Programmatic advertising solutions offer an automated way to serve up tailored content to targeted individuals within a defined budget. For marketers, it promises a way to get more from your online marketing budget. Let’s look at how.
The personalized advertising messages that greeted Tom Cruise’s character as he navigated the city in Minority Report seemed like futuristic fantasy when the film was first released in 2002.
Today, thanks to programmatic display, we are now used to personalized digital advertising being served to us online.
Now, advances in the Internet of Things (IoT) combined with programmatic display means that personalized digital advertising messages in the physical world may not be that far into the future either.
Following Our Lives Online
As our lives have moved increasingly online, advertisers have rushed to catch up and ensure their messages are where we are. The decline in print advertising is well documented – GroupM estimates it now equates to only 16% of advertising revenues in the US; with digital now accounting for more than 33%.
In 2011, Internet advertising revenues in the United States surpassed those of cable television for the first time and nearly exceeded those of broadcast television.
At that time, Google reigned supreme: it had 87% of display impression market share in 2012. In the last five years, this market-leading position has been cannibalized by Facebook, other social programs and progressive mobile networks.
While Google continues to dominate search advertising, in digital display advertising, Facebook now dominates.
eMarketeer estimates Facebook has a 39% share of digital display ad revenues – worth $12.4bn of the overall $34.9bn market in 2016. This digital display market includes banner ads, static display ads such as Facebook’s News Feed ads and Twitter’s promoted tweets, rich media, sponsorship, and video.
So where does programmatic advertising fit into this picture?
In 2016, programmatic advertising accounted for approximately 63% of digital display ad spend. Adweek has stated that by 2020, programmatic advertising could account for 85% of targeted banners and 67% of streaming video ads.
Related: Benefits of Programmatic Advertising
What Is Programmatic Advertising?
Programmatic advertising is a way of automating digital media buying using data and technology.
Before programmatic advertising, digital ads had to be bought and sold by human ad buyers and salespeople. Instead, programmatic advertising uses automated processes and carefully constructed algorithms to optimize ad purchasing and spending.
By drawing on demographic and behavioral data to make advertising more targeted, programmatic advertising makes it easier and cheaper for an advertiser to reach their target audience.
Advertisers can choose to purchase ad impressions in advance from specific publisher sites, or they can purchase digital advertising through Real-Time Bidding (RTB) platforms. RTB allows advertisers to bid against each other for advertising space on different websites and social networks based on price, audience profiles, and network reach. This all happens in fractions of a second, so that the digital advertising can be served up to the consumer seamlessly with the rest of the page content.
Step 1: Someone clicks on the webpage
Step 2: The publisher of the page puts up the ad impression for auction
Step 3: The ad marketplace holds an auction among the advertisers competing for the impression
Step 4: The advertiser that bids the most for the impression wins the right to display their ad
Step 5: The ad is delivered to the prospective customer
Step 6: The customer clicks on the ad and the advertiser converts them into a sale and profits
In terms of the consumer experience, the only noticeable difference programmatic advertising will deliver is that of more relevant ads being served up.
How Does Programmatic Advertising Work?
Digital advertising is sold directly through the platforms and social networks or through an ad exchange.
An ad exchange is a technology platform that effectively operates as a broker, facilitating the buying and selling of media advertising inventory from multiple ad networks (such as Yahoo, Google, AOL, etc).
From the advertiser’s point of view, the automated purchasing of digital advertising from these ad exchanges is managed through a complex piece of software called a demand-side platform (DSP) or supply-side platform (SSP).
A DSP and an SSP essentially do the same job; enabling buyers of digital advertising inventory to manage multiple ad exchanges and data exchange accounts through one interface. When selecting a DSP it is important to consider the amount of online inventory they have access to, and the insights and optimization capabilities they can deliver, as well as cost.
The DSP may work in conjunction with an Agency Trading Desk (ATD). An ATD is a massive media buyer and re-seller which functions as an independent working unit within a large media buying concern.
Achieving the Best Value From Programmatic Advertising
Simply purchasing media through real-time bidding platforms or using a demand-side platform is not enough. To get the best value from programmatic advertising, advertisers must make use of the optimization possibilities available.
In order to fully optimize programmatic ad purchasing, advertisers need to use demographic and behavioral information about their customers and prospects. This might include insights such as:
- Location data points collected
- Unique places of interest linked to a profile
- Video viewing hours associated with individual profiles
- Online and offline purchases
- Other verified data from offline and online sources
This requires a system of managing customer and prospect data so that it can inform ad placement and targeting. This is usually the role of a data management platform (DMP). A DMP is a centralized computing system for collecting, integrating and managing large sets of structured and unstructured data from disparate sources.
A growing number of DMP software options are available including: Adobe Systems Audience Manager and Core Audience (Marketing Cloud) to Oracle-acquired BlueKai, Sitecore Experience Platform, and X+1.
The advanced customer profiling enabled by the DMP can then be used to inform email campaign, web analytics, social platforms, as well as targeted display ads.
Monitoring and Reviewing Programmatic Advertising Results
There are three main methods for monitoring and evaluating digital display advertising.
- Last click
- View and click
- Test and control
Each has its own set of advantages and disadvantages.
Like many digital marketing programs, digital display advertising can be measured on “the last click before purchase”. This has the advantage of offering an immediate view of the success (or not) of an ad placement. However, it does mean that a DSP or vendor could infringe on other channels to gain more clicks, and it doesn’t allow for – or give an overview of – a longer customer journey or conversation.
As a result, some digital display ad marketers prefer to use the “view and click” metric; this offers a more holistic look at ad performance while delivering an equally immediate view of the success or otherwise of an ad. However, it does have a serious disadvantage, because it can lead to the double counting of engagement across multiple digital channels. Given this, it can be more difficult to explain to clients and executives, who are often fixated on “last click” statistics.
A more preferable option for analysis is “test and control”. Although this involves a lot more analysis, it does enable marketers to take into account the full consumer journey. It can even incorporate repeat conversions and repeat transactions per customer. Although it can be time-consuming to analyze and influence campaigns using this method, it does give a more detailed overview of what is working and how customers are engaging with your brand and your display advertising.
With this type of effective statistical analysis, and the subsequent optimization it enables, the results of your digital display advertising should improve steadily week by week.
The Future of Programmatic Display
By freeing digital ad buyers from the manual purchasing of ad space, programmatic advertising frees up time for marketers to concentrate on planning and developing creative campaigns based on the new statistical and behavioral data and analysis available to them – further driving returns on advertising spend.
In an article in Forbes magazine, Bob Arnold, Associate Director of Digital Strategy at Kellogg reported “tremendous results when using programmatic buying… depending on the brand, the digital media ROIs have increased as much as six times.”
With this type of improvement possible, it is little wonder that companies are already starting to explore the possibilities of selling traditional media using programmatic technologies. The possibilities for TV ads, digital billboards, in-store and retail really take us into Minority Report territory.
Programmatically allocating ad space on a digital billboard and outdoor advertising spaces based on local weather conditions or other local events is a real possibility. And how long before updating in-store digital advertising for customers as they pass based on profile data from the mobile devices or store apps installed falls on the right side of the creepy line?
Programmatic ad purchasing makes it a real possibility.