Programmatic Advertising – What You Need to Know

The world of digital marketing and digital advertising is going the programmatic way. Programmatic ad spends makeup 43% of ad revenues. 65% of marketers shift to programmatic and the numbers are rising since that percentage is for the year 2016 and much has happened since then in programmatic ad tech. It is not just online ads that are going the programmatic way; even TV ads are programmatic with market share of programmatic in this segment being 39% in the US. 62% of media buying professionals are focusing more on programmatic TV. Mobile programmatic is not to be outdone with more than 80% of mobile display ads generated through this avenue. 50% of marketers now use programmatic for mobile ad inventory purchases.

Adobe Think Tank predicts that by 2022 over 80% of advertising will be programmatic. The US, at $ 24 billion in ad spends accounts for 62% of total global expenditure but the Asia Pacific region is catching up. Globally, advertisers are expected to spend over $ 84 billion which just goes to show how huge the potential is. So, what is programmatic and why is it such hot stuff.

What is programmatic advertising

In order to understand programmatic first take a look at how traditional advertising online works. There are publishers with websites offering space for advertisers. Advertisers may contact directly and negotiate rates and then place ads. They may go through an ad agency. The process is cumbersome, time-consuming and less effective since the purpose of ads is contextual targeting. Now enter programmatically. It changes the landscape. Everything is high-tech and automated through the programmatic ad tech platform.

The scenario is the same as before. However, the ad-tech platform with its supply side, demand side, real-time bidding and data management platform play a central role. There is minimal or no human involvement in the space buying and ad placement process. It happens automatically and in real time. The technology may even include tracking technology to track site visitors and pursue them as they flit from one site to another. This is important for targeting and retargeting.

Publishers list their space on the ad tech platform and specify minimum and maximum prices for display ads. Ads may be plain graphic, images, video and any other format with appropriate slots being available on publisher sites’ pages.

On the other side are advertisers and ad agencies as well as ad exchanges. Their goal is to place ads on sites that will generate clickthroughs, and, hopefully, conversions. They are looking to maximize return on investment. Programmatic is the smart platform that helps advertisers achieve their goal.
How it works

Publishers make available space on their sites on the ad tech platform. Suppose a visitor visits a site searching for content of interest to him. What happens is that the ad tech platform swings into operation. It detects the type of content the visitor is viewing and then initiates bids for advertisers offering relevant contextual ads aligned with the page’s content. The assumption here is that the visitor, if he is searching for specific information on particular products or services, is likely to click on ads if the ads are about the topic of his interest. This lets advertisers target people who are actually interested in a product instead of using a spray and pray method. As soon as the visitor clicks that page the real time bidding process starts but not before the programmatic tech has analyzed the cookies and determined visitor behaviors.

There may be several advertisers with products that would fit into that available slot. The slot goes to the advertiser who puts in the maximum bid. Here again, advertisers have the option of specifying just how high they will go. Advertisers may end up bidding against themselves unless they specify a ceiling. If there are no other bidders and if that ceiling is reached then the platform’s automated feature may allocate the space to the advertiser or simply cancel the bid process, depending on what the publisher has programmed into his offer. There are various types of bid strategies such as waterfall bidding, client-side and header.

All of this happens in the space of a few milliseconds, even as the page the visitor visits is loading on his screen. The ad too starts loading. Uninformed visitors may be surprised to see an ad that relates to the content they are viewing. Smart visitors know that programmatic is at work. It does not stop there. The visitor is being tracked. If he leaves one site and visits another, he will find similar ads popping up on that page.

With programmatic advertisers do not have to carry out extensive exercises in demographic and geolocational targeting – programmatic simply targets visitors who are actually interested in the product. It gets them maximum returns. Publishers benefit by getting maximum price on their inventory.