What is Programmatic Marketing, Buying and Advertising

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Estimated reading time: 4 minutes, 54 seconds

WTF is programmatic advertising

Unless you have been hiding under a rock for about a year or so, no doubt you would have heard of programmatic marketing or advertising being bounded around by agencies, blog posts, in conferences and from those who want to target more efficient spend in the advertising arena.  The IAB estimates that by 2018 programmatic spend will have grown from 28% in 2013 to over 80% of marketing spend. Its time to jump onboard and think about where and how you’ll be spending your digital budget.

This post will give you a high level – whistle stop tour of what is programmatic, how it is being projected as a “game changer” in digital advertising budget changes and how it can benefit you.

What is Programmatic

Simply put – programmatic is a way to target what types of audience you wish show your advertising to, which can encompass segments across demographics such as age, gender, social standing, to geographic in certain areas of the country. As with Paid Search you can also limit the ads to times of day and frequency and which publishers you want your ads to show on – so you are only paying for highly effective ads, delivered to the right people at the right time. Its a change from traditional ad buying, where a buyer agrees to run a certain number of ads with a publisher and is locked in to the contract.

Programmatic media buying, marketing and advertising is the algorithmic purchase and sale of advertising space in real time. During this process, software is used to automate the buying, placement, and optimisation of media inventory via a bidding system. Automating the process means that it can be done in real time and doesn’t rely on the human touch, manual insertions and manual trading.

Programmatic media buying allows the “owner/brand” to tailor a specific message and creative to the right person, at the right time in the right context – using audience insight from the brand (the customers you want to target) around the kind of audience they want to target. This methodology should deliver far more precision and personalisation of messaging and media, resulting  in more efficiently targeted campaigns, and less of the “spray and pray” methodology of digital advertising – which is less targeted and based on sheer volume (mainly of impressions).
Programmatic Stats 2015(img: http://www.forbes.com/sites/steveolenski/2015/09/18/the-current-state-of-programmatic-advertising/)

How is it different

Again keeping this highlevel (as you will hear lots about SaaS, DSP, DMP etc which I will not go into here) programmatic is about driving efficiencies in spend and resource. Ad buyers manually buy digital ads space (inventory) for their clients, so again, using the human touch. Programmatic makes the buying, placement and optimisation of  process more efficient as its done by computers and algorithms – removing some of the mundane areas of dealing with different tagging requests, insertion orders and hopefully it should cut down on time to market too.

What about Programmatic RTB (Real-time buying)?

Programmatic RTB is different to PPC – as its done for display advertising only. Again its an automated way in transacting media thats bought and sold via technology platforms in Real-time. The process of RTB is set, so sellers of the ad space (publishers) make the space available for buyers (brands/advertisers) who then bid for that ad space. The RTB part comes into play, where brands/advertisers set different variables such as price, audience segment profiles (types of people) they are trying to reach with their message and the overall network reach.

But how does it work in real life?

When a webpage is being loaded and has the space for an advert (and there aren’t many that don’t serve ads of some kind eh) on it, information that’s been gathered about both the user/visitor (audience segment based on web behaviour etc) and the context of the site or webpage its being loaded to,  is sent back and forth to an ad exchange and the ad is placed on that page. This space gets auctioned off to the highest bidder and their ad is placed in the space – all of this is done in milliseconds with no apparent detriment to page loads times or user experience.

How do I know if an advert is programmatic or “normal display”?

Well, you kind of don’t! Not 100% anyway, next time you see an advert on a webpage – take a second or two to look at it and think, is it a targeted advert based on programmatic about you, your segment and likelyhood to be an ideal person to click on it – or is it just inventory purchased on a spray and pray display – where volume or spreading the message as far and wide as possible, will drive the traffic or conversions your way.

Is programmatic the future of all advertising?

As a person who works client side, then isn’t it right that we would want our advertising and campaigns to be marketed to the right type of person, at the right time for them in the context and place that they digest their media? Then my answer is yes!

Programmatic is moving quickly into the realms TV, radio and out of home (OOH) advertising, its not quite there in terms of display advertising just yet, but all of the background data that supports those media outlets is already there, it just needs to be used and “welcomed” by publishers  – but it certainly will be very soon!

I still believe there is a place for the “old inventory display” way of buying ad space, that could be used for more brand awareness – in terms of having a brand that offers lots of different products to different audiences. For me, I will be focusing my planning on programmatic!

