What is programmatic advertising, and how does it work?
The digital advertising landscape was quite different before the dawn of programmatic advertising. Advertisers had to manually negotiate ad placements with publishers, involving endless phone calls and emails. Targeting options were limited, and reaching the right audience was challenging. Ad networks tried to aggregate ad space, but this often resulted in inefficient ad placements. Advertisers had to create different ad formats for each publisher, and data usage was limited.
The arrival of programmatic advertising in the mid-2000s was a game-changer. It automated ad buying, introduced real-time bidding, improved targeting, and provided access to vast amounts of data. This shift made digital advertising more efficient, precise, and scalable, revolutionizing the industry. In this world, advertising is now data-driven, reaching the right audience with the right message, thanks to programmatic advertising.
Here’s how programmatic advertising typically works:
Auction-Based Buying: Advertisers use demand-side platforms (DSPs) to set their criteria and preferences, such as target audience, ad format, and budget. These DSPs then participate in real-time auctions for ad impressions on various platforms.
Real-Time Bidding (RTB): In these auctions, advertisers bid in real time for ad space. The highest bidder’s ad is displayed to the user visiting a website or app.
Ad Placement: When a user visits a web page or app, the available ad space is put up for auction. Advertisers’ DSPs analyze the user’s data and make bid decisions in milliseconds based on the ad’s relevance to the user.
Displaying the Ad: The winning ad is displayed to the user. This can be in various formats, including display ads, video ads, native ads, and more.
Data and Optimization: Programmatic advertising relies heavily on data to make decisions. Advertisers use data to target specific demographics, behaviors, and interests. They also use data to measure the effectiveness of their campaigns and make real-time adjustments.
The different forms of programmatic advertisements
Programmatic advertising encompasses various types of ad formats and methods for buying and placing ads. Some of the common types of programmatic advertisements include:
Display Ads: These are visual ads that can include static images, rich media, or interactive elements. Display ads can be shown on websites, apps, and other digital platforms.
Video Ads: Video ads can be displayed before, during, or after online video content. They can be in-stream (within the video content), out-stream (standalone video ads), or in display ad units.
Native Ads: Native ads are designed to blend seamlessly with the content of the platform on which they appear. They match the style and format of the surrounding content, making them less intrusive.
Mobile Ads: These are ads specifically optimized for mobile devices. They can include mobile display ads, in-app ads, and mobile video ads.
Social Media Ads: Ads that appear on social media platforms such as Facebook, Twitter, Instagram, and LinkedIn can be bought programmatically. They include a variety of ad formats like image ads, video ads, carousel ads, and more.
Programmatic Direct: Involves buying ad inventory directly from publishers through programmatic means, eliminating the need for an auction-style bidding process. It can offer more premium placements and guaranteed ad impressions.
Dynamic Creative Optimization (DCO) Ads: DCO allows for the customization of ad creative in real-time based on user data and behavior. This results in highly personalized ads.
Location-Based Ads: These ads use programmatic technology to target users based on their real-time physical location, delivering relevant ads to people in specific geographic areas.
The field of programmatic advertising continues to evolve with advancements in technology and changes in user behavior and preferences. Advertisers can choose from these formats to best suit their marketing goals and target audiences.
What are the benefits of programmatic advertising for business?
In the very beginning, companies had very little influence on who would see their content. Ads were nothing more than static banners with small amounts of text and even though there were some methods for targeting, with the rise of programmatic and the usage of cookies the options became more sophisticated. Finally, machines and certain algorithms replaced humans in the process of buying ads, which made advertising simpler and more effective than before.
These days, access to big data and artificial intelligence enables organizations to leverage more sophisticated techniques of making themselves visible to potential customers. Programmatic advertising allows companies to leverage automation, as well as other, advanced advertising techniques and technologies (such as contextual targeting etc.). It also makes it easier for companies to measure ad performance and come up with proper adjustments for their campaigns.
Third-party cookies removal from Chrome equals a new era for advertisers
The growing prioritization of consumer privacy and user experience is a catalyst for developing and introducing new advertising technologies and techniques to the market. It is also the reason why current solutions are being assessed for how much they rely on access to the sensitive data of users. The announced future third-party cookies removal from Chrome creates new challenges for advertisers, but also forces them to leverage more sophisticated methods of promotion, which positively impact user experience. This is one of the main catalysts for the evolution of programmatic advertising, since brands will no longer be able to leverage third party cookies for personalization. Publishers are not wasting any time and are already working on preparing and introducing new, advanced advertising techniques to the market. Cookieless targeting methods that you can take advantage of are already available.
The main benefits of programmatic advertising
Collaboration with programmatic advertising companies provides organizations with access to attractive advertising solutions and more precise tools. These techniques and software enable users to find new opportunities to solve their ads-related challenges in their businesses. Various benefits of programmatic marketing are present.
Ease of using ads in any format
Why limit yourself to static ads with some short text and simple graphics when you can achieve way more by stimulating other senses of your audience as well? In the programmatic advertising ecosystem, you can easily leverage any available ad format. Video ads allow you to describe your products and ideas with visuals, sounds, and text. Such campaigns will be even more effective if you empower them with advanced technologies. Video advertising combined with contextual targeting makes it easier to reach the proper target group without violating the privacy of your potential customers.
Campaign budget optimization
Leveraging automation is a more effective approach to buying ads. The algorithms can identify the best opportunities and places on the internet where an ad should be displayed to perform with the highest efficiency. Putting software between ads publishers and companies that try to promote their content, increases the efficiency of the entire process. With no need for terms and price negotiations, both publishers and brands can save a lot of time and money.
