There is no doubt that the technology within digital advertising industry is becoming more automated, but that does this mean? Today, we will dive into the basics of programmatic advertising, and why it has become so widely adopted among advertisers and marketers.
What is programmatic advertising?
Let’s start with the definition of programmatic advertising
Digital Marketing Institute offers a simple explanation:
“Programmatic ad buying, put simply, is the use of software to buy digital advertising. Whereas the traditional method includes requests for proposals, tenders, quotes and human negotiation, programmatic buying uses machines and algorithms to purchase display space.”
Here is another definition from Marketing Land:
“Programmatic advertising helps automate the decision-making process of media buying by targeting specific audiences and demographics. Programmatic ads are placed using artificial intelligence (AI) and real-time bidding (RTB) for online display, social media advertising, mobile and video campaigns, and is expanding to traditional TV advertising marketplaces.”
Simply stated, programmatic advertising describes the automation of digital ads, where computers help determine what kinds of ads will run and where they will be placed. This streamlines the ad buying process with data-driven technology, leading to higher results.
What are the benefits?
A key benefit to programmatic advertising is that it’s more efficient and cost-effective.
Traditionally, ad buying consists of negotiating prices with other humans and manually entering in data to decide which ads to buy. This involves leveraging an ad exchange, ad network, or DSP (demand-side platform) to bid on ad placements. The problem with the traditional ad buying method is that advertisers have less control over their ad placements which can lead to wasting money by not effectively reaching your target audience. This is basically a “hit-or-miss” type of approach to ad spending.
With programmatic, computers handle the ad buying and negotiation of prices by leveraging key data, which makes the process much more seamless and efficient. In real time, computers can calculate bids based on the data and boundaries set by the advertiser, leading to much more granular, customized campaigns.
Programmatic is continually gaining deeper insights and gathering data based on your audience’s behavior, which helps optimize KPIs. This means advertisers can determine the most effective placement at the best time in order to reach the most optimal outcomes, which is reaching their intended audience. In other words, programmatic advertising is the ability to automate data collection of users, leading to more granular campaigns.
The future of programmatic
Forecasts for programmatic advertising show no signs of slowing down. According to eMarketer’s 2017 estimates, programmatic ads account for 84% of all digital display ad spend. eMarketer predicts that programmatic ad spend will reach just over $39 billion this year, up from $33 billion in 2017.
The key stats:
- 62% of marketers use programmatic advertising to achieve brand objectives
- It is predicted that programmatic spend will reach $45 billion by 2019
- The fastest growing programmatic channel is mobile
- The top cited benefits of programmatic are better audience targeting, the ability to build audience reach, and real-time optimization: ANA