impressions on publisher sites or apps within milliseconds through a sophisticated ecosystem. Programmatic advertising is a way to automatically buy and optimize digital campaigns, rather than buying directly from publishers.

It’s designed to replace human negotiations with machine learning and AI-optimization.  The goal is to increase efficiency and transparency to both the advertiser and the publisher. This is done through real-time auctions where ads are bought at the same as a visitor loads a website.

The rate at which programmatic advertising is being used is way more than what you expect. Most companies have seen programmatic advertising as a very essential tool in publicizing their business. Most businesses that cannot grow without publicizing it to the world make use of programmatic advertising to make foster its success.

The History of Programmatic Advertising- How it All Began

In the days before, if an advertiser wanted to buy media inventory from a publisher, they would do this manually and directly. This can be a very tedious process, which involved negotiations, insertion orders (IOs), manual tracking, and long waiting periods. The advertiser had the job of tracking the results manually in order to see where the ads were performing the best.

In addition, because advertisers typically purchased media on a CPM model, they bought impressions in bulk, such as the same ad on the same app. Despite the user demographics and behavior, every user was seeing the same ad.

As time flew and went on, the number of advertisers and publishers grew exponentially, it became utterly impossible for publishers to sell most of their inventory manually and for advertisers to handle the direct media buying process. The advertisers would need to be in direct contact with thousands of publishers at a time in order to maximize their reach.

Again, in addition, manually tracking all of the ads proved to be nearly impossible. Now, big thanks to the availability of programmatic media, this problem is solved. All over the world today, marketers around the world are leveraging programmatic strategies and tools to deliver personalized user experiences across devices and continents.

As these advertisers’ demands for programmatic buying rise, publishers become more willing to release their premium inventory for programmatic buying. On the other side, there are also maturing advertising technologies that meet the increasing attention and needs of advertisers.

These technologies ensure the quality of media inventory, which in turn helps solve issues such as ad viewability, fraud, and brand safety.

Why is Programmatic Advertising Important and Why Does Your Brand Require it?

  • Scale:

    The strength of programmatic is its incredible scalability at a volume direct buy could never have reached. In the times of direct buy, or even current “traditional” media buys, you would be limited by smaller inventories and lesser reach.

    The strength of programmatic allows you to reach a vast amount of people all across the Internet wherever they go through the power of retargeting. Programmatic advertising allows you to purchase any inventory available on the Internet, provided you have the budget available.

  • Real-Time Flexibility:

    A problem with direct buy is that it doesn’t permit any adjustments once your purchase has been made. It’s all set, and all you can do is let it run its course regardless of whatever performance you are seeing. Programmatic advertising, however, allows you to make changes in real-time based on the impressions that you are getting.

  • Targeting:

    With programmatic advertising, you can also layer in way more targeting criteria pretty cheaply in order to reach the exact audience you want, all at the previously mentioned huge scale.

    For instance, you could layer thousands of specific in-market audiences into your targeting reaching all across the Internet and make your advertising much more efficient, saving you money on spending while making you more money per impression.

    When we talk about big data, demographics, interests, in-market audiences, and more are only the start of the kind of layers you could add to your targeting. Targeting criteria all through one platform is one of the biggest benefits of programmatic advertising.

  • Efficiency

    In business, you can use programmatic advertising for some of your biggest clients to make their spending more efficient. For instance, if we have the extra money in a client’s advertising budget, we can plug it into their programmatic partner and layer in that client’s very specific targeting criteria.

    This is because programmatic advertising is so cost-efficient, even a small piece of a budget can go a very long way, and that client will make back four to five times what they have spent on it.

How Does Programmatic Advertising Work?

Programmatic advertising encompasses two different kinds of media buying:

  • The Real-time bidding (RTB)

    For most people, real-time bidding on an open marketplace is the more popular of the two programmatic media buying methods. The reason is that it allows businesses to serve ads on a wide variety of websites to only people that meet their buyer personas. With this real-time bidding, the process of placing an ad involves a publisher, a supply-side platform, a demand-side platform, and an advertiser.

