Programmatic Advertising: A Crash Course On Modern-Day Media Buying

Programmatic advertising has been around since the dawn of the internet. It has gone through a number of changes, evolving from static online advertising to dynamic, real-time, data-driven media buying. 

The main goal of the Programmatic advertising industry, which is defined as the automated process of buying and selling digital advertising spaces, has always been to help brands reach target audiences in an automated manner using algorithms. With an increasing audience for the internet, high click rates made online advertising the place to be in the 1990s. The modern programmatic industry was born as a more lucrative alternative to print advertising.

What Is Programmatic Advertising?

The use of software to purchase digital advertising is known as programmatic ad buying. While traditional methods include RFPs, tenders, quotes, and negotiations, programmatic buying buys and sells online ad space using algorithmic software.

It’s a sophisticated way to place ads that uses traffic data and online display targeting to drive impressions at scale, resulting in a higher return on investment for marketers. It can be beneficial to both SMEs and global brands, so don’t overlook it just because your company is small.

The Programmatic Advertising Ecosystem: What Are The Main Components Of The Ecosystem?

The ecosystem includes a variety of advertising deal types and methods for purchasing programmatic media, as well as a variety of ad formats.

Programmatic Advertising Platforms

The programmatic chain is made up of a variety of platforms that communicate with one another to allow for automated media transactions. This means that there isn’t a single platform that handles programmatic advertising on its own (if only it were that simple).

SSPs And DSPs

Publishers (also known as “first parties” or “supply sources” in digital advertising) use SSPs (supply-side platforms) to manage the programmatic selling of their ad inventory in the programmatic ecosystem. Publishers pay SSP service providers to access and use their platform, which is typically owned and operated by an SSP service provider. 

DSPs (demand-side platforms) are used by advertisers (also known as “third parties” or “demand sources”) to manage their programmatic media buying. Advertisers pay a fee to access and use the DSP, which is also owned and operated by a DSP service provider. 

DMPs And CDPs

DMPs are large databases of third-party information that can be used to learn more about a user to whom an ad is being served. With the end of third-party cookies on the horizon, most DMPs are rethinking their business models or rebranding entirely to provide the role of CDPs.

CDPs are software platforms that store a company’s first-party customer and lead data. Because first-party data is only ever shared with a business with the user’s consent, its use in programmatic advertising is increasing as companies move away from using third-party data to target ads.

Ad Networks And Ad Exchanges

Finally, in the programmatic ecosystem, two intermediary parties stand out: ad networks and ad exchanges. Ad networks make their money by aggregating or “bundling together” publisher ad inventory into categories for advertisers to purchase more easily. In today’s digital advertising, ad networks frequently facilitate these deals through programmatic arrangements, which help both publishers and advertisers get the most bang for their buck.

In terms of functionality, ad exchanges are a little different. They make it possible for ads to be bought and sold on an impression-by-impression basis through a process known as real-time bidding (RTB) (real-time bidding).

Significance of Implementing Programmatic Advertising: 

Target A Better Audience 

The right targeting methods make all the difference in digital advertising. If your digital ads aren’t being seen by the right people, you can say goodbye to all your advertising dollars and efforts, because they’ll be wasted! Advertisers can use programmatic advertising to improve their targeting capabilities, allowing them to show ads to the right audience at the right time.

Use Real-Time Data To Assess Your Success

There’s no need to wait a long time to see and assess the results of your advertising efforts. You get extensive real-time data on how well your ad campaigns are performing with programmatic advertising. This data gives you the crucial opportunity to recognise and implement the necessary changes to improve the success of your campaigns. You can make small to large changes to your campaigns, and you’ll be able to see how effective they are very quickly. As a result, you’ll be able to analyse and improve your campaigns on a regular basis.

Take Automation As A Blessing

Advertisers benefit greatly from the automation component of programmatic advertising. You can let algorithms and software handle all of this for you instead of spending a lot of time and effort or going through a middleman to buy spaces for your digital ads. You can now devote your time and energy to a more important task: ad campaign optimization. 

How Does Programmatic Advertising Work?: A Step-By-Step Guide

Despite the fact that programmatic advertising spending is on the rise, a lack of understanding of how it works is a major roadblock for many digital marketers. As programmatic ad technology replaces traditional advertising, the value of strong advertiser-publisher relationships is diminishing while the need for technical knowledge of programmatic technology grows.

As a result, here is a detailed guide to the most common programmatic format, from start to finish, to assist you in understanding the process:

Step 1

When a user visits a website that uses programmatic advertising, the automated bidding process for serving an ad to that user begins.

Step 2

On their supply-side platform, the publisher lists the ad space for this viewer (SSP). The SSP acts as the publisher’s seller, informing advertisers of the site’s, user’s, and ad space characteristics so that DSPs can place their bids. In essence, they market the product (ad space) for sale.

Step 3

After receiving the ad space information, the SSP examines the user’s cookies to determine factors such as their location, demographics, and interests.

Step 4

The corresponding demand-side platform (DSP) examines the user information provided by the SSP. Advertisers use DSPs to select ad space that fits within their budget and targeting parameters. It assigns a value to the ad placement based on the website and the characteristics of the user.

Step 5

The DSP bids on the ad placement on behalf of the advertiser. All of this occurs in real-time, which is why programmatic advertising is also known as real-time bidding (RTB).

Step 6

The SSP will choose the winner after receiving the bids from the various DSPs. There are a variety of bid strategies available for various SSPs. Waterfall bidding, client-side bidding, and header bidding are the three types of bidding, with header bidding being the most efficient and fair.

Step 7

When the higher bid is chosen, the SSP shows the user the ad on the publisher’s website. The entire process of choosing a programmatic display ad takes milliseconds, all while the user’s page loads.

Big Brands That Have Implemented Programmatic Advertising

Are you ready to look at some programmatic advertising examples? Let’s get going.

Google

When promoting its Google Search App in 2014, Google discovered the power of programmatic advertising. Its advertising campaign not only reached 30% more of the public, which was three times as often as before, but it also had a 30% lower cost-per-thousand impression (CPM). The number of people who were aware of it increased by 50%.

The Economist

By referencing subscriber, cookie, and content data, “The Economist,” a digital and print publication, was able to successfully use programmatic advertising. Its campaign resulted in 650,000 new leads and a 10:1 return on investment (ROI). The popularity of “The Economist” grew by nearly 65%.

Kellogg’s

Kellogg’s, like Google, started using programmatic advertising in the year 2014. The company wanted to implement digitalised ads to drive offline sales, and programmatic advertising helped them achieve that goal. Viewability increased by 70-80%, and Kellogg’s improved its targeting by 2X to 3X.

Programmatic Advertising: Is It The Future Of Media Buying?

Brands will continue to rely on programmatic advertising to reach their target audiences, and they will spend a significant portion of their ad budget on it. They will, however, look into different formats that encourage creativity and new ways to reach out to customers while maintaining privacy.

One of the potential developments for programmatic will be wearable technology innovations. Retailers will be able to target these loyal customers directly, pending their approval and adherence to privacy rules, in order to entice them to visit the store more frequently or at specific times.

Final Thoughts

To summarise, programmatic advertising can help you improve many aspects of your online marketing strategy. It lowers costs, improves user experience, and opens up new creative possibilities. In fact, programmatic advertising is at the heart of marketing because it seamlessly integrates data and creativity. However, keep in mind that it is merely a method for buying online advertising more intelligently. It’s not a magic wand that will solve all of your marketing strategy’s problems; words that start with the letter P should still be at the centre.