Programmatic Advertising for Beginners: The What, How, and Why of Using It

Advertisers call programmatic the next big thing. This is because they have noticed a steady rise in programmatic ad spends over the past decade, mainly in display advertising and when compared to traditional digital media buying. The forecast for 2021 is even better, which makes it a model worth exploring if you haven’t already.

Here’s a simple guide about programmatic advertising, how it works and optimizes ad campaigns, and why you should be using it. It’s a field that is largely obscured by heavy jargon and technicalities, which often makes it look complicated. So, this guide will take a simplistic approach.

Introduction to Programmatic Advertising

Programmatic is an online system that uses data to automate buying and selling of ads across formats and channels. Although it started as a facilitator for automating display ads and emails, programmatic has now evolved to cover almost every media including digital out-of-house (DOOH), mobile app ads, native ads, and audio promotions. It’s easy, fast, and an optimized way of buying and selling ads.

The automation provided by programmatic allows publishers and ad buyers (you, your company, or your agency, for example) to bid for any ad space in the world wide web. It could be a YouTube display ad or a banner on a niche website.

The only difference here (when compared to traditional ad buying processes) is that a huge number of parameters are considered by the system (basically a computer) within microseconds to auction a specific ad space to the most eligible buyer. This is where the influence of data comes in, which helps advertisers to target ads and reach their ultimate goals.

In most cases, in programmatic, the one who bids the highest wins the ad space. But there are a lot of other factors that are at play. Here’s a quick look at the critical aspects of programmatic.

Programmatic Jargon Simplified

DSP – Demand-side platform; used by brands and agencies to decide what ads to buy
SSP – Supply-side platform; publishers use this to sell their ad spaces
DMP – Data management platform; used to store and utilize different types of data
Ad Networks – Middlemen or brokers who marry buyers and sellers
CPM – Cost per mile; price an advertiser pays for 1,000 views or clicks
CPC – Cost per click; price an advertiser pays for clicks

Types of Programmatic Advertising

Here are some of the most common types of programmatic advertising:

Real-Time Bidding (RTB)

This is the most widely used type, an open auction where the highest bidder gets the spot. The only drawback being the advertiser doesn’t know which publisher website its ad will run until it’s live.

Private Marketplace (PMP)

Exclusive invite-only bidding for advertisers. They can pick and choose the publishers, which is a critical advantage over RTB.

Preferred Deals

A more controlled form of PMP where advertisers can pick and choose ad spaces based on several factors such as the publisher’s traffic numbers and audience.

Programmatic Guaranteed

Instead of bidding, the publisher and advertiser negotiate a one-on-one deal here. Advertisers have a lot of influence over this type of media buying.

Data Types Used

With data playing a vital role in programing and with renewed privacy and security regulations such as GDPR coming up, it is important to understand what types of user data are used here. A quick rundown.

First-Party Data

Data supplied by your users during direct communication
High-quality info but has low reach
Examples: transaction history and buying behaviour are examples

Second-Party Data

Secondary data originally owned by another advertiser or publisher usually through an agreement
Used for scaling up
Example: a cloud kitchen obtaining information from an ecommerce website

Third-Party Data

Aggregated data of a wider audience and is usually obtained through combined user behaviors
It provides high range but has the risk of hit-and-miss

Example: Data obtained from SimilarWeb

Top Channels for Programmatic Advertising

Programmatic covers almost all formats of ads, understandably except offline media such as print. This has resulted in programmatic advertising being available across channels.

Video Ads: Ads appearing within videos, before videos, or on search results on video platforms
Display Ads: They appear on the headers, footers, and sidebars on websites
Native Ads: They appear like regular content; in-article ad is an example
Digital Out-of-Home: Targeted ads on public offline platforms like cinema theaters
Social Media: Optimized ads sent out to users based on their interests; allows heavy optimization
Audio Ads: Ads appearing before audio tracks and between podcasts (e.g.: Spotify)

Top Programmatic Advertising Tools

While behemoths like Google and Amazon rule the programmatic roost as platforms, there are several third-party tools and ad exchange platforms that you can use to achieve better campaign optimization. Here are some of the most popular ones.

A list of programmatic tools:

AdClarity: Ad optimization support
Genius Monkey: Provides additional programmatic ad tracking support
Jelli: Supports audio ad buying via programmatic

A list of ad exchanges:

Rubicon Project: A leader in the market, it automates negotiation and wide inventories
DoubleClick: Most popular tool, it is known for its huge inventories
Adobe Marketing Cloud: Allows better performance tracking
Outbrain: Known for its clickbait ads

Advantages of Using Programmatic Advertising

Above all, programmatic allows advertisers and publishers to optimize their ad targeting, which helps with better ROI numbers. However, there are several reasons why it has caught on and why agencies and the Big Five put their money on it.

Here are some of its attractive advantages:

Greater Insights:
Provides real-time performance reports which can be used for future campaigns
Better Targeting Possibilities:
Several factors at play allows advertisers to optimize and better target their ads
More Transparency:
PMP & Programmatic guaranteed allow advertisers to see their ads performance & logs in real-time
Cost-Effectiveness:
Better targeting and optimized ads mean better ROI and reduced losses
More Secure:
Disallows fake bot traffic and other fraudulent subsystems; offending participants are banned

Conclusion

Programmatic advertising is growing at such a high speed that it is bound to influence other formats of advertising and marketing. It has the power to dissolve the thin line between itself and search-based marketing (PPC) like Google ads and Bing ads. But no one is complaining because it promises higher ROIs and an optimized approach at pushing ads online. Perhaps, it is already a big thing.

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