Programmatic Advertising

Programmatic advertising, also called programmatic marketing, is the use of software tools to automatically purchase digital ads from an online ad exchange.

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What Is Programmatic Advertising?

Programmatic advertising, also called programmatic marketing, is the use of software tools to automatically purchase digital ads from an online ad exchange. A display advertising strategy, programmatic advertising relies on computers and algorithms to buy ad placements based on data. This is done in lieu of manual bidding and negotiating between human ad buyers and publishers.

Why Programmatic Advertising?

Programmatic advertising is widely seen as a more efficient approach to display marketing. It enables advertisers to extend their reach while managing costs and other forms of operational overhead. Instead of eliminating the need for people, it redirects marketing talent into optimizing campaigns in granular fashion. This is possible when marketers are no longer bogged down by the drudgery of negotiating (and renegotiating) ad placements with individual publishers on a repetitive basis. Programmatic advertising can enable much more highly targeted, data-driven campaigns than what is possible when the process is managed entirely by humans.

What Are the Benefits of Programmatic Advertising?

Programmatic advertising helps digital marketers reach highly specific target audiences, without having to manually manage every ad buy. Think of it this way: Do you know every website your most valuable audience is visiting? Most likely not. But a programmatic ad network can ensure your ads show up where they have the highest odds of meeting your audience.

Programmatic advertising can also happen 24/7—during lunch breaks, overnight, and regardless of time zone. 

Even better, programmatic algorithms are constantly improving to maximize results. Every programmatic advertising platform uses machine learning to analyze how audiences are responding to your ads, making real-time optimizations and collecting data to inform the next round.

Simply put, programmatic advertising makes it easier to coordinate truly sophisticated campaigns that nurture buyers on the road to a purchase decision. It takes a great deal of human effort (and the potential for human error) out of the equation, freeing up your resources and brainspace for more strategic tasks. And it helps you get the most out of your digital advertising budget.

Ultimately, It’s all about putting your display ads in the right place at the right time—and that right time is determined down to the microsecond.

Does Programmatic Advertising Work?

It’s easy to see that programmatic advertising is more efficient and targeted than old-school digital advertising. For proof that it gets results, we only need to look at how programmatic spending has exploded over the past few years. In 2013, only 8% of digital media investment was in programmatic advertising. By 2019, it was 41%. Currently in the U.S., programmatic accounts for 86.5% of all digital ad spend. Worldwide, companies are spending over $129 billion on programmatic ads.

We’re seeing a revolution in ad buying, as more and more marketing departments discover just how effective programmatic advertising can be.

What’s the Difference between Programmatic Advertising and Real-time Bidding?

Real-time bidding, or RTB, is one of the major forms of programmatic advertising. RTB entails real-time, automated auctions in which ad impressions are bought and sold in fractions of a second. In this type of programmatic advertising, impressions are bought and delivered as they are being loaded. When someone visits a web page that includes paid advertising space, that space is bought and sold—often based on data about that specific visitor—as the page loads.

Imagine the digital marketer who could make those bids, acting faster than the speed of thought to fill out a page while it’s loading! It’s easy to see how programmatic in general, and RTB in particular, puts technology to work to augment our abilities.

Will Programmatic Advertising Take My Job?

It’s understandable for digital marketers to be nervous about the advent of artificial intelligence. Programmatic advertising certainly does a part of the marketing job quicker, smarter, and more efficiently than a human can. But that doesn’t mean you should be polishing your resume or bowing to our robotic overlords just yet.

Programmatic advertising is just another tool in your marketing toolbelt—albeit a multi-purpose and highly useful one. The tasks of coming up with a marketing strategy, setting goals, identifying the audience, and writing creative will all still require human intervention for the time being.

Smart marketers should focus on the parts of their job that a machine can’t do, and let the computers do what they’re best at.

What Do I Need to Get Started with Programmatic Advertising?

A demand-side platform (DSP) is a useful tool to coordinate your programmatic buying. Programmatic ads are available on a variety of different ad exchanges—each one carries inventory on a particular subset of websites, which are of interest to different audiences. 

A DSP consolidates multiple ad exchanges into a single control panel. You can then set parameters to guide the algorithm’s ad buying for maximum effectiveness. Finally, make sure your DSP solution is compatible with the rest of your martech stack.

How Do I Measure the Results of Programmatic Advertising?

One of the more useful features of programmatic ad buying is that it makes measurement easier and more transparent. You can see the impact of your ads across channels, in real time, and see what works and what doesn’t. While an algorithm can do some of this optimizing—like promoting the creative copy that’s getting more clicks—it’s up to you to tie the campaign in with the rest of your goals.

For example, you may be running a 24-hour promotion for your online store. Halfway through the promotion, you can see that over half of the people clicking the ads are bouncing from your landing page. A few tweaks to that page later, and you can see the conversion rate start to climb.

For a baseline measurement, treat programmatic ads like you would any other type of display ad: Clicks, views, and impressions will be the most instructive metrics.

The Programmatic Advertising Glossary:

Supply-side Platform (SSP): A platform that holds a website publisher’s ad inventory. The publisher uses the SSP to filter ads, define costs for ad spaces, and track user behavior.

Demand-side Platform (DSP): A programmatic platform that advertisers use to make bids on available ad inventory. The DSP uses rules set by the advertiser to determine which ads to serve and where.

Data Management Platform (DMP): DMPs were created to store, manage and analyze ad campaign and audience data. With a DMP, users can create temporary user profiles and target audiences based on demographics, behavior or other characteristics. DMPs are restricted in their ability to use personally identifiable information (PII).

Ad Exchange: The virtual auction house where ad space is negotiated between SSPs and DSPs.

Customer Data Platform (CDP): A data management platform that integrates with a DSP to collect and organize data and further optimize the marketing process.

Real-time Bidding (RTB): A type of programmatic ad buying in which bids are taken and the winner is determined in the microseconds that it takes for a web page to load.

Private Marketplace (PMP): A subset of programmatic inventory that is offered to an exclusive group of buyers before it goes into an open auction.

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