Explaining Programmatic Advertising can be complex and has only amplified the many questions thundering around the digital landscape. From how everything works to how it can help, we have tried to answer some of the top questions our clients confront regularly.
What is Programmatic Advertising?
Several definitions of programmatic advertising circulate the digital landscape; before we tackle popular acronyms, we want to explain what this beast is.
Programmatic advertising uses software to instantaneously buy digital ad space across display, video, mobile and social mediums.
Before this advertising breakthrough, media purchasing across display, video, mobile and social channels involved several manual processes, including negotiating prices for consistently occupied placements and impressions. Programmatic advertising has helped streamline most manual processes signifying those advertisers don't have to purchase ad space for a set amount across a specific period. Instead, advertisers leverage software to buy personal impressions that better match their target audience.
How Does Programmatic Advertising Work?
Imagine a music enthusiast named Sebastian visiting an article on Rolling Stone or watching one of his favorite concert videos on his MacBook. The webpage or video he accesses is home to various advertising spaces available for acquisition. As each webpage or video loads, so will an ad in the open advertising space. This moment translates to one impression and will produce the advertisement shown on Sebastian's visit based on an ad exchange that will receive data noting available ad space for purchase. The ad exchange will then make an impression on the ad space open to many interested ad buyers. These buyers have auctions required for bidding by impression and the winning bidder will serve an advertisement to our friend Sebastian. This process occurs in fractions of seconds.
One crucial piece of information to note would be that impressions sell in different categories:
- Reserve buy: the advertiser agrees to purchase a set number of impressions on a website
- Real-time bidding: this is a reserved buy that has already been served or does not exist and every impression is available to purchase
Real-time bidding determines your budget impressions during the loading phase of any webpage. The winning bidder will win the impression and their ad will appear. It is almost impossible to bid on these impressions since real-time bidding happens in milliseconds on an infinite number of daily impressions manually. Bidding is possible by programmatically placing bids using a demand-side platform (DSP) software. Within a DSP, rules create safety nets to determine how much an advertiser is willing to bid based on the website visit and the user visiting the web page. In our example, Fano guitars may be very interested in winning the bid to show an advertisement to Sebastian, a music and guitar enthusiast.
A demand-side platform (DSP) is the solution used to bid on impressions from an ad exchange automatically. Most DSPs have a data source for information of each user to be stored and closely monitored. Each ad exchange will send data through to the DSP (typically including the user's ID); the ID then receives a review to establish whether details about the user match the advertiser targeting criteria before a bid price reaches the exchange for specific impressions. If that DSP can win the auction for the impression, then a piece of creative, including a tracking pixel, is served. The user viewing the creative may purchase it on the advertiser's site. Details are sent back to the DSP through this pixel, allowing the campaign to capture a return.
It's important to remember that campaigns run continuously; the DSP utilizes algorithms to understand how placements achieve the advertiser's objectives. Constantly evolving and comprehending placements will also help determine which impressions to bid upon and attempt to buy highly.
Many companies are considered DSPs based on their utilize of automated software to bid upon relevant impressions; the companies include:
- Basis Technologies.
What are Some of the Advantages of Programmatic Advertising?
- The gift of increasing qualified traffic to your website
Through programmatic, advertisers can continually gather insights into the audiences that provide the desired actions for the objectives of campaigns. By utilizing this data, advertising campaigns can automatically optimize and improve performance by aggressively bidding for traffic closely resembling a "converting" audience, therefore providing brands with an increase in better audiences.
- The efficiency of buying
The use of programmatic advertising makes buying impressions an efficient experience. There is no need for negotiating prices or sending creative manually to all the different publishers you wish to utilize. The process of ad buying through programmatic streamlines previous hurdles and saves advertising precious time and money compared to other methods.
- Heightened control of the purchasing process
Programmatic advertising gives advertisers increased control when running campaigns efficiently to adjust budgets or bids through a self-serve platform. A bonus is the ability to pause and resume campaigns, when necessary, which proves incredibly useful if your action is to sell a particular product that could reach sell out.
- Access to inventory at lower price points
Through programmatic, an advertiser bids on unsold inventory rather than premium inventory. The price point is far higher in purchasing superior placements, allowing programmatic advertisers to potentially have access to advertise at lower CPMs rather than buying premium, depending on the competition. However, a key factor is that programmatic campaigns should focus on bidding on the user to ensure they closely align with your target audience, so I would not get too hung up on buying at lower CPMs.
- Enhanced tracking capabilities
The tracking capabilities through programmatic have grown in their ability to equip advertisers with information from where their ad is showing and characteristics of the audience completing each desired action. This data allows improved campaigns to optimize and reinvest budgets in the correct areas.
What North Star Metrics Should I Focus on for Programmatic Advertising Campaigns?
When planning to run programmatic advertising campaigns, a crucial decision depends on how you deem a campaign successful. Some metrics to benchmark success we recommend:
- Click-Through Rates
- Cost per conversion
- Return on Investment
- Click-through attribution
- View-through attribution
- Brand search uplift
- Audience awareness
- Uplift in social engagement
- Ad frequency
Can You Clarify the Buzzwords I Keep Hearing?
Trying to navigate the maze of terms associated with programmatic advertising can be frustrating, and those who know them may try to mislead and intimidate you. I have clarified the jargon you will hear with some of the critical acronyms defined below, so you don't need to be spooked.
Ad Exchange: A digital marketplace enables publishers to sell advertising space and advertisers to buy ad space. This advertising space is most commonly purchased or sold across display, video, or mobile media.
Real-time bidding (RTB): An instantaneous bid is placed on placement as it becomes available to purchase. These bids will occur seconds before web pages finish loading. Think of this as a modern-day eBay experience.
Demand-side platform (DSP): This tool allows buyers and advertisers to place bids for space through different ad exchanges. Along with purchasing advertising space, the tool enables advertisers to include target criteria and rules that automate bids for different impressions available to buy from the ad exchanges.
Supply-side platform (SSP): This tool lets publishers sell space available across display, mobile, or video. Through a supply-side platform, publishers can make their impressions available to ad exchanges; from here, the impressions are bid upon typically through demand-side platforms (DSPs). As publishers make impressions available on the ad exchange, many advertisers are likely to bid via DSPs, allowing publishers to maximize income.
Agency trading desk (ATD): Agencies who purchase and resell media to advertisers at a surplus, helping to manage the buying of campaigns to a specific group and optimize campaigns using Demand Side Platforms. A trading desk will sell the media at a premium, making money for the service provided to help advertisers reach their target markets.
Interested in programmatic advertising? We’d love to help you get started! Reach out today to get the conversation going.