What Is Programmatic Advertising?

Alex Fleming
By Alex Fleming

There’s been a recent technological overhaul that’s taking the digital advertising and marketing arena by storm, and it’s called programmatic advertising. This data-driven automated technology helps to mine massive amounts of data in real time, while eliminating human error and driving traffic and sales.

With technology moving so fast, especially in the digital space, it’s vital your company take advantage of programmatic advertising now before you risk losing business to your competition. With the power of this incredible ad-buying program behind you, you’ll reach your target customers at the perfect moment, with the exact right message they’re looking for.

If that sounds too good to be true; it’s not. In this post, we’ll dig into programmatic advertising to help you gain a better understanding of what it is, how it works, and why you need it for your business.

Is Programmatic Advertising The Future Of Ad Buying?

Probably, yes, although it’s still very early on.

Programmatic advertising has swiftly changed the face of online advertising. This ad buying technology uses software to purchase digital advertising. It makes the traditional process of an RFP (Request For Proposal), human negotiation, and manual insertion orders seem tedious. This is next gen; it’s AI going live. Programmatic advertising is basically machines buying ads.

But if you’re a marketer, you can’t look at programmatic as if it’s potentially the future. It’s the present, and you need to learn how to use this new tool or risk being left behind. Programmatic is already spending billions on ads, and even if you’re not currently using the program, you likely soon will be. Programmatic is catching on fast, and its growing even faster.

Related: Programmatic Display 101

What Is Programmatic Advertising?

Programmatic advertising is a program that automates the ad spending process. It uses artificial intelligence to mine large swaths of user data in milliseconds and then determine the best ad to run in the perfect location at the ideal time.

Automated Ad Buying With Programmatic Advertising Saves Money

Programmatic advertising makes the ad buying process more efficient. While marketing automation like programmatic saves marketers and salespeople time by eliminating some routine and tedious tasks they traditionally have to handle, it will also end up saving the company money because of how efficient the program is. The AI component learns on the fly, optimizing which ad to run to offer the best return — and it works.

By eliminating the human element from the equation (ad buyers and salespeople), it removes unnecessary expenses and unreliability. Machines don’t take any sick days or even require sleep, but humans do. Programmatic has now made efficiency the new currency, instead of ROI and value ad buying. Reaching a customer at the moment that will most influence their buying decision represents the best offer to a business.

Some marketing agencies have already shifted their focus to programmatic advertising, and it looks to be on the rise. Programmatic advertising will allow marketing and sales teams to spend less of their time focusing on ad buying and more on planning more sophisticated campaigns. It removes a major time suck from the planning process, and by being more efficient, it also saves your company money.

How Does Programmatic Advertising Work?

It’s rather complex, but we’ll try to break it down simply. Programmatic advertising synthesizes data points to create the most efficient ad buying possible. It uses Google’s new ad technology to track credit and debit transaction data as well as a customer’s smartphone location, or even the timeframe data of when they visited a physical store. Programmatic can combine this offline data with the user’s online activity across mobile, desktop, search, video, and display, to gain insights into their purchase intent, what CTAs (Calls To Action) will be most effective, and then the conversion rate. With each purchase, programmatic gets stronger.

Rather than purchasing ads based on value assessment and a particular target audience, you will be able to pinpoint the best route to take to meet your customer at the right moment and achieve successful returns. This is crucial technology, given how limited buyer attention span is, especially online.

Not only will companies be able to reach their target customers with the perfect message at the very moment they are looking for them, the data is remarkably trackable as well, allowing companies to have unprecedented optimization of their campaigns. Programmatic will retarget tracking codes that are set within a user’s IP (Internet Protocol) address, and fed back almost instantaneously to learn your customer’s behavior, including their intent and location, in an efficient timeframe.

Like stocks, programmatic ads are traded, but those who trade programmatic ads have to automate the stream of transactions that occur in just milliseconds. Programmatic advertising works for ad inventories on mobile, desktop, search, display, and video, allowing advertisers and publishers to transact in real time. The automated digital platform allows supply and demand to meet head on.

Real-Time Bidding vs. Programmatic Direct

Real-time bidding, or RTB, is a type of programmatic advertising, but it is not the only one. Through RTB, programmatic purchases ads in real-time auctions, getting the ads out immediately through an automated process. There is also a method of buying known as “programmatic direct,” in which the software will buy guaranteed ad impressions in advance for placement on specific sites.

Why Is Programmatic So Effective?

Besides eliminating the human error element and its remarkable efficiency, programmatic is more effective than traditional methods because it also takes away any risk involved. Traditional, old-fashioned marketing campaigns were very hit or miss. Sometimes they could work out, but others, they would end of costing marketing companies a lot of money when they were ineffective.

With programmatic, you rely on the algorithm to determine where and when your ad money will be best spent. You simply input your marketing campaign information and key performance indicators (KPIs) into your programmatic solution and let the software do the rest.

Related: Benefits of Programmatic Advertising

Programmatic uses information provided by Big Data solutions to micro-target and uber-segment your audience. There’s simply no way a human would be able to mine a fraction of as much data that programmatic can in milliseconds. This kind of high-level processing has never been seen before in digital marketing and will help to optimize your ad spend.

You can now run an aggressively-targeted ad campaign to a very small, incredibly well-defined target audience. And you simply just plug the information for the program and let it run. Programmatic can even find trends and uncover hidden markets you didn’t even know existed.

Programmatic then will launch your ad campaign on its own and track the information to look for areas it can learn and improve.

Tracking Programmatic Advertising

Programmatic can globalize digital advertising in a way never seen before. All obstacles that once prevented holistic customer tracking, both online and offline, have been removed forever.

Online ads are the main focus of programmatic advertising currently, but the program is already evolving to target television viewership metrics, including traditional and non-traditional (Netflix, etc.) as well as radio advertising.

Programmatic will come out on top of any performance-based campaign metric a company can come up with. The old tracking metrics, like CTR (click-through rate) or CPM (cost per thousand impressions), will soon be a thing of the past.  

Defense Against Ad Fraud

Anyone who has ever watched a Sci-Fi movie knows not to trust artificial intelligence, but in this case, the AI is built for safety. Programmatic has algorithms included that fight against ad fraud, and though rumors exist that the program is full of fraudulent advertising, this simply isn’t true.

Ad fraud has been around long before programmatic advertising was even created, so it’s hard to place blame on programmatic when fraud already existed in the space. The program does have protections set up against fraud, but there will naturally be some people in the world who want to work around programmatic’s algorithms for detecting ad fraud to capitalize on the technology. However, you should rest easy knowing the AI is there to help you, not work against you.

Programmatic’s automated solutions are able to detect ad fraud and avoid it, so if it’s a big concern to you, there’s reason to believe you might even experience less ad fraud when you move over to this automated solution.

The Time To Utilize Programmatic Is Now

There is no better time than now to give programmatic advertising a go. Gone are the days of having to optimize your own digital ad campaign — programmatic will do that for you. Use the free time to create the ambitious marketing plans you’ve been dreaming of. Programmatic will quietly go to work bringing traffic to your site and improving your ROI.

Create your campaigns, expand upon them, and monitor your results, while programmatic learns how to make them better for you. Programmatic advertising is the future, and the future is now.

Alex is a Paid Media Project and Account Manager at Power Digital. A recent graduate in Marketing from San Diego State University, he began his digital marketing career as an intern at Power Digital where he quickly caught interest in the fast paced, dynamic landscape of PPC advertising.