One of the newest terms in marketing and advertising – and definitely one of the emerging trends – is programmatic advertising. Programmatic advertising has grown in popularity, from its roots as a tool that was only used by the most fearless of marketers, to something that is fast becoming the standard way to buy and sell advertising online. In this article, we’ll be looking at the idea and process of programmatic advertising.
What is Programmatic Advertising?
Programmatic advertising is the process of buying advertising using software – sort of vending machine advertising sales; using software to purchase advertising means that you do not actually have to communicate with an actual person. There are a lot of software platforms out there for buying advertising, and this practice has become much more prevalent lately. However, programmatic advertising isn’t just about using a website or software – it is also about automation. You set up a preconfigured buyer’s profile and tell the software what you want, how much you want to spend and a number of other factors, and the computer program does all of the work of buying – and often placing – your advertising for you.
Benefits of Programmatic Advertising
Obviously, there are a number of advantages to using programmatic advertising software programs. The first is the most obvious one is that you save a lot of time by automating the process. Since the buying of the advertising is done for you, you don’t have to worry about searching for the right company, negotiating a price, determining what sort of ad you want to run or anything else. To a certain extent, you will have to do some of these with programmatic advertising, but far less than you would if you were doing everything manually.
In addition, many of the software programs out there not only automate the process of getting ads; they also look for the best possible price. That means that you will probably save money on your advertising. You can set up the software to bid the lowest possible amount, sort of like eBay does when you enter a price that you’re willing to pay, and attempts to get you the advertising that you have requested at the lowest price available.
Finally, these software programs also have a lot of tracking and analytics tools, which means that you will be able to track how your ads are performing better than you would be able to by buying advertising manually. This means that you can make your advertising more effective, and set up rules so that the software automates the process of optimizing your advertising so that you get the best return for your money.
How Programmatic Advertising Works
Programmatic advertising is still evolving, and will continue to do so as technology and the web changes and improves. While the tools first started as a way to manage leftover advertising, this is no longer the case, and programmatic advertising includes audio, video, online ads, digital, stream, TV and so many other types of advertising that to the uninitiated it can be extremely intimidating.
The first thing that you have to understand is the terminology if you want to understand how programmatic advertising works. There are a lot of acronyms and new terms that you’ll want to learn in order to use this tool effectively. However, you should know beforehand that this is not real-time advertising, which is something that many people believe to be true about programmatic advertising. While PA does include real-time advertising, this is not the entire scope of it. Generally, real-time advertising includes bidding for ads, and while that is still available with programmatic advertising, there is a lot more to it than that.
The first acronym that we will look at is DSP. DSP stands for demand-side platform. The demand-side platform is what a buyer uses in order to buy advertising. The demand-side platform allows them to decide which impressions they want to buy and how much they would like to pay for them. The corollary of the DSP is the supply-side platform or SSP. The SSP is what advertisers use in order to list their advertising spaces, prices and connect with buyers. Two other acronyms that you should know when it comes to programmatic advertising includes DMP, which stands for data management platform – a platform that is used to configure your advertising to exactly what you want, including the audience type that you are targeting and a plethora of other factors – and API, which stands for application program interface.
Programmatic advertising allows buyers to be guaranteed the number of impressions that they are going to get. The price is set by the seller, and the buyer configures the demand-side platform to automatically buy when the program comes across advertising that is been set to that price. This means that both buyers and sellers are able to get exactly what they want and the buyer doesn’t even have to do any of the manual work. Incidentally, neither does the seller, as a great deal of the supply-side platform process is also automated.
Of course, setting up programmatic advertising for the first time can be a little complex. There is an entirely new language to learn, and buyers must familiarize themselves with the platform considerably before they are able to unleash it upon the advertising world and trust that it will be able to buy the advertising that they want at the price that they want. Programmatic advertising allows for a great deal of customization. For example, rather than buying a certain number of ad impressions for a particular website at a particular price, buyers can purchase ad impressions across multiple websites for the price that they want and target exactly the audience that they need at the same time.
Programmatic Advertising Data Tiers
There are three different tiers of data that can be examined when it comes to programmatic advertising. Primarily, there is what is called first-party data. This is data that comes from the advertiser themselves, so it is usually very reliable. Advertisers know which customers they are targeting and many have that data available. Second-party data is collected by someone other than the advertiser, such as an agency. While this date is not as reliable as first-party data, it can still be useful, particularly if the advertiser does not have any data available – or enough data available – themselves.
Data is a big part of programmatic advertising. If you want to be able to target your advertising to a particular audience segment, then you’re going to need to have data on that audience segment. But what happens if you have no way to get that data? There definitely types of customers, products and advertisers that need to have some other source of data and that is where third-party data comes in. Third-party data is also known as premium data. This information can be had by anyone, but it does cost money. However, getting the right information to advertise a particular product or service can be invaluable, making this investment worth it.
Who is Using Programmatic Advertising?
Now, let’s take a look at who is using programmatic marketing. When it comes to parts of the world, the UK is definitely using programmatic advertising more than anyone else. However, the phenomenon is spreading rapidly. Basically, the people who are using programmatic advertising are the ones who have seen the value of it and are able to overcome the learning curve that is required in order to be able to use programmatic advertising effectively.