    First, with a supply-side platform, publishers offer up access to an audience in the form of ad inventory and space on their web pages where an ad can be served to a visitor. In fact, in an open marketplace, advertisers bid to reach that audience or demographic. Space is now won by the highest bidder during an auction. Once a user of the internet clicks a link, the auction begins.

    Essentially, the software will say to advertisers, “This is what we have on the person visiting our page based on their browsing history, behavior, and device type. What are you willing to pay to show your ad?”

    What you are willing to pay will be based on what your odds of converting the visitors are. This type of process used to take days, weeks and sometimes even months.

    Now, on the open marketplace, it spans milliseconds with an experience just as fast in private marketplaces, where publishers and advertisers meet for a more transparent media buying experience. These are very exclusive, invite-only marketplaces in which a publisher or a  small group of publishers offer their ad inventory to a particular group of advertisers.

    This procedure of ad buying skips the ad exchange altogether: The benefit here is all parties know what they’re getting, that is, Advertisers will know where their ads will be placed, while publishers can ensure only quality ads are displayed to their audience.

  • Programmatic Direct

    Compared to the former, the programmatic direct method is closer to traditional media buying. It allows advertisers to purchase a guaranteed number of impressions ahead of time. It can be compared to booking a hotel room directly through the hotel rather than through an online ad.

    Most times, publishers will reserve their most premium placements on their home pages, for instance, programmatic direct deals with top-tier advertisers. On the other side, advertisers who want to guarantee placements on a valuable publisher can do so in advance.

The types of programmatic advertising

There are a few different types depending on who you ask, but these are the basics:

  • Open Marketplace or Auction:

    OM has so many names because it can refer to both a programmatic ad type and a type of transaction. OMs the most basic and currently the most common kind of programmatic, with ad inventory available to all bidders in an open auction with, you guessed it, real-time bidding.

  • Private Marketplace:

    These kinds of marketplaces are a little more exclusive. Access to them is granted to just certain buyers or even a single buyer, and even the ad inventory might be restricted or specially selected. The primary aim of PMP is to exercise control over where your ads will run, which is why the buyers are limited.

  • Automated Guaranteed:

    As the name suggests, this is the most heavily automated of the programmatic ad types. In AG, the ad inventory is reserved in advance, and pricing comes fixed. In addition, the RFP and campaign routing processes are fully automated through a software platform. This kind is rapidly growing in popularity versus OM.

The Top Programmatic Advertising Platforms Include:

  • Smarty Ads
  • Tube Mogul
  • Simpli.fi
  • Media Math
  • PubMatic

The secret to succeed if running a PROGRAMMATIC ADVERTISING platform is to employ the use of a proprietary machine learning algorithm that is designed to analyze campaign input and user behaviors so that audiences who want to leave are targeted and retained.

Programmatic advertising as the name suggests shows it is mainly used by business owners as you can’t advertise if you are not into business. If you are not selling a product or rendering any service, what are you advertising?

There are a host of reasons you should use programmatic advertising including:

  • Enhanced targeting strategies
  • better returns on investment
  • advanced tracking capabilities
  • automation

And no business can succeed without advertising.

Why Do People Use Ad Block Software, and Can it Affect Programmatic Advertising?

Ad blockers have been around for years however online advertisers all over the world have been freaking out about these software programs lately. These ad blocks as the name suggests are used to block or prevent ads from being shown on websites. Of course, it will affect programmatic advertising because once your ad has been blocked automatically, the person that blocked can’t see your product.

I understand why people use AdBlock. In fact, I use it myself because it is so annoying and frustrating for random web ads to keep popping up while I am busy doing something important on my device. Some games, for example, even offer the option of paying to block ads.

Also, you need to consider a lot of things before embarking on your programmatic advertising campaign and they include:-

  • Cost
  • Transparency
  • Technology
  • Targeting options
  • User data
  • Technical Support
  • Intuitive interface
  • Metric.

