If you’re running a business, advertising is one of the most crucial tasks you’ll need to accomplish. But for this to succeed, it’s your goal to grab the best ad space and aim it at the right audience. One way to fulfill this goal for successful online advertising is programmatic advertising.
Essentially, programmatic advertising uses automated software to buy and sell online ad spaces. You’ll see those ads sold through this process across the internet. For example, websites use programmatic advertising to determine the top advertising industry on their platforms.
Aside from that, it’s used in shopping malls, billboards, and train stations to promote a brand. It connects advertisers who plan to buy ad spaces with publishers who have online ad spaces to sell. Hence, it’s also called programmatic marketing.
Furthermore, programmatic advertising makes use of algorithms to manage the process of buying and selling online ad spaces. If you want to find out how you can take advantage of the process, you can check out examples of programmatic advertising. And if you want to dive further into details, continue reading this helpful ultimate guide for marketers.
How Does Programmatic Advertising Work?
As an online marketer, you’ve probably heard of programmatic advertising and read some articles on how it can boost the ad performance of your brand. However, you might find the process difficult to understand. Below is the step-by-step guide for you to understand how the process of programmatic advertising works.
But before that, it’d be better to explore the ecosystem to determine the types of ad platforms involved and how they’re connected. That said, here are the primary components of the programmatic advertising ecosystem:
Supply-Side Platform (SSP): This media-selling platform was developed to assist ad publishers in managing their ad inventory, including those on their sites—formats, size, resolution, prices, etc. This simplifies the selling process by connecting to a plethora of DSPs, increasing the chances of selling online ad spaces.
Demand-Side Platform (DSP): Unlike SSP, DSP is developed to help advertisers purchase targeted impressions from sellers (publishers). It’s a software solution connected to plenty of ad exchanges and SSPs, allowing buyers to purchase ad spaces across the world in one interface.
Ad Exchange: This is a platform that both advertisers and publishers can use for ad trading. In addition, it’s linked to SSPs and DSPs to maintain the bidding process.
Now, here’s how the magic happens:
Step 1: When someone visits a platform that uses programmatic advertising, the automatic bidding begins to provide the right ad for this visitor.
Step 2: The publisher will generate the ad space for this visitor through their SSP. This will act as a seller, informing advertisers about the details regarding the site, ad spaces, and users that help them bid. It advertises the ad spaces up for grabs.
Step 3: After SSP collects the necessary data, it’ll evaluate the user’s cookies to identify the factors affecting the buying process. These factors include geography, preferences, age, demographics, gender, and so on.
Step 4: After that, the DSP will assess the user information the SSP provided. This assists advertisers in choosing the right ad space based on their targeted parameters and ad budget. Then an ad placement with a value will be declared, which depends on user and website characteristics.
Step 5: Next, the DSP will act as the advertiser and make a bid for the ad placement. Note that the auction is happening in real time, which is why programmatic advertising is also known as real-time bidding.
Step 6: Then the SSP will pick the winner of the bidding among the DSPs involved. Additionally, it’s worth noting that there are different bidding processes for various SSPs. These may include Header, Waterfall, and Client-side bidding strategies. Among these, header bidding is often considered fair and most effective.
Step 7: Once the winner has been chosen, the SSP will display the winner’s ad to the user on the platform of the publisher. What’s surprising about this is that the entire bidding and selection process happens only in milliseconds—all while the platform is loading at the user’s end.
What Are The Benefits Of Programmatic Advertising?
When programmatic advertising comes into the spotlight, pricing discussions, manual negotiations, endless scheduling, and selecting appropriate media will become obsolete. In other words, it automates the campaign process. If you’re still not convinced, here are other benefits of using programmatic advertising:
- Large Audience Reach
Due to its real-time bidding and precise ad and user targeting, brands will be able to connect with the right audience at the right time. This helps businesses reach a large group of potential customers. Moreover, it increases their chances of connecting with the four billion active internet users today.
- Cost-Efficiency
With programmatic advertising, you’ll never have to waste your time and money on viewers less likely to be interested in whatever you promote. It allows you to target the right audience and send the right message at the right time. This will help you use your ad budget wisely and effectively.
- Real-Time Measurement
Programmatic advertising allows you to measure the performance of your ads in real time. Now, you don’t have to wait for weekly reports from publishers—too late for ad improvements. This enables you to optimize and adjust your ads whenever necessary to boost your ad performance and save more.
- Transparent Media Buying
In the past, you had to depend on third-party agencies to manage your ad spending and budget, which presents a lot of accounting loopholes. But with programmatic advertising, everything will be transparent. You’ll know exactly how much and where your ad spending and budget are being spent.
- Multi-Channel Reach
These days, the number of an average user’s digital touchpoints increases, and every advertiser and marketer should learn how to keep up. This is where programmatic advertising can be very useful. It enables you to reach and connect with audiences across different devices, such as mobile, laptops, desktops, tablets, TV, in-app, and even those in public spaces.
What Are The Different Formats Available In Programmatic Advