So as to understand programmatic advertising, it is helpful to return to the fundamentals of ad buying. And what better place to begin than the award-winning TV series Mad Men, based around the fictional Madison Avenue ad agency, Sterling Cooper, when copywriter Paul clarifies the media buying department to new secretary Peggy.
Needless to say, there’s a good deal more to advertising than simply buying media space. But there is no doubt that ad buying is — and has always been the key to the enterprise.
No matter how brilliant or creative the ad, positioning is the only way it is going to be viewed by the intended audience. Therefore, buying the best ad space in the very best cost and targeting it to the ideal audience, is the entire shakedown, really.
Fast forward into the 2020s, and there is a new media buying kid on the block: programmatic advertising.
Automated, complicated and computerized, it is a far cry from ad buying in the Mad Men era. Let us take a look at what’s programmatic advertising, and how it works.
Programmatic advertising explained
But actually, it is a lot more than that.
The market for electronic advertising space is conducted by ad exchanges, who operate computerized auctions which bring together both parties of the transaction:
Advertisers, who wish to buy ad space online.
Publishers, the site owners with electronic space to sell.
Programmatic advertising takes the whole process to a different level. It uses algorithmic applications that manages the sale and placement of electronic ad impressions via ad exchange programs — at a fraction of a second.
Programmatic also incorporates traffic info and online targeting methods to function impressions more accurately, effectively and in scale, which means better ROI for advertisers and publishers alike.
How can programmatic ad buying work?
Here is the programmatic buying stream in a nutshell:
A individual clicks on a web site
The site owner puts the ad impression up for auction (SSP)
Advertisers provide bids for the impression (DSP)
The highest bidder wins the ad impression
The ad is served on the site to the consumer
The consumer (hopefully!)
Despite the numerous steps involved, this whole process happens in an instant.
By way of instance, if the user who clicked on the site is a powerful potential client for your ad, according to their historic surfing data and internet profile, the bid functioned for your impression will probably be greater.
A DSP enables advertisers to buy ad impressions on publisher sites, made accessible via ad exchanges and networks. Additionally, it enables advertisers to target specific audiences via data like location, age, previous online behaviour and much more.
Kinds of programmatic advertising
In the realm of digital media buying, you have probably come across the idea of Real-Time Bidding, or RTB.
RTB, is only 1 kind of programmatic advertising. While static auctions for internet ad space demand the purchase of tens of thousands of impressions upfront, RTB allows bidding for individual ad impressions, making it far more concentrated than majority ad buying.
Apart from RTB, programmatic also includes other advanced types of automated ad buying, such as”programmatic direct”, once an advertiser buys guaranteed ad impressions on particular sites or from selected publishers. With programmatic direct buying, advertisers can be assured ad space on particular publisher websites, but there is less capacity to finetune audience targeting.
What are the advantages of programmatic advertising?
Programmatic advertising provides a multitude of benefits which were unimaginable only five or ten years back. And it’s becoming more complicated as new ad tech comes on the scene. Here are a few of the important advantages of programmatic advertising…
Programmatic advertising supports multiple ad exchanges and networks, which gigivedvertisers access to much more ad space on thousands of sites at the same time. Advertisers can advertise at scale at reasonable prices and with no excess work.
Programmatic advertising gives advertisers and publishers real time access to information about ad placements and action, which hehelpo maximize transparency. The next step is attaining transparency in programmatic prices , which is a key issue facing the industry.
Targeting past CTR
CTR isn’t a KPI. It doesn’t matter how many clicks you get — if they aren’t turning into conversions, all of the clicks on the planet will not count for much.
Programmatic exchanges offer access to real time information and advanced reporting about ad placements and functionality, so advertisers and publishers may optimize campaigns quickly and accurately at scale.
Programmatic ad buying gives advertisers access to a enormous ad inventory across multiple ad exchanges and networks with a click of the mouse, such as premium stock and private marketplaces with high quality traffic. With programmatic, advertisers can be certain that you maximize the relevancy of the ads for specific targeted audiences and enhance ROAS.
In regards to programmatic, the future is already here. Programmatic advertising spend is increasing every yeyearnd is anticipated to be utilized for the huge majority of display advertising within the next couple of years. In the US, almost 88% of display ads in 2021 are forecast to be purchased programmatically.
And it is not only in the US — 65% of European and UK brands use programmatic advertising, and 86% of these even have in-house programmatic capability.
How much does programmatic advertising price?
CPM is the cost per 1000 ad impressions that appear on a web site. Programmatic ads CPM is generally thought to cost somewhere between $0.50 and $2. Surely, programmatic CPM is much more affordable than other platforms, such as social media networks where CPM can go as large as an average $6-$7.
In actuality, the price of programmatic advertising is dependent upon multiple variables and parameters. Take a look at this calculator in the IAB to help compute programmatic fees.
Although programmatic spend is on the up and up, for many digital marketers, lack of understanding of how programmatic advertising works is a massive hindrance. As using programmatic ad tech overtakes the traditional advertising model, the value of building strong advertiser-publisher relationships is declining and the requirement to acquire technical knowledge of programmatic technology increases.
Because of the scale and reach of programmatic advertising, it is a really efficient way to improve brand awareness among high-volume audiences. If you’re fofocusing onn ad campaign on the thought / awareness stage, you may want to think about using programmatic to spread your message. With the assistance of advanced programmatic ad formats, like native ads and movie ads, it is possible to engage audiences even more efficiently.
The way to begin with programmatic?
For novices to programmatic advertising, the perfect place to start is by becoming educated. See webinars, hear podcasts about programmatic, and network with colleagues about best practices.
Once ready to begin, start with creating your audience personas, advertising strategy, and KPIs. This will assist you in your research about which programmatic ad exchanges and ad networks are ideal for you.
Let us go programmatic!