You might not understand these things if you are not an expert so seek knowledge from an expert.

What are the Examples of Programmatic Advertising?

Some real-life examples of programmatic advertising you can look up include:

  • The Amanda Foundation: Digital Pawprint
  • Tariff Research
  • The Economist: Raising Eyebrows and Subscriptions
  • AirAsia: Customer Confidence.

Programmatic Advertising Advantages

  • It has Increased transparency & control:

    Programmatic technology provides a layer of transparency that marketers and advertisers can’t get from traditional advertising. Through it, advertisers can see exactly what sites their advertisements are reaching, the type of customer looking at their ad, and any costs associated with the advertisement in real-time. Due to this, making optimizations and quick changes on the fly are able to take place in a much more efficient and educated way.

  • Audience reach:

    Another major advantage of programmatic advertising is the potential audience reach. At any time, there are 3.5 billion people on the internet on average. That is a potential reach of, depending on targeting parameters, millions of people.

    It is always best to narrow that down to those ideal consumers, but the potential reach is not only impressive but instantly trackable.As a display advertisement is seen, advertisers can see just how many impressions were served, who looked at it, where they were located, and so much more within the tips of their fingers.

  • The Real-time measurement:

    Real-time reporting and data measurement are the dreams of every marketer and advertiser. P.A provides the ability to measure exactly how a creative, campaign, or overall targeting is performing as soon as the campaign’s launched (although we wouldn’t recommend making any changes for a week or so).

    Unlike traditional advertising such as billboards, print advertisements, digital advertising through a publisher, etc. you don’t have to wait until the end of the campaign to get results.

What’s Next for Programmatic Advertising?

According to eMarketer, programmatic ad spends made up $25.48 billion of the total digital ads spend in 2016, up from $17.5 billion in 2015. By the end of 2019, programmatic ad spend is expected to hit $45.72 billion.

And by 2020, programmatic ad spend is expected to reach $68.87 billion. That is a growth rate of nearly 4x in just a few years.

Things to Consider Before Starting Your First Programmatic Advertising Campaign

Also, you need to consider a lot of things before embarking on your programmatic advertising campaign and they include:- Cost, Transparency, Technology, Targeting options, User data, Technical Support, Intuitive interface, and Metric. You might not understand these things if you are not an expert so seek knowledge from an expert.

Frequently Asked Questions about Programmatic Advertising

Q. How much does programmatic advertising cost?

A. On the average, programmatic advertising range around $0.50 to $2 as cost per mile.

Q. How does programmatic ad buying work?

A. When a webpage is loaded and has the space for an advert (and there aren’t many that don’t serve ads of some kind eh) on it, information that’s been gathered about both the user/visitor (audience segment based on web behavior) and the context of the site or webpage its being loaded to,  is sent back and forth to an ad exchange and the ad is placed on that page. This space gets auctioned off to the highest bidder and their ad is placed in the space – all of this is done in milliseconds with no apparent detriment to page loads times or user experience.

Conclusion

According to current trends and industry developments, it is becoming apparent that advertisers and publishers who do not make use of programmatic advertising are either leaving money on the table or wasting time on ineffective practices. As the online programmatic advertising industry gets more technology driven it’s best to adopt these practices and get with the times or else your business might fall behind, stagnate or even go under because of it.

If you are a publisher and want to see first-hand the advantages of an optimal programmatic advertising strategy, go ahead and check for experts on Google who can help out but be ready to pay.

Team Writer

Team Writer | TechFunnel.com is an ambitious publication dedicated to the evolving landscape of marketing and technology in business and in life. We are dedicated to sharing unbiased information, research, and expert commentary that helps executives and professionals stay on top of the rapidly evolving marketplace, leverage technology for productivity, and add value to their knowledge base.

Team Writer

Team Writer | TechFunnel.com is an ambitious publication dedicated to the evolving landscape of marketing and technology in business and in life. We are dedicate...

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