When it comes to what types of individuals or companies are using programmatic advertising, it varies. What most people are concerned with is whether or not they should be using programmatic advertising. The questions that you have to ask yourself include, whether or not you need to target audiences in order to sell your products and services effectively, whether you have the technical knowledge to use the programmatic advertising platforms, and whether or not you feel comfortable allowing computer software to choose when you buy ads.
The Risks of Programmatic Advertising
There are definitely some risks of using programmatic advertising. The primary risk is actually fraud, but it is unclear whether programmatic advertising is more prone to fraud or not. Some data analysis would point to this however. For example, according to the Association of National Advertisers, digital ad fraud is more prevalent with programmatic advertising, and display advertising that are purchased with this method were more than 50% more likely to be loaded by bots.
But risk is not the only thing to consider with programmatic advertising. There are also a lot of fees that come with using this method. Although some of these can be offset by the money that you saved by using programmatic advertising, the fees still stack up. Here are a few of those:
- Verification fees
- Campaign management fees
- Targeting fees
- Data management platform and demand-side platform fees
- Pre-bid decision fees
- Ad blocking fees
The bottom line is that there are definitely some downsides when it comes to programmatic advertising. Each advertiser will have to weigh the pros and cons, and decide for themselves if using programmatic advertising is worth the risk that they are taking or the fees that they are paying for the service. Programmatic advertising can have a lot of advantages too, but deciding which way to lean is the job of the individual advertiser.
The Impact of Programmatic Advertising
Programmatic advertising is definitely having an impact. More and more advertising revenue is being spent on programmatic advertising all around the world. This is especially true in the United Kingdom. According to marketing experts like Emarketer, nearly 75% of the ad revenue in the UK will be spent on programmatic advertising this year. But it does also growing around the world. Across the globe, the percentage of money spent on programmatic advertising is on the rise. In 2012, just $5 billion were spent on programmatic advertising. By 2016, that number had grown to $39 billion.
The reason the programmatic advertising is expanding so rapidly is twofold: first, it makes buying advertising easier and more efficient, saving people time and money. Second, it makes advertising more targeted, which means that advertisers actually make more money. When automation is used to reach a target audience, advertisers save both time and money.
Programmatic advertising has had a huge impact on buyers and sellers. Just as with any emerging technology, there are problems, but they are actually quite minor when you compare them to the potential of programmatic advertising. This type of advertising could easily change not only the way that add buying and selling is done in the digital space, but also with more conventional types of advertising such as print, signage, radio and television.
The Future of Programmatic Advertising
So, what is the future of programmatic advertising? Most people involved with the marketing and advertising world already know that things are changing, and the way that they are changing has to do with personalization. No longer is advertising something that you throw at a wall and hope enough sticks; advertising today is all about getting the right message to the right customer at the right time.
In the digital space, this is easier than other methods of advertising. For example, people that use the Internet are already providing a lot of information about themselves to advertisers. This is the same with advertising on mobile devices as well. Advertisers can collect information like demographics, interests, buying patterns, income and much more. But what about advertising that is done outside of the computer and mobile world? This is much harder to target. But that is going to change in the near future as well.
Television, radio and even print media are being combined with the Internet. People no longer watch television; they stream it. People no longer listen to the radio in their cars; they subscribe to satellite radio or use a streaming service like Pandora. In addition, people are getting their print media on the publications website or app much more often than they are getting it from an actual physical print magazine or newspaper. This is the future of programmatic advertising. Eventually, even radio, television, print media and the billboards that you see driving down the road will be so interconnected with the Internet.
The bottom line is that the future of programmatic advertising is extremely bright. Many experts are predicting that this will be the primary – if not the only – way to buy advertising in the future. Computer software already does a huge number of the tasks that people used to do manually, and buying and selling advertising will be the next automation revolution.
Summary
The process of programmatic advertising is using computer software to buy and sell advertising. While real-time bidding and buying is something that is already incorporated with most programmatic advertising platforms, it is not the only way that programmatic advertising is used. Programmatic marketing involves the buyer on a demand-side platform, or DSP, and the ad space seller on a supply-side platform, or SSP. Complex targeting can be done using a DMP, or data management platform. Although the use of these platforms to do programmatic marketing can be difficult to learn, the rewards are usually worth it.
In order to target ads successfully you need to have data. There are three sources of data out there. There is the data that you provide yourself about your customers, data that is provided by someone else and may not be as reliable, as well as data that is provided by third-party companies or services for a fee. Lots of different people are using programmatic advertising. Anyone who wants to target their advertising better, save time and money by using automation or who simply want to be up-to-date on modern advertising methods are using programmatic platforms. But there are some risks involved, including fraud, as well as a number of fees that you may not get with conventional methods of advertising.
Programmatic advertising has had a huge impact, growing in recent years to become prevalent across the entire globe. In the UK, most of the advertising that is done is through programmatic advertising. No one knows exactly where the future of programmatic advertising lies, but it is clear that as media becomes more intertwined with our use of the web and are mobile devices, the data that we provide to advertisers will allow them to laser target ads to us, which benefits everyone.
