Defining Programmatic Advertising

 
There’s a lot of buzz about programmatic advertising. It’s not just a new advertising fad — it’s quickly becoming the go-to method to purchase online ads.

Programmatic advertising helps organizations pinpoint their audiences with remarkable accuracy, provides insightful data about who’s responding to an ad and eliminates a lot of the guesswork usually associated with ad purchases.

What is programmatic advertising exactly? This guide offers a beginner’s look at what programmatic advertising is and how it works.

Programmatic advertising defined

Programmatic advertising brings automation to online ad buying. It uses software and algorithms to purchase online ads and provides real-time data that allow buyers to make adjustments to maximize an ad’s success.

Programmatic advertising is mainly focused on the online advertising arena, but in the future it could expand to TV and radio ads.

Programmatic advertising is growing fast

U.S. programmatic digital display ad spending will grow 137 percent, surpassing the $10 billion mark this year, according to eMarketing statistics. That trend will continue for years to come. By 2016, the amount spent on programmatic ads is expected to almost double to $20 billion.

Types of programmatic buying

Real-time bidding

Let’s say a consumer who meets specific audience criteria is about to check out a website that has ad space available. With real-time bidding, or RTB, website and viewer information is sent to an ad exchange where that ad space is auctioned off to the highest bidder. The highest bidder wins the space and an ad is instantly loaded onto that site so the consumer sees it.

It sounds like a long process, but it all happens in the second or two during which a website is loading.

Ad buyers don’t sit at their laptops scanning auctions or negotiating sales. The entire process is automated. Advertisers use demand-side platforms, or DSPs, to help them identify the best ad possibilities and place a bid.

Programmatic direct

Unlike real-time bidding, programmatic direct allows a buyer to purchase ads in advance. There’s no auction process. After defining the target audience, ad space on sites that cater to this niche are purchased for a set price. It’s like booking a plane ticket in advance through a specific airline rather than buying a last-minute ticket on a site like Priceline.

The process is also referred to as programmatic premium or programmatic guaranteed.

Benefits of programmatic advertising

Many believe programmatic advertising is the wave of the future because of its many benefits, which include:

Efficiency

Considering the process is automated, it cuts out the tedious time involved in buying an ad. There are no RFPs, phone calls or orders to place. It takes all the back-and-forth out of ad buying.

Real-time data

A buyer can see how ads are doing with access to data that show which geographic area is doing best, what time of day is resonating with customers and which segment of their audience is most responsive.

Cost effective

Considering the data provided, decisions can be made mid-campaign. These decisions save money.

Programmatic advertising offers a new level of campaign targeting. By pinpointing audiences, ads are more effective, generating higher brand awareness and sales. These ads offer the sort of high return on investment that has become so important for companies who remain cost-conscious, even as they seek better ways to engage consumers.

Sources

eMarketer statistics: http://www.emarketer.com/Article/US-Programmatic-Ad-Spend-Tops-10-Billion-This-Year-Double-by-2016/1011312