More accurate targeting
Reaching a wide audience is important, but reaching ”the right” audience is, in fact, even more important. After all, you always address your campaigns to those who may be interested in your offer, so you should try to display your ads in the right place and time. Programmatic advertising allows companies to make the most of various targeting techniques that enable entities to present their content to those who could potentially be interested in it (using methods such as behavioral targeting, contextual targeting etc.). With programmatic advertising, we are capable of displaying the right content automatically at the proper time during the day. Additionally, personalization is even more effective, as we can reach a very specific audience (e.g. people from certain cities with particular purchasing habits). By using programmatic advertising, you increase the possibility of presenting your campaigns to the right audience. Such advertising also provides an organization with better flexibility, so it can react quickly to changes on the market.
Improved user experience
Internet users were never ecstatic about huge amounts of ads on webpages – can we blame users? Irritating ads that are not at all related to the website’s topic often have the exact opposite effect than their creators want them to have. Still, intense advertising doesn’t have to be annoying. The idea of great advertising is to get better control over your campaigns. Programmatic advertising allows you to increase the chance that your ads will be displayed in the right place and at the right time.
Efficient campaign performance monitoring
Programmatic advertising gives an organization better control over specific campaigns, resources, and goals. There are many tools that enable organizations to track their campaign’s performance and results. Various metrics can be applied to measure the effectiveness of your organization’s advertising. You have to remember, though, that some metrics are more suitable for evaluating specific types of campaigns. For example, metrics like VCR and CPCV are typical for assessing your video branding campaign success.
Prevent your brand from being associated with improper content
Every company should use some type of brand safety solution to make sure that their ads will not be displayed on some types of websites. Business organizations in general don’t want to be associated with content such as fake news, conspiracy theories, pornography, or violence. This could reflect poorly on their credibility and brand image. Deep Learning based solutions powered by Natural Language Processing exclude these sorts of sites, so the company can be sure that their ads are presented on the right websites.
How to make the most of programmatic advertising
Leveraging programmatic advertising effectively requires a strategic approach:
Start by defining clear campaign objectives, target audience segments, and key performance indicators (KPIs).
Next utilize data and audience insights to create highly targeted ad campaigns.
Then set a reasonable budget and bid strategy, and choose the right types of programmatic ads based on your goals.
You should continuously monitor and optimize your campaigns in real-time by adjusting bids, ad creatives, and targeting parameters based on performance data. To achieve this you can employ ad verification and brand safety measures to ensure quality ad placements.
A/B test different ad variations to determine what resonates best with your audience.
Programmatic advertising’s power lies in its data-driven, automated capabilities, but success comes from the smart application of technology, creativity, and ongoing analysis to refine your approach and deliver the best results.
Mistakes to avoid in programmatic advertising
Although there are many benefits of programmatic advertising, avoiding mistakes is crucial to achieving a successful campaign. Here are some common mistakes to steer clear of:
Lack of Clear Objectives: Failing to establish specific campaign goals and KPIs can lead to inefficiency and poor ROI. Always define what you want to achieve with your programmatic campaign.
Insufficient Audience Segmentation: Overgeneralizing your target audience can result in wasted ad spend. Segment your audience effectively based on demographics, behaviors, and preferences for better targeting.
Neglecting Data Quality: Relying on poor or outdated data can lead to inaccurate targeting. Ensure that the data you use for audience targeting is up-to-date and accurate.
Ignoring Brand Safety: Failing to implement brand safety measures can lead to your ads appearing in inappropriate or harmful contexts, potentially damaging your brand’s reputation.
Budget Mismanagement: Setting an inadequate or excessive budget can impact campaign performance. Balance your budget to align with your objectives and competitive landscape.
Overlooking Creative Quality: Strong ad creatives are essential for engaging your audience. Neglecting creative quality can result in low ad effectiveness.
Not Monitoring in Real-Time: Programmatic advertising requires constant monitoring and optimization. Ignoring real-time data can lead to wasted ad spend and missed opportunities for improvement.
Ignoring Mobile Optimization: With the increasing use of mobile devices, failing to optimize for mobile can limit your campaign’s reach and effectiveness.
Excessive Frequency: Bombarding users with the same ads can lead to ad fatigue and annoyance. Use frequency capping to control ad exposure.
No A/B Testing: Neglecting A/B testing means missing out on opportunities to improve ad performance. Experiment with different ad variations to identify what works best.
Disregarding Ad Formats: Choosing inappropriate ad formats for your campaign goals can hinder success. Select formats that align with your objectives and audience preferences.
Setting-and-Forgetting: Programmatic advertising requires ongoing attention. Don’t just set your campaign and forget about it. Continuously optimize and adjust based on performance data.
Inadequate Tracking and Reporting: Failing to implement robust tracking and reporting mechanisms can make it difficult to measure and evaluate campaign success.
By avoiding these common pitfalls in programmatic advertising, you can maximize the efficiency and effectiveness of your campaigns and achieve better results.
How to start using programmatic advertising?
If you are interested and feel ready to explore how programmatic advertising can work for you, you should consider whether you want to run it in-house or cooperate with experienced advertisers. Both approaches have their advantages, though handling advertising in-house requires having access to significant resources (data, budget, talents) and tools. You can collaborate with an advertising provider, who will analyze your needs, advise you on the best solutions and take care of your campaigns. Don’t hesitate to contact us for more information.
