In the past, ads on media platforms were bought and placed only by humans. This process was hampered by mistakes. Human error is unavoidable, sadly, and advertisers eventually recognized this. Enter what is now known as programmatic advertising. According to data of eMarketer, 85% of US advertising budgets will go toward programmatic ad buying this year.
But What is Programmatic Advertising?
Programmatic advertising is where you use technology to automate the purchasing and selling of ad impressions for online video ads, native ads, digital display banners, or other types of ads. Ads are served dynamically in a programmatic setting on the basis of individual users visiting an app or website. Publishers utilize real-time auctions to see which ads appear when a user visits one of their app screens or pages.
More specifically, it works like this: When you visit a site, the browser sends your personal data (gender, age, online behavior) and the main topics the site covers to a number of platforms that handle ad impression transactions. When the platforms get the data, they initiate something like a bidding process to establish the ads you will see on the site. The buyers in this auction are brand advertisers and their media partners. The platforms carry out the auction in a process called bidding in real time, which transpires very quickly. There are mere milliseconds between the time the user opens the site and the point in time when its contents load.
Main Functions of Programmatic Advertising
The technology’s main function in terms of ad buying is to automate the auction bidding process that transpires in real time: when sites serve ads and users visit them. Programmatic advertising is lucrative because it allows advertisers to target ads based on concrete user data instead of buying inventory from the publisher of the ad. This way, the advertiser is focusing less on the location of ad display and more on the recipient of the ad.
As far as reasons to adopt programmatic advertising go, this is one of the best ones. However, it will not work unless you know why you’re doing it. You should set your goals in advance. This is not as hard or as general as it may sound. You will be faced with a set of new terms and concepts as someone exploring a new area of advertising. Take the time to really grasp and understand them.
Protect Your Brand
Programmatic advertising relies on algorithms. While these are less prone to error than us humans, they are still not failsafe. When an algorithm goes wrong, ads will show up in the wrong place. You need to make sure you’re constantly updating your demand-side blacklist and monitoring it for unfitting sites. Certain platforms can exclude entire categories from ad spending, which is definitely an advantage.
Use a whitelist if you offer a sensitive product or service. This will pull up a list of sites that are approved, not a list of denied ones. The whitelist will make sure your ad isn’t associated with any inappropriate content. On the downside, it will up your costs and limit your ability to reach your audience. If you choose to partner with a professional content marketing service, they will make sure your ads appear neither on sensitive nor on low quality sites.
There is Still a Need for Human Intervention
Programmatic advertising requires human intervention despite relying on algorithms and machines. The types of platforms available differ markedly from one another. Some are merely technical ones that enable brands to run programmatic buying activities independently. Others are half-managed services. Still others are fully managed. From there, brands have to optimize their buying and allocate skilled people planning and management.
The Issue of Fraud
According to data of State of Digital, views of programmatic ads are around 50% on average. While that’s good news, it has been estimated that advertisers lost $6.5 billion from digital bot fraud in 2019. Still, the industry-wide fraud level of programmatic ads is lower than of other types of display ads at 16%.
Examples of Programmatic Advertising in Action
The Economist launched an investment campaign in programmatic advertising in 2015 and 2016, which yielded huge returns – 10:1 to be exact. The ads succeeded in targeting readers who hadn’t spent a lot of time on the medium’s site by using its content along with funny, witty, or thought-provoking headlines. 3.6 million people took action as a result of the campaign.
UK charity organization Missing People turned to programmatic ads due to insufficient advertising resources. This move made it possible for them to target users according to the area, in which children had gone missing instead of merely issuing appeal ads once a week. Speaking in numbers, 20% more children were found alive after the charity moved to programmatic advertising, up to 70% from 50%. People would respond to messages that were relevant to either a specific location or to the area where they themselves lived.
Who Can get Involved in Programmatic Advertising?
At the beginning of this article, we informed that there were a number of platforms handling ad impression transactions. These platforms were developed to make sure the right consumers saw the right ads from the right brands. Brands, media agencies, ad exchanges, supply-side and demand-side platforms, publishers, and audiences all get in on the action. Here’s a brief overview of the agents in some of these categories.
Ad exchanges are where the auctions take place in real time. They handle ad buying and selling. Supply-side platforms help publishers manage price points, identify audience segments, and facilitate sales across ad exchanges. Demand-side platforms help agencies and advertisers adjust bidding strategies and analyze available inventory in real-time.
Publishers sell ad impressions on their apps, sites, and platforms. Finally, audiences are the users who see the ads on these apps, sites, and platforms.
Programmatic advertising has become a force to reckon with thanks to its ability to scale and automate complicated tasks. As tech companies introduce ways to improve the process, it’s only going to get bigger.