Programmatic ad buying is changing the face of digital advertising, globally. Programmatic ad spends grew from $5bn in 2012 to $39bn in 2016, at an average rate of 71% a year, according to Zenith’s programmatic marketing forecast.
Despite this, there’s still a large group of marketers who are unaware of what programmatic ads are and how do they function. Programmatic buying uses computer algorithms to purchase digital advertising as opposed to traditional mediums that involve RFPs, manual bidding and human intervention.
Despite being in a juvenile stage, programmatic advertising has a deep influence in the world of online advertising. The process is very similar to that of the professional traders that rely on different software to plan and execute their stocks, futures and other types of trading. Programmatic Advertising players intend to replicate that possibility for the advertising industry.
Programmatic advertising can be defined and explained in a lot of different ways. But in the simplest of terms, it is any ad purchased without the need for any human intervention. Programmatic ads make use of data, software and technology to automate the buying process. This process ensures maximum efficiency by getting rid of all the paperwork, negotiation and other tedious tasks advertisers must go through while taking the traditional route. Programmatic buying is more than just being efficient – it makes possible execution of a more sophisticated and more targeted campaign.
The term “programmatic” encompasses a wide range of technologies and which is why people attribute everything from intent-based targeting to Real-Time Bidding (RTB), exchanges based inventory and more to programmatic.
There are two main types of programmatic advertising: Direct buying through Programmatic and Real-Time Bidding
Programmatic direct buying is done in case of selective ad inventory purchase against a fixed advance pay. Advertiser negotiates the rate with the Publisher to provide a certain number of impressions on the selected inventory of publisher e.g. Homepage banner.
RTB (Real-Time Bidding)
RTB is a major component and an important feature of programmatic buying. According to a report by Juniper Research, current annual revenues attributed to RTB are close to $3.5 bn, and it is projected to grow to $ 21 bn in the year 2021.
RTB is an instantaneous programmatic auction to buy and sell ad impressions, where advertisers bid and launch their ad campaigns in milliseconds which are then displayed across multiple publishers’ site.
RTB is an advanced technology to suffice the growing needs of targeting consumers in real-time, while, the ads in the past were targeted only to demographics i.e. age, gender, income group, location, etc. RTB takes it to next level. RTB is the outcome of the consumer practice to research online, the moment you visit a website for e.g. QualiSpace.com, you will be shown ads related to QualiSpace more frequently.
Programmatic buying empowers the marketers to pursue customers in real-time with relevant ads, it also enables the marketer to include multiple variables or parameters to reach its potential consumer, along with tracking the real-time results.
Advertisers can now calculate the returns on their ad investments almost immediately and quickly change parameters of their campaign as compared to the traditional month-end report.
Components of RTB enabled Programmatic Platforms
DSP: Demand Side Platform, is a system represented by advertisers (Brands and Agencies). DSP allows advertisers to access the ad exchange to bid for ad space.
Ad exchange: This is the marketplace where publishers and advertisers both meet to buy and sell the inventory for ad via auction.
DMP: While DSP is used to actually buy advertising, the information of it is stored in DMP (Data Management Platforms). In the world of digital advertising and programmatic, data plays an exceptionally important role. DMP’s are a storage platform for data as it holds and stores information and presents it in a useful manner to marketers, publishers, and other businesses. The use of large data sets in predicting outcomes, understanding audiences and breaking down media silos is more widespread now than ever before.
DMP provides direct access to a range of third-party data providers and pre-packaged data segments. This data can be used by the clients to build new, larger audiences and to understand what actions and behaviours consumers are exhibiting across the wider internet giving them an even more holistic view of their target customers.
Advantages of Programmatic Buying
Transparency: Transparency in the pricing of the inventory bought, provides additional assurance to the advertisers that their brand is safe. It is the buyers who determine the price of impressions.
Real-time reach: Advertisers are safe, as the ads done through the Programmatic platform, are shown only to people who have shown some interest in the product.
Better campaign monitoring: With real-time reports, you can monitor the campaign and easily adjust the plan as per your need.
Quick reach: Buyers and Sellers relate to each other in real time through programmatic buying, making it convenient for advertisers to launch their campaign in milliseconds across any device or any channel.
Lesser Manual dependency: Programmatic cuts down unnecessary middlemen from the ad-buying process. It saves one from the hassle of negotiation and saves time & money.
Programmatic Advertising Challenges:
Following to unwanted websites
With programmatic buying, there is a risk that ads would follow the user and might end up on a site that you don’t want the ad to be shown. This generally happens when you keep your options open to follow the potential client, you can always blacklist certain sites to prevent your ads to appear on them. Vertoz’s Ingenious Plex platform allows you to exclude certain categories of websites and content too, you can use this in conjunction with blacklisting the websites that you don’t want the ad to be run on.
In a different approach, your brand can also choose to white-list the websites, with this, your ads will be shown to only the websites you have selected. This, however, can limit your ability to reach the audience and make buying more expensive.
Dependency on Cookies
Programmatic ads rely on cookies to track the activities across devices, making it difficult on certain occasions, but this remains as a major challenge across all display advertisements. However, in case of Facebook, tracking across the device is easier as movement is tracked through login status and not only dependent on cookies.
Ad fraud is a big concern in not only digital but any advertising medium. However, there are ways that can protect the interest of advertiser. Read our guide to prevent ad fraud here to know more about protecting your interest of ads display.
Programmatic Advertising and its future:
The programmatic advertising will continue to evolve and update its offerings, bringing the change that protects the interest of each party i.e. buyer and seller. Content will continue to be the key driving force of communication and become more relevant and effective for conversions.