What Is Programmatic Advertising?
Programmatic advertising is the automated process of buying and selling advertising space in real-time, without the need for manually interactions. The most common examples of this are Facebook & Instagram advertising, Google search ads and display advertising on web pages.
Why Use Programmatic Advertising?
For most marketers, if you’re running ad campaigns right now, you’re likely already using it.
While running ads on social media platforms or search engines is relatively easy, ad placement on many websites still follows the traditional model, requiring time and negotiation.
This results in every website visitor seeing the same ad, regardless of relevancy. Programmatic advertising represents a shift towards a more efficient model, removing the need to negotiate and replacing general campaigns with targeted advertising.
There is incredible value in the use of programmatic advertising, and it is likely to only get better in the future. However, because it currently only applies to display advertising, it may not fit within your company’s marketing mix, or you may have to supplement it with the use of other channels.
How Does Programmatic Advertising Work?
As with all emerging technologies, programmatic advertising can seem daunting, especially since there is a lot of associated terminology. Luckily, many of the systems that facilitate programmatic advertising are just permutations of each other.
The most central of these systems is called an ad exchange, which has a similar function to the negotiations in the traditional model, as it is where prices for advertising are agreed upon between website owners and advertisers.
Typically, website owners connect to the ad exchange through a supply-side platform, or SSP. SSPs allow website owners to broadcast what kinds of space or placement are available. Conversely, a demand-side platform, or DSP, functions in a similar way for advertisers, alerting them to opportunities that their advertising may fit.
In order to gain the most value, advertisers must also use a data management platform, or DMP. While the primary role of a DMP is to collect and sort information, it uses this information to target customers and make automated decisions. While DMPs technically exist outside of the direct ecosystem, programmatic advertising is nowhere near as effective without them.
The Power of Targeting
Companies have become used to targeting their ads to specific user groups or demographics on social media, and programmatic advertising offers similar functionality for display advertising. Though it is often overlooked, one of the most powerful ways to target is by location. Imagine logging into the wi-fi network of a coffee shop or cafe and being served ads for complementary in-stock products, such as mugs or books.
Targeting a specific location also overcomes the traditional weakness of limiting the awareness of advertising, and therefore its potential to bring in new customers, because it seeks to further monetize a specific audience, and therefore would not be as effective if widely distributed.