Programmatic Advertising – A Guide To Programmatic Advertising

Digital advertising has become the dominant choice of marketing for most organizations, instead of traditional advertising. As manual processes give way to automation in digital advertising, Programmatic Advertising is quickly becoming the most preferred choice of buying and selling online ads.

Traditional advertising is inefficient, expensive, and time-consuming. More marketers and advertisers are re-directing their resources and energy to programmatic advertising, to improve the ad performance of their brands. 

Programmatic advertising is known as the “black box” of advertising because this disruptive trend is still an alien concept for most advertisers. But as competition continues to rise, the use of AI automation and machine learning has become essential to optimize marketing campaigns and get a better ROI.

According to a report by Zenith, programmatic ad spending is estimated to reach $98 billion by 2020, which is 68% of the total global digital ad spending. Greater efficiency of programmatic advertising and another ad tech will continue to push this trend.

What is programmatic advertising?

Programmatic advertising is the automated purchase and selling of online advertising in real-time, through an elaborate automated bidding system. Programmatic ads use algorithms to sell inventory on publishing sites, and buy inventory, and place ads on a publisher’s site. This automation has made the process more efficient and effective. Programmatic advertising also includes ad slots for DOOH, streaming services, TV, video, and voice-activated ads.

Programmatic platforms use AI-powered algorithms to enable brands to purchase ad slots on a publisher’s site. These algorithms analyze campaign inputs and user behavior such as demographic, age, gender, and cookie data, so that real-time campaign optimizations can be made, enabling identification and targeting of the most motivated audiences that are most likely to buy. These ads are personalized based on the consumers’ unique preferences. 

The digitization of the ad buying process has done away with the old hit-or-miss marketing campaigns, creating greater precision in campaigns, that reaches the right audience at the right time.

What are the benefits of programmatic advertising?

Since advertising is all about creating brand awareness, programmatic advertising is helping brands choose the most effective campaign that yields the best results.

1. Better use of ad budget
Programmatic advertising allows companies to target their audience on a micro-level. The programmatic algorithm helps advertisers to make data-driven decisions, and take the guesswork out of the process. Optimized campaigns ensure better allocation of resources, and higher profits and ROI.

2. Better targeting
Programmatic advertising allows companies to target the most motivated buyers. Platforms use real-time data to identify the best audiences for the campaign and purchases digital ad space through an auction. Well-placed ads generate better outcomes and revenue.

3. Real-time measurement and optimization
It allows companies to measure and analyze the real-time performance of their ad campaigns. Programmatic advertising allows companies to make adjustments to their ads in real-time, to optimize the results without the need to allocate additional ad spend.

4. Transparency
Programmatic advertising has created more transparency in the ad buying process. Brands no longer have to rely on third parties or ad agencies to manage their ad spend. It has given the power back to companies to control the price and place of their ad campaigns. Programmatic advertising offers more traceability compared to traditional advertising. Also, automation eliminates the risk of human error, thereby providing greater transparency. 

5. Omnichannel reach
Programmatic advertising allows companies to reach a larger audience through multiple channels of communication. Companies can target audiences on several devices; on a mobile, desktop, tablet, in-app, connected TV, and even out-of-home.

What are the different formats of programmatic advertising?

1. Display ads
Programmatic displays ads are placed at the header, footer, or sidebar of websites. Publishers and advertisers work with networks such as Google, Microsoft to buy and sell ad slots. Display networks allow advertisers to place their advertisements in front of potential customers, while they are browsing the publisher’s website. Programmatic display ads are targeted at audiences based on specific demographics such as age, gender, interest, and browsing history. These ads are placed at specific times, and on specific sites when the target audience is online. Publishers generate revenue through CTR and impressions data, collected by the display network. 

2. Digital out-of-home (DOOH) ads
DOOH is the digital version of the traditional out-of-home ads. Powered with ad tech, DOOH has the superior ability to track, retarget, personalize, and measure ad campaigns. DOOH offers enhanced traffic data, and runs precise retargeting campaigns, thanks to its geofencing features.

3. Video ads
Today, 75% of video ads are programmatic. Programmatic video ads collect user data in real-time and use real-time bidding (RTB) to display ads to the brand’s most ideal target audience. The growth of programmatic video ads is driven mostly by Youtube’s TrueView ads. There are three types of video ads;  in-stream (ads that play at the start, middle, or end of a video), out-stream (pop up ads), and in-display (ads that appear on top of Youtube feed). 

4. Social ads
Social media accounts for more than half of total programmatic ad spend. Advertisers are incorporating programmatic advertising and social media advertising to increase the efficiency, accuracy, and reach of their marketing strategies. Programmatic ads have automated the social media ad buying process, optimizing a brand’s ad spend. It’s also enabling the automation of influencer marketing campaigns, by identifying the right influencers, onboarding them, and optimizing campaign management, depending upon the campaign performance. 

5. Voice-activated and audio ads
The use of voice-activated in-home devices like Alexa has soared over the years. Programmatic advertising is helping advertisers to use these ad spaces. Programmatic platforms collect consumer data in real-time and use relevant audio ads to engage the audience. Voice-activated ads allow the user the choice to either verbally accept the ad’s offer, or to respond negatively to skip the ad and return to their content. Streaming services like Spotify and SoundCloud are some of the major companies using programmatic audio ads.

6. Native ads
In programmatic native advertising, brands buy impressions through a demand-side platform (DSP), while publishers sell ad space through a supply-side platform (SSP). These two platforms match up in real-time through native advertising platforms. Programmatic advertising offers guaranteed impressions i.e. the price of impressions is pre-agreed by both parties before the ad goes live on the publisher’s website. It allows RTB on impressions so that brands can optimize and enhance their campaign at any time.

Final Thoughts

Programmatic advertising has immense potential. The use of AI in this field will lead to more dynamic and personalized campaigns, with laser precision targeting. At Alkye, we help our clients with Programmatic Advertising strategy as part of our digital advertising service to help them meet their advertising needs and business objectives.