A Six Sigma black belt, Sarah writes regularly on business and project management, marketing and technology. When she's not working with local youth or writing...Read more
We know that one of the biggest obstacles to the development and maintenance of strong digital publishing is time; since content and relationship development is critical to success, learning how to use programmatic advertising to make your paid efforts more efficient can be a good idea. Programmatic advertising has become an important skill set for all online advertisers and publishers.
We always promote the use of relationship-building content via blogs, websites and social profiles to convert consumers. Programmatic ad buying isn’t a tool to create community and trust, but it is a door by which new consumers can enter your community. Think of programmatic advertising as a cost-effective way of sending invitations to your brand party. You can’t have the party without sending the invites, but once the guests arrive, you must do the work to keep them entertained and comfortable.
What is Programmatic Advertising?
The simple definition is that programmatic advertising is advertising that is programmatically run. Going into more depth, it’s the process of buying and optimizing your digital campaigns by using automation. It exists in numerous digital channels, most notably display ads – but also in mobile, social, and video.
Traditionally, you’d make digital ad purchases manually. You would find a digital publisher, figure out what you need to buy, then handle the transaction by yourself. Of course, things were a little bit more complicated than this. Realistically, the process would typically follow this pattern:
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- You insert orders manually with the publisher of your choice
- The rates are negotiated by you and the publisher – you’re directly involved in the decision-making
- Some organizations implement RFPs to outline intense bidding processes and contract terms
- Your order is confirmed, and your ads are placed
By reading this, you can already see how time-consuming the manual method is.
Why is this an issue? Surely if you secure your ad placements for a reasonable price, then that’s all that matters, right? The fact is that you waste so much time on manual advertising processes that you lose out on valuable time with customers. You may miss phone calls because you’re negotiating with a publisher, or you don’t have time to respond to an email. It makes your business look bad as your customer service drops. In turn, your relationship with customers starts to get worse, and you could lose out on business. While you rely on advertising to bring in new leads, you can’t spend too much time on it. What use are leads if your overall service is terrible because you have no time to focus on customers?!
Programmatic advertising steps in to counter this issue.
As briefly mentioned above, this is the process of implementing automation in your advertising strategy. Instead of handling everything manually, you call upon automated bidding technology to take care of things for you. The bids are handled in real-time, and you can decide what to bid on and how much you want to go up to. Then, everything else is handled by technology.
Thus, you have more time to focus on your business. According to App Nexus, 80% of digital display marketing was done through programmatic advertising in 2018. We don’t have the figures for last year, but the early estimates indicate this percentage has gone up! It’s a concept that’s become commonplace in the advertising world, so it’s time you got used to it.
Why programmatic advertising is important
A recent report by eMarketer found that the US spent around $68.62 billion on programmatic marketing in 2019 alone. In comparison, only $11.32 billion was spent on nonprogrammatic digital display ads.
That stat is telling as it shows the importance of programmatic advertising in the modern climate. Everyone has been shifting their approach to this format for a good few years now. Therefore, you can’t afford to be left behind. Think about it from a competitive aspect. If your rivals are all using automated real-time bidding, then where does it leave you? They’ll be miles ahead, so this is not something you can hide from.
Furthermore, this idea is important because it impacts your business in many ways. We’ve already touched upon how time-consuming manual ad procurement is, and how you’ll benefit from switching to an automated approach. But, there are other advantages of programmatic marketing that signify its importance:
- Improve your return on investment
- Enjoy more advertising flexibility
- Zero in on your target audience
- Real-time reporting
Improve your return on investment
Another eMarketer report revealed that 54.3% of all US ad spending was done digitally in 2019. Companies are investing lots of money in digital ads, and this creates a highly competitive environment. When one business sees a rival pumping lots of money into digital display ads, then they try to respond by increasing their spending. The result is that you invest so much money in advertising that you may struggle to get a positive return on your investment.
The nature of programmatic advertising helps you improve this return. Advertisers need to negotiate a price for each placement in advance. You set it, and then the software does the rest. But, the key thing is that you only pay for the relevant impressions that you get. This is known as pay-per-click advertising. As an example, if your advertisement receives no impressions, then you don’t pay anything. By only paying when the impressions come in, there’s a greater chance of making a significant return – far more so than with the manual approach.
Enjoy more advertising flexibility
The automated approach also brings more flexibility to the party. Advertisers can pick and choose how many impressions they sign up for, and how much money they want to spend. There’s not really a negotiation phase as there is with the traditional model – you’re in control of your advertising strategy.
Naturally, this makes everything more flexible as you can pick and choose things. To add to this, you also have the capacity to buy digital media from lots of different publishers. You don’t have to pigeon-hole yourself to just one, there’s enough time to explore all the options and be flexible.
