Explained: Programmatic advertising refers to the buying and selling digital advert space through automated platforms which connect publishers with prospective advertisers.
Programmatic advertising has become an increasingly important part of a modern marketer’s job.
As digital marketing continues its upwards rise and maintains its position as the primary way marketers communicate their adverts to prospects, the need for programmatic advertising will only increase as tools to improve the process of buying and selling digital ads become more sought-after.
There are six major benefits of programmatic ad buying:
- Scalable and flexible spending
- Large reach
- Transparency
- Efficiency
- Targeting
- Real-time data
In this blog, we’ll cover what programmatic advertising is in more depth, how it’s used, and how a modern business can make the most of these platforms.
You can also start by watching this brief video that breaks down programmatic advertising:
Industry
If it had escaped your notice already, digital advertising on websites is the today the dominant form of ad spend worldwide, with digital ad spend accounting for a whopping 61% of total media ad spend in 2021.
By 2024, this figure is expected to have reached 68% and has seen double-digit growth for much of the last decade.
Simply put, digital ads are the primary channel through which marketers broadcast their ad messaging to consumers, and this is why programmatic advertising represents such an important tool for them to use in order to effectively communicate and make sales.
How Does Programmatic Advertising Work?
Programmatic advertising works though ad exchanges.
Publishers sell digital ad space through these exchanges and buyers enter bids for their content to be advertised.
An automated algorithm uses advanced analytics to determine the correct placement of these ads on publishing sites, based on factors like industry and demographics, in order to give the ads the best bang for their buck.
This is a process that takes mere seconds, with buyers able to find qualified space for their ads almost instantly.
A typical platform for programmatic advertising would be Google Ads.
Benefits of Programmatic Advertising
Scalable and Flexible Spending
Programmatic ads are completely scalable in how much is spent on ad campaigns, making it an appropriate form of advertising for big and small businesses alike.
SMBs with limited budgets can simply put a monetary ceiling on their campaigns so they do not end up overspending and paying more than they bargained for.
Google Ads, for example, allows for average daily budgets for campaigns and will determine when best to use the budget on a day-to-day basis, depending on factors which impact the campaign’s ROI—advertising more for a display campaign restaurant in the run-up to the weekend might be more advantageous, for example.
Because of this, not only can budgets be used more effectively, but the scalability of ads run through programmatic advertising is extremely flexible—companies can simply up or reduce the budget whenever appropriate.
Large Reach
Programmatic advertising provides enormous reach to marketers because the marketplace for publishers far exceeds anything else.
With millions of websites and the ad space being sold by them, programmatic advertising offers an opportunity to reach an incredibly broad and diverse audience, depending on the needs of the buyer.
This is something that is simply unmatched by any other form of advertising and gives programmatic advertising a huge advantage in this respect.
Programmatic now makes up 72% of all digital display advertising spend. In 2018, it made up just 61.2%.
Transparency
Programmatic advertising provides a level of transparency for marketers that allows them total visibility over their campaigns.
Marketers can see exactly what sites their ads are being used on, what kinds of audiences are seeing their ads, and what they are getting in return on their investment.
This makes it a lot easier for marketers to determine the success of their campaigns and how to proceed to improve them to, for example, reach out to their target audiences by seeing what sites are currently being used and whether you’re communicating your message to the right end users.
Efficiency
This transparency plays a big part in the efficiency that programmatic advertising can bring.
Access to this data in real-time means that marketers can make changes where necessary and optimize the placement and style of digital ads in order to effectively make conversions.
The data-driven approach of programmatic advertising makes it an efficient tool for advertising.
Across the 10 campaigns studied, Nielsen found that when brands consolidated their campaigns using Programmatic Guaranteed, they experienced an 11% increase in reach efficiency. That means that for the same impression investment, they reached 11% more unique consumers.
Targeting
As we noted, the specificity of programmatic advertising allows for a level of targeting that is unparalleled by any other form of modern marketing.
Programmatic advertising means several different factors can be segmented and targeted according to the needs of the marketer.
Examples of different types of targeting are:
- Contextual: This kind of targeting means data is used to ensure the right kind of ad appears on a relevant site.
- Behavioral: Shopping habits and interests drive behavioral targeting, where ads will be shown to people who fit a certain behavior profile—for example someone adding an item to their basket without purchasing. That information can be used to target that customer with something they may be interested in.
- Location: Geo-targeting ensures that location-specific ads can be seen by those it’s most relevant to, based on consumer information regarding region or postal codes.
- Device: Advertisers can reach users across devices, meaning marketers can use ads that nurture prospects on an omnichannel basis instead of just hoping a single ad cuts through.
Real-Time Data
Because as it’s heart, programmatic advertising is conducted through the application and analysis of data in real-time, marketers have access to this information in real-time, too.
As a result, they can make decisions on-the-fly, making adjustments to campaigns where necessary and evaluating them as they are launched.
This kind of real-time management using a data-driven decision making process is what marks programmatic advertising out as a useful solution to marketers.
Bottom Line
As marketers continue to approach their campaigns in a way that is more data-driven than ever, the use of programmatic advertising has grown and its benefits are being sought after by organizations of all sizes.
The ability to successfully target desired audiences effectively and manage campaigns efficiently within a budget means this tool will be an essential ally to marketers for many years to come.
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