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Russell O’Sullivan is an all-round Senior Digital Marketing Manager. With over 15 years of experience in the digital environment, he has worked across varied disciplines such Content Strategy/Marketing, PPC, SEO, Ecommerce, Social Media/Marketing, Web Design and UX.

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Three Questions to Better Understand Programmatic Technology

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Nothing is making a greater impact on the way media is bought and sold today than programmatic. In fact, the share of programmatic spend in US digital media (display-related) transactions, when looking at both RTB and NRTB, will expand from 38% in 2012 to 53% this year and to 83% by 2017, according to Magna Global. The numbers tell a story of tremendous growth, and beyond all the hype surrounding programmatic, its advantages are truly game-changers.  But recognizing the appeal of programmatic is just the first step in understanding what programmatic is and how it can best suit the needs of a campaign.

Simply put, programmatic makes it easier to buy and sell digital media by automating as much of the elaborate – sometimes 40 steps – process as possible. Real-time bidding (RTB) on the open exchange is the most common notion of programmatic, but it’s not the only type. As brands continue to adopt this new form of technology, comprehending the role of each facet of programmatic and how it can best suit a campaign’s needs is vital to maximizing the impact the technology can have.

The following three simple yes-or-no questions demonstrate how to differentiate between the most common forms of programmatic buying and selling: RTB vs. Fixed price, Open Exchange vs. Private Marketplace, and Programmatic Direct vs. Preferred Deal.

Question 1: Is the inventory being auctioned?

[NO]

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This is Fixed Price. Fixed Price can be further classified as one of two forms, Programmatic Guaranteed and Preferred Deal, depending on whether or not inventory is guaranteed.

[YES]

This is Real-Time Bidding (RTB). RTB allows bidding by a variety of sources on each individual impression at the precise time of serving. When the highest bid wins, the ad is served—within 200 milliseconds a publisher loads a page and fills an ad either from direct sales or programmatically. RTB can be further classified as Private Marketplace or Open Exchange, depending on if the auction is public.

Question 2: Is the inventory guaranteed?

[YES]

This is Programmatic Direct. Programmatic Direct typically bypasses programmatic vendors, with publishers providing a platform for buyers to log in and purchase their inventory directly, often with a set rate card. This simplest form of programmatic automates the purchase process to eliminate negotiation of the media placements, pricing, and contracting/invoicing. Programmatic Direct provides impressions at the highest ad server priority, delivering directly sold inventory through an automated platform.

[NO]

This is Preferred Deal. Preferred Deal utilizes a Demand Side Platform (DSP) to allow an advertiser and publisher to agree on a set price for inventory. Preferred Deal provides a publisher’s impressions at a higher priority in the ad server than those on the secondary market or those being auctioned. Preferred Deal allows buyers to select inventory specified by a publisher for higher priority sale, and a Deal ID facilitates the process further by providing the technology for exchanges to know which inventory to prioritize for that buyer.

Question 3: Is the auction public?

[NO]

This is Private Marketplace. A Private Marketplace enables publishers to allow only buyers with permission to bid on impressions. Inventory is available only to select buyers and not open to bidders through DSPs or ad networks. Private Marketplaces can utilize Deal IDs to prioritize inventory for a buyer.

[YES]

This is Open Exchange. An Open Exchange is a public auction allowing any buyer to bid on impressions. Significant portions of impressions live on Open Exchanges, attracting many industry players. An AdExchanger survey revealed that 61% of programmatic budgets are spent on Open Exchanges utilizing RTB.

The Open Exchange brings together buyers/advertisers who are looking for ad space to display their message and publishers/websites who have ad inventory to monetize. Supply Side Platforms (SSPs) allow websites to provide Exchanges with inventory that has not been sold directly to advertisers, and buyers bid on that aggregated inventory on the Exchange through Demand Side Platforms (DSPs). The highest bid wins the auction, and the winning bidder’s ad creative is served in that impression. With exchanges aggregating millions of impressions a minute, advertisers utilize Data Management Platforms (DMPs) to process audience-targeting data and instruct DSPs to bid on specific impressions.

Programmatic technology comes in many shapes, sizes and forms. And its evolution will continue as it becomes more engrained in the media buying and selling process. As the technology continues to iterate, understanding the fundamentals is the best foundation for understanding the technology as a whole. While programmatic can seem both complicated and convoluted, asking a few simple questions to differentiate the various components can be the first step to better understanding the technology and how it can work for you.

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