Are you sitting there asking yourself, “what is programmatic advertising?” Is it the same as display ads?
The truth is, it’s really not that complicated.
The term programmatic advertising simply refers to the use of software to automate the process of buying and selling digital advertising. It uses multiple ad exchanges.
Display ads only take place on a closed network.
That’s it. It’s that simple.
So now you know what it is. But why should you care?”
Programmatic has made advertising transactions easier for both advertisers and publishers. It has also made advertising more effective and efficient.
According to eMarketer’s 2018 Programmatic Ad Spending Forecast, in 2018, American advertisers will spend more than $46 billion on programmatic ads. By 2020, more than 86% of all digital display advertising will be purchased programmatically.
In order to wrap your head around the popularity of programmatic, lets understand how it works. Check out the video below if you want to learn more about programmatic advertising.
Programmatic started as a more efficient way for publishers to sell what they call remnant inventory. (Or unused ad space.)
Before programmatic, every time ad space was sold it would involve proposals and negotiations. These are very time-consuming for both for buyers and sellers of advertising.
With programmatic, there’s no need for tedious tasks like negotiations between advertisers and publishers.
The publisher would put up ad space up for sale using a supply-side platform and as an advertiser. You can access these exchanges and buy ad space using a demand-side platform.
Data management platforms provide user data for both the demand- and supply-side platforms.
This helps publishers to understand the audiences they serve, allowing them to provide more valuable ad inventory. This will allow them to sell their ad space for a higher price.
It also helps advertisers to target the right audience(s) and track those who’ve been served their ads. This makes their advertising much more effective.
These platforms facilitate the sale of any kind of digital advertising. These would include everything from display advertising (desktop and mobile devices) to ad space on digital billboards.
We’re getting a little ahead of ourselves. So lets break down these terms a bit more.
A data management platform is used to collect, sort, store and analyze information.
DMPs are invaluable because they provide the data that DSPs and SSPs need to automate the buying / selling of advertising.
Without this data, programmatic advertising simply wouldn’t exist.
A demand-side platform allows advertisers to create campaigns, access ad auctions, bid for ad space, and track the performance of their advertising. This makes optimizing ad campaigns much easier because it’s all in one place..
Advertisers just feed the software the information it needs to do its thing, such as target audiences, performance indicators and budgets, and then an algorithm will automatically bid on the most appropriate ad space.
A supply-side platform allows publishers to simplify several processes, such as listing ad inventory, determining where each piece of inventory should be listed, and deciding what the price of ad space should be.
An SSP also gives publishers access to more potential buyers and lets them offer more valuable ad inventory, thus allowing them to get the most money for each piece of ad space.
If you’ve made it this far, you might be mumbling to yourself that I should just get to the point already.
So, let’s get down to brass tacks.
Programmatic has exploded in popularity because it’s more efficient and more effective than traditional forms of advertising.
A survey from London Research and TRUTH asked marketers what they regard as the greatest benefits of programmatic ads.
The top five answers included the ability to effectively target, optimize and scale campaigns, better return on investment, increased efficiency and reduced costs.
As I said above, programmatic eliminates a lot of tedious, time-consuming tasks, such as negotiating with publishers.
But it also improves efficiency because it removes as many humans from the equation as possible.
This makes the ad buying process cheaper and eliminates human error, which often results in money being wasted on ineffective advertising.
Which brings me to my next point.
The effectiveness of programmatic ads is vastly superior to other kinds of advertising.
With the data provided by DMPs, you can target and track your audience using an array of different strategies, ensuring your ads will be served to the right people at the right time in the right place.
The precision of these targeting and tracking capabilities results in a better return on investment, as you won’t be wasting money serving ads to the wrong audience, and you have a greater ability to determine the effectiveness of your ad campaigns.