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2019 Guide to Programmatic Advertising, Buying & Marketing

Marketers, and especially digital marketers, are always on the lookout for the next big thing that will fundamentally change the advertising business. Lately, that thing has been data—lots of data.

Data is like oil; just as oil is essential to a smooth running car, data is essential to a smooth running advertising campaign. The more information that marketers can collect and organize, the better they can evaluate, target and convert consumers into purchasers.

However, aggregate data is only as effective as its utilization, and with so much data readily available these days, especially via online channels, marketers needed to develop new and more intelligent tools capable of helping them make real-time decisions about where and how to serve ads to ensure that their campaigns were as efficient and cost-effective as possible.

One of the new tools developed to solve this problem is a mix of technology and modern practices called “Programmatic” Buying, which is an advertising strategy that has quickly changed the landscape of both digital and traditional marketing best practices.

What is Programmatic Advertising?

Programmatic advertising uses computer software to buy advertising space automatically, in real-time, choosing where to place ads, how much to pay for them, and what specific marketing messages should be served via those ads by utilizing 1st and 3rd party data to inform all of these decisions.

Instead of buying ads based on a destination, like a specific website, article, or TV show, programmatic buying lets advertisers purchase impressions with specific audiences, making it a much more personalized, much more targeted process where advertisers can be sure the money they’re spending is being used appropriately, as ads are served to individual users, instead of entire audiences.

But how is this possible?

The answer is 1st and 3rd party data! With the help of Data Management Platforms (or DMPs), advertisers can programmatically analyze 1st and 3rd party data to create persona segments and even theoretical lookalike audiences to target and retarget.

  • 1st party data - Data you already own, like subscriptions, demographic info, contact info, behaviors, purchase history from your website, cookies, social media, apps, etc.
  • 3rd party data - Data that is purchased from companies that have purchased 1st party data from publishers

No matter where you go on the web or which free app you use on your phone, your behavior is tracked and put into a cookie pool. By matching 1st and 3rd party data, advertisers can effectively target a 35-50 year old women with an income of X, living in a specific zip code and has interests in mountain biking (if this who you are trying to sell a product or service to).

What you need to know is that programmatic buying has revolutionized the media buying landscape, which all used to be done by hand, involving coordinating contracts with individual websites, radio stations, TV stations and other publishers, limiting the effectiveness of marketing campaigns with time-consuming, expensive processes that served up ads to relatively poorly-targeted audiences.

With the introduction of programmatic ad buying practices, marketing campaigns have grown to be much more sophisticated, as ad buys can be managed at the microscopic level in real-time, allowing advertisers to save time and money by personalizing and automating media buys by eliminating slow traditional negotiations processes with individual publishers and all the time, effort and energy that used to be required for creating manual insertion orders for each media buy.

Programmatic strategies have made the ad buying process significantly faster, and much more flexible, but also more effective, since advertising campaigns are now guided by virtually endless amount of consumer data, allowing programmatic campaigns to serve ads to specific individuals in the right place, at the right time, and in the right way that ensures they’re most likely to respond to the marketing messages being delivered.

Remember, the biggest difference between traditional buying and programmatic buying is that the entire process can now happen in real-time, at scale, and with tremendous amounts of flexibility.

Benefits of Programmatic Advertising

The major advantage of programmatic media buying versus traditional media buying is the flexibility we just mentioned; with programmatic campaigns, marketers are now able to continually optimize their message, in real time, serving it to individuals who meet their targeting profile and in the locations that they want to hit them with the message, exactly when they want to deliver it..

Rather than buying media in advance based on estimated impressions, typical audiences and theoretical conversion metrics, then simply hoping for the best once campaigns had launched, programmatic ads are based off of much more granular data where each impression is paid for individually and where those impressions can be strategically managed in real time.

Because of the technological component involved here, not only is programmatic buying faster and more efficient than traditional buying, but it‘s also less expensive. Unlike traditional methods for buying ad space where the publisher runs the campaign on behalf of the advertiser, setting up and managing ads throughout the course of the campaign’s flight, programmatic marketing puts the control and management in the hands of the advertiser, who is able to make updates to the campaign in real time.

The opportunity to make decisions in real time is extremely valuable for programmatic traders, who are now able to alter their strategy based on any independent variable that may influence the campaign’s success, like, altering tactics based on weather, local or national news and all sorts of other data which can lead to significantly better results. The flexibility offered by programmatic buying equates to less wasted media dollars, increased target audience exposure and better ROI.

How does Programmatic Work?

With Programmatic bidding, human-to-human interaction is removed from the media buying process. And with that element of the process eliminated, advertisers are able to operate much more quickly and efficiently compared to traditional buying strategies.  Automation takes minutes to complete tasks that would’ve taken hours or days if bought manually, leading to all sorts of time and cost savings, and again, helping to maximize marketing ROI. Is there any wonder that the new option of buying media programmatically is getting called a revolutionizing in advertising capabilities? There shouldn’t be! 

Real Time Bidding (RTB)

The most popular type of programmatic technology now used to purchase media is called Real Time Bidding (or RTB), which is the official term for a virtual auction conducted on either a private or public ad exchange.

Real Time Bidding is built upon Artificial Intelligence (AI) technologies capable of micro-targeting and segmenting audiences based on Big data. Real Time Bidding processes occur within 100 Milliseconds from the point that a consumer opens a web page to the time that they are served a targeted ad, which means it’s lightning fast.

A user clicks on a URL prompting the publisher to load the browser and the user’s data is sent to an advertiser. From here, the programmatic bidding process is started and is based on budget and campaign goals. The winning ad with the highest bid is then shown to the user.