Zero in on your target audience
The whole point of effective advertising is to make sure your adverts find the right audience. This is where a lot of other advertising techniques fall short. With programmatic advertising, you’re given tools to really zone in on a specific demographic of people.
Regardless of the publisher, you’ll be allowed to select targeting criteria. This is usually based on cookies, which means you target audiences that have interests similar to whatever you’re advertising.
The technology at play here goes much deeper than you think. There are things like IP Targeting to aim your ads at specific IP addresses, there’s location targeting, and much more. In essence, there are no limits to how precise your targeting can be. Again, this lets you find the ideal audience, which can lead to an increase in impressions, which may help you convert more leads and get a better return.
Old school advertising and nonprogrammatic advertising come with drawbacks. Primarily, you have to wait for your data. You don’t get to see how your ads are performing until after a specific period. Programmatic advertising is entirely different. Here, you get to view results and reports as they happen. It gives you greater control over your campaigns as you can tweak little things to enjoy better results.
Overall, programmatic advertising is important because it empowers advertisers and businesses. Efficiency is supercharged, money is spent better, and there are far more tools and technologies available to gain a deeper understanding of your advertising campaigns.
How does programmatic advertising work?
It all starts with a web page. Many websites are now constructed with advertising space that’s specifically reserved for programmatic advertising. This space is often referred to as a container. When the page is loaded up, a signal is automatically sent to an ad exchange – or marketplace. In essence, you can think of this exchange as an online auction house for ads, but where everything happens in split seconds.
On the ad exchange, an auction is instantly run amongst all the advertisers that have registered an interest in running ads on this page. How do they know who’s interested? It’s all based on the targeting metrics chosen by the advertisers, and the person who’s loading up the website. This is where cookies come into play as they tell advertisers what that particular customer is interested in, and what their browsing history looks like. For example, if they’ve spent a lot of time searching for new shoes, then shoe companies will be keen to get their ads seen by this customer.
Anyway, all the interested parties will bid on the ad space via the auction. This is all done automatically, and the entire process can last milliseconds. The winning advertiser will see their advert in the container, broadcasting it to the customer.
A shorter breakdown of the process can be found here:
- A webpage is clicked and loaded up
- The ad space gets put up for auction
- The ad exchange hosts the auction for all interested parties
- Bids are made
- The advertiser with the highest bid gets their ad in the display
- The ad gets shown to the customer
How does it work from the advertiser’s perspective?
The above description misses out a crucial aspect of the entire process. How do things work on the advertiser’s end?
It begins by finding a programmatic platform. Lots of companies exist, and you need to sign up to one to gain access to these automated auctions and exchanges. If you want to know the best options around right now, then we have an entire section dedicated to this. Feel free to skip ahead if you want to see our list.
Once you’ve found the ideal platform, you can start identifying your target audience. This is typically done by deciding on some of the following factors:
- Audience demographics (age, sex, etc.)
- Audience location
- Behavioral patterns
- The device they’re using
- Time of day
The list can go on forever, and you have the freedom to choose all the different factors that zone in on your ideal customer.
As a simple example, let’s say you run a business that sells fitness supplements. On your programmatic platform, you’ll likely create the following ad profile:
- Male or female, aged anywhere between 18 and 45
- Located close to a gym or fitness center
- Has interests in fitness, going to the gym, health, nutrition, supplements
- Spends a lot of time looking up fitness content during the day
- The ideal time of day between 6 and 11 pm (peak browsing time)
- Targeting users on smartphones and desktop computers
The platform also makes you set a maximum bid, which is the most you’re willing to pay for the ad placement.
Now, real-time data is used to seek out the perfect placements for your ad based on all of the above. It won’t just find one place, there will likely be a few. The platform will then join auctions and bid up to your maximum allocation for the ads. If you win, then your ad gets placed on websites for the relevant audience.
Advertisers don’t have to do an awful lot at all. Just make sure you know the target audience for your ads, and ensure your programmatic platform knows this. Set up your maximum bids, then everything happens for you. You can then go back and check the real-time reports to see how many impressions you’re getting and if the clicks are leading to purchases. From here, you’re also able to follow-up on any of the leads you gain via these impressions.
Existing programmatic advertising providers
Advertising campaigns hinge on using the right programmatic providers to help you find the best ad placements. A quick Google search will show you there are hundreds of options out there. With such a diversity of options available, it can be daunting to choose a service. Moreover, it can be incredibly time-consuming to find the right one.
So, we’ve listed a few of the top programmatic ad companies in 2020. All of these options are fantastic, it doesn’t matter which one you choose. Hopefully, this helps you get started!
SmartyAds is one of the most comprehensive programmatic advertising platforms you will find. It has everything you need to run extensive campaigns all in one place. A key feature of this platform is that you can run multiple ad types through this system. That includes display ads, in-app ads, video ads, social media ads, and more. Advertisers can also choose whether to run their campaigns on desktop or mobile devices.
You have access to very detailed analytics software that lets you track ads in real-time and view all of the data from them. The ad creation tool is also very useful as it lets you make your ads on the platform before they get sent off. Overall, it’s very easy-to-use, and the SmartyAds team has been around for some time and will provide loads of customer support if needed.
PubMatic gives advertisers full-access to an immense ad inventory through the company’s own private marketplace. A unique buyer console streamlines your programmatic campaigns by letting you plan and manage everything all together. As you would expect from a top programmatic platform, you get the full choice of formats and channels to bid for ads on.
One of the standout features of PubMatic is its fraud-free program. If there’s any advertising fraud detected, then you get refunded if it affects you. It’s not a critical feature, but it is nice to have. There’s a lovely UI to enjoy as well, which makes using this platform so easy. Plus, you get real-time analytics to optimize your campaigns as they’re running.
Simpli.fi is yet another platform worth considering. As with all the options mentioned, it provides various RTB ad exchanges for you to take advantage of. We were also impressed with the ready-made report templates on offer as well. Advertisers can choose from 60 different designs to view real-time reports or customize one to suit your needs.
You’re able to import your own CRM data into Simpli.fi too. This allows for even better audience targeting as you can go into way more depth than usual. It’s also worth noting the look-alike and search-alike features that help you find similar audiences to broaden your reach.
Choozle is something of a dark horse in this category. It’s not as well-known as the others, but it does allow you to set up excellent programmatic campaigns. The key selling point is that there is no minimum ad spend. You can start at as low a price as possible, making it an attractive choice for small businesses on a tight budget.
It’s a very powerful platform that gives you all the tools you need for targeting, buying, and analysis. Compared to other options, this is one of the most affordable out there, yet it doesn’t lack that many features.
Programmatic advertising trends
What’s next for programmatic advertising? A few years ago, we were talking about this as a trend that was doing to become popular soon. Now, it’s pretty much the number one advertising method out there.
With that in mind, what’s on the horizon? What are the upcoming programmatic trends?
A switch to in-house models
The majority of programmatic advertising is done via agencies. Companies trust other companies to handle all of that for them. You can see why; it saves a lot of time, and you let the experts deal with what they’re good at.
However, a report from IAB detailed that almost 40% of businesses now prefer to use in-house methods to run their programmatic campaigns. One trend we’re sure to see is a switch by more companies to in-house approaches. Businesses realize that they can actually save a lot of money by carrying things out on their own terms. Plus, the technology and resources available through ad platforms makes it easier than ever to stay on top of multiple campaigns at once.
Self-service means that you can get everything you need without having to speak to someone or interact with anyone. These days, there are more and more self-service programmatic programs popping up. Choozle is an example of just that. Advertisers can use the platform and do everything by themselves.
In essence, this cuts out the middle-man. Self-service platforms will play a critical role in this shift to in-house models. So, it stands to reason that both of these trends will go hand in hand.
Programmatic TV ads
Right now, programmatic ads mainly exist in the online space. However, the trends suggest that we will see them enter the television sphere very soon. In actuality, programmatic TV ads already exist, but they’re not mainstream just yet.
It’s all thanks to the growth of streaming platforms and digital TV. If you wanted to sign up for a streaming service today, you’d have so many to choose from – and more are on the way. Naturally, this opens up new doors for marketers to implement the programmatic approach in a TV setting.
An article by AdWeek in September revealed that streaming giant Hulu has already brought out programmatic ad formats. There are pause ads that activate when a user pauses, and binge ads that tailor their content on a viewer’s streaming habits. Pretty soon, we will see this type of advertising across all streaming platforms, and possibly even on mainstream TV in the distant future.
Programmatic audio ads
Following on from TV ads, we should also see audio ads become more prevalent. Podcasts have become insanely popular, which opens up more advertising opportunities. It won’t be long before programmatic ads can be placed in specific podcasts or in various music streaming platforms.
The nature of podcasts and music streaming means that advertisers instantly have access to behavioral habits and interests of the user. From here, it’s easy to see how auctions can be configured to place ads in the prime slots.
More spending and more growth
As we spoke about earlier, over $60 billion was spent on programmatic advertising last year. Recent predictions by Zenith suggest this figure could rise to an incredible $98 billion in 2020. Brands will continue to invest a lot of money in the programmatic model – and it’s easy to see why.
This whole approach is far better than what existed previously – and what still does exist. There’s no substitute for technology and automation in the modern advertising space. As the old saying goes, time is money. You can’t afford to waste time manually procuring ads when other companies are securing prime placements in milliseconds. Businesses are starting to realize this, and that’s why this approach to advertising will grow over the next few years. Don’t be surprised to see spending top $100 billion by the end of 2021.