The landscape of digital advertising is constantly evolving, with automations through features like dynamic keyword insertions becoming the norm. Programmatic advertising is no longer the future; it’s very much dominating a large chunk of today’s advertising spent. In 2019, US advertisers are on pace to spend approximately 60 billion on programmatic display, and this number is said to reach $81 billion by 2021. The only reason this number isn’t higher is due to the lack of knowledge surrounding this process.
What is Programmatic Ad Buying and how does it work?
Programmatic advertising automates the process of buying and selling of online ads. This whole process occurs within an ad exchange– a platform that oversees and facilitates the transaction between advertisers and publishers.
The publishers use the supply side platform (SSP) to manage their ad inventory, and advertisers use demand side platform (DSP) to purchase ads. The inventory is bought and sold, most cases in real time, using an automated bidding system.
Programmatic advertising uses sophisticated software to buy, place and optimize the ads, and requires no human touch or manual trading. The AI grades users across various segments such as their online behavior, demographic data, engagement level, social engagement, time of the visit, cookie data and other factors to determine the most relevant ad for them.
Types of programmatic buying
- Real Time Bidding– Refers to the buying and selling of ad impressions through real time auctions. When a user enters a website that has empty ad spaces, their information (for example, gathered with the help of cookies) along with the site info is sent through an ad exchange to buyers. The ad space gets sold to the highest bidder and the page loads with their ad in place for the user. The whole process occurs within milliseconds– which is usually the time it takes for a page to load. One of the greatest advantages of RTB is that the advertiser only pays for hyper-targeted impressions whose parameters they decide.
- Private marketplace- An invitation only Real time bidding marketplace that gives buyers access to premium inventories. Both the buyers and publishers go through a qualification process, after which the deal terms are negotiated. This type of programmatic advertising is used by high profile publishers who want to work with a select group of buyers.
- Preferred deals– In this type of programmatic advertising, the publisher and buyer set terms and price for an inventory that the buyer can later bid on. The buyer will have first-look at inventory at the agreed price, and the inventory can be sold directly to the buyer, hence bypassing auction.
- Programmatic guaranteed– This type of programmatic advertising involves automated direct sale of premium add inventory between buyer and seller. The seller guarantees a certain number of impressions for a negotiated price.
How programmatic buying helps build revenue
- Makes hyper-relevance possible- Programmatic advertising makes it possible for buyers to serve relevant, even localized, advertising to people who precisely match their requirements. When a user visits a website, their psychographic and customer profile is sent along with a bid request through an ad exchange. The advertisers can analyze the users characteristics and ascertain the quality of that impression in terms of its ability to bring conversion, and then choose to serve the ad. This can be really useful if you’re trying to reach a very niche group of audience.
- Uses look-alike modeling to boost conversion– Programmatic advertising utilizes look-alike modeling– the practice of finding a new group of customers that look and act like your target customers– to reach audiences that closely resemble previous customers. The AI and machine learning algorithms aggregates user data and makes it so that the bid request that you receive will be for audiences who are very likely to be interested in your product and service.
- Offers multiple inventory buying options- Buyers can purchase inventory on a per impression basis through real time bidding, Or they can receive guaranteed impressions through direct deals with specific publishers. The cool thing about programmatic advertising is that you can get started right now as an advertiser because there are inventories of all shapes and forms out there, both in open market and private marketplaces.
- Its transparency can give you deeper insights- With programmatic buying comes high transparency. The advertiser can get detailed information like which website their advertisements will be published on, info on the user that’s being served the ad, the price associated with each click. You can essentially track the performance of your ad, click-by-click, in real time, and quickly decide if you need to make tweaks to improve its performance.
If you aren’t already using programmatic advertising to boost your reach and conversions, now might be a good time to get started. With this type of advertising you can reduce wasted impressions, and make every click count by only serving your ads to relevant audiences- super fast.