Programmatic Direct

Another way to advertise programmatically is through Programmatic Direct, which holds a smaller market share than RTB. “Direct” is a guaranteed deal between the advertiser and publisher, and is a slightly more manual process since the advertiser is purchasing a fixed CPM.

Even though there is a set price, there is still little to no human involvement in these fixed buys. The ads are still programmatically purchased because they are sold through an API.

Programmatic Inventory

The most common buying platform for programmatic marketing is a Demand Side Platform (DSP). This is where the digital ad inventory is purchased. Inventory consists of a variety of platforms such as display ads on a website, mobile ads on apps, audio ads on the radio, etc. And these ads are served in different ways, being static, animated, interstitial, or video creative. And with data-driven audience targeting, media channels now see a more advanced way of advertising and engagement across all browsers on any device.

Programmatic Display & Native

Programmatic display advertising is the fastest growing segment of the digital marketing industry. Programmatic display and Native ads, sometimes referred to as “Banner ads”, are the creatively designed images that appear next to or near the content of a web page and when clicked-on, lead to a designated landing page.

Both ads are similar in look and feel, but there is a subtle disclaimer in Native ads that read “sponsored” or “promoted”. This is because Native ads are designed to seamlessly fit within the content of a web page, sometimes making it difficult to tell whether it is an ad or not.

Programmatic TV

Programmatic TV uses data and automation to better target niche consumer segments on linear cable (real time broadcasting) and connected TV (enabled by internet, smart TVs, streaming, etc.) It is somewhat contradictory to online programmatic ads since it doesn’t target specific individuals. However, it can target specific households, and this is known as “Addressable TV”.

This is where the realm of Traditional TV buying crosses paths with the Digital Marketing world. Addressable TV shows different ads to different households while broadcasting the same show in real time.

Programmatic TV utilizes data-driven targeting to optimize campaigns in real time. Unlike buying traditional TV ad space, where ad space is purchased for a specific time-slot on a specific network and shown to millions of broad viewers, buying TV ad space programmatically more precisely targets audience segments based on 1st and 3rd party data. Traditional TV ad space buying is manual, and by the time a campaign needs to be optimized, it is too late.

Programmatic Audio

Programmatic audio serves users 15/30 second non-skippable ads as listeners hear music or talk shows online. Programmatic audio ads are different from advertising via traditional radio broadcasts for reasoning similar to traditional TV, the audience is just too broad. Whether the medium is digital radio, pure-play streaming, podcasts, etc., Programmatic audio ads more precisely target audience segments based on 1st and 3rd party data.

Programmatic Audio ads are unique, due to the nature of the communication medium. When advertised in an audio space, the message is the only thing a listener hears. Unlike programmatic display, where space on a web page is shared, audio ads completely stand alone and a listener cannot experience “banner blindness” (ignoring page elements that are perceived to be ads).

Programmatic Targeting Strategies

Programmatic advertising thrives off of utilizing data to reach an exact audience in real time. Based on data regarding specific demographics, behaviors, interests, and more, Programmatic solves the guessing game of whom to target and when to target. In fact, there are a variety of strategies and tactics to deploy Programmatic ads to unique individuals.

Programmatic Targeting strategies available:

  • Retargeting – Re-message visitors to your website
  • Search Retargeting – Use paid search data for targeting
  • IP Targeting = Target by company, neighborhood, or cable provider
  • Contextual Targeting = Target by individual site, categories, or keyword
  • Audience Targeting – Target by a wide range of 3rd party behavioral data
  • Geographic Targeting – Target a defined area including users’ current locations and weather conditions
  • Dynamic Creative Optimizations – Retarget a user with the same product they viewed
  • Lookalike Modeling – Build audience models to target based on insights

Limitations of Programmatic Media Buying

Though Programmatic has gained of traction and popularity in the Digital Marketing world, like anything in this field, there are limitations. Buying ad space via computer algorithms still presents risk and drawbacks. And if practiced incorrectly, can not only lead to being more expensive per customer acquisition, but can be extremely consequential to a brand’s name.

The main challenges faced by Programmatic Advertising include the following:

  • Steep Learning Curve (too much complexity) – It takes time to fully develop the skills and nuances needed to use complex DSPs to their full potential
  • Low Engagement Rates – People can’t be forced to click on an ad, even if the right ad is placed in front of the right audience, ads bought programmatically still have low CTRs
  • Risk of Fraud – The most common example of fraud is Bot traffic (non-human automated clicks) which is extremely prevalent online since it is not exactly illegal
  • Brand Safety – Web pages often have risky content (adult, offensive, alcohol/tobacco, etc.) and if a brand’s ad appears on the wrong web page, it can be very bad for its image

The Future of Programmatic

It’s safe to say that Programmatic advertising is not disappearing anytime soon, if ever. The industry is expansive across the board and is pioneering ways in which advertisements are shown to audiences, like “ad select” – in which individuals can choose which advertising message they want to see.

And as Artificial Intelligence (AI) plays an integral role in programmatic ad campaigns, AI tech is advancing at a rapid rate. With its advancements, new arrays of data can be used to even more accurately drill down into a target markets, making a more effective programmatic transaction.

Programmatic Jobs

Since Programmatic advertising is a relatively new and niche field within Digital Marketing, Programmatic traders and campaign managers are increasing in demand. And as the field is ever-changing, intellectual curiosity is a necessity to thrive in this career.

Though programmatic relies on AI, the savvy programmatic buyer and campaign manager must be excellent with written and verbal communication skills as these are needed in performance analyses and client-facing conversations. Candidates for a career in Programmatic must also be analytically minded and computer savvy, as DSP and other bidding platforms are very complex. And being able to manage multiple tasks at a time is a must.

According to Glassdoor:

Find the latest job listings at Digital Media Jobs in Programmatic today!