Programmatic advertising is a complex subject that many find difficult to comprehend fully. It has been referred to as the “black box” of online marketing and experienced phenomenal growth in recent years. The official definition is that it is “the automation of buying and selling of advertising online”. It uses different platforms to sell inventory on publishing sites as well as being able to buy inventory and place advertisements on publisher’s websites.
It is something that used to be a manual process, consuming many man-hours and being a high cost for businesses around the world. The whole process is now completed in milliseconds, here’s a brief guide on how it works.
How does it work?
Even the most experienced digital marketers may be a little confused about how programmatic advertising works, although you are aware of the immense impact that it can have on your brand’s performance. To try and make things as straightforward as possible, we have put together this step-by-step guide to the most frequently used form of programmatic (although there are several different methods).
A customer uses a website that is part of an advertising network. As soon this happens, the automated bidding starts for which ads are displayed.
The publisher, via their supply-side platform (SSP), lists ads space which will be available for the viewer (the customer). The advertisers will be told the characteristics of the site, the user and also the amount of ad space which is available. This allows the demand-side platform (DSPs) to make a bid to advertise their product in the space available.
By using cookies, the SSP analyses information about the user. This will include their geographical location, interests and anything else which may be relevant.
The DSP will then analyse all the information which has been sent by the SSP. The DSP chooses to place ads that match their budget as well as their target market. The ad placement assignment will be based upon two factors, the user’s characteristics and the website itself.
Acting on behalf of the advertiser, the DSP places a bid for the relevant ad placing. Of course, all this needs to happen in real-time for it to function correctly – hence the name real-time bidding (RTB).
Rather like a tendering process, once the SSP has received all the bids from the DSPs, a decision will be made on the winner. Different SSPs use different forms of bidding strategies, including:
- Waterfall bidding
- Client-side bidding
- Header bidding
Although all the methods are commonly used, header bidding is regarded as being both the fairest and most efficient.
The winning ad is then displayed on the publisher’s website, and the whole process is concluded while the user’s page is still loading.
Why should you use programmatic advertising?
There are countless reasons why you may wish to consider programmatic advertising for your business. The top reasons include:
- Efficient management of your advertising budget
You can specifically target users with an array of data at your fingertips which means that you can efficiently manage your budget, ensuring that your ads are displayed in the right place and at the best possible time. It means that you aren’t placing your ad in front of people who will have little or no interest in what you have to offer and make your advertising budget go further.
- Analytics available in real-time
With real-time information available advertisers you can tweak and optimise your campaigns in real-time, once again increasing efficiency and enabling smarter use of the budget. Ads can immediately be adjusted with the results presented in an instant rather than waiting on a spreadsheet from a marketing agency which may come weeks after a campaign has started.
- Transparency and openness
In the past, before programmatic advertising was introduced, more prominent brands relied on advertising agencies to manage their advertising. Unfortunately, this often led to a dilution of control and a lack of transparency regarding fees. With programmatic advertising, you know exactly how much you are spending and on what.
- Reach across different channels and formats
Digital touch points is a phrase that is becoming increasingly popular, but as a marketer, you must keep abreast of the number available to average users. You can reach out to users across different devices, apps, platforms and even various forms of media including TV. In reality, wherever you want to advertise, you can!
What does the future hold?
Although the concept is nothing new, it is something which is continually evolving. Technologies are improving, regulations are changing, and new best practices are being dreamed up all the time. It is indeed exciting, but what can we expect in the future?
- Personal data and privacy
The introduction of GDPR in 2018 meant that the use of third-party data had been transformed. The biggest issue for marketers was how this information could be used to target groups or individuals. In 2020, we will see the introduction of ePrivacy, which is likely to have a similar impact with even tighter restrictions being put in place.
- Cookie-less tracking
Internet browsers are putting restrictions on the tracking of cookies which is significantly reducing their effectiveness when it comes to targeting specific markets. It is anticipated that there will be an increasing move towards deterministic and probabilistic tracking.
- Increasing use of AI
Few would argue that AI isn’t playing a more significant role in all of our lives and can play a huge role in programmatic advertising. We have all witnessed the impact of personalisation and optimisation of creative with the rise of dynamic creative optimisation (DCO).
- In-house use of programmatic advertising
With an increasing number of tools available to marketers and the advancements in technology, many companies are exploring their options when it comes to moving their advertising in-house. With increasing transparency, brands want to take control of their budgets, and advertising technology is making this feasible.
Programmatic advertising is something that is continuously evolving, and you need to have a clear strategy to make efficient use of its capabilities. If you would like more information, contact us today on 02 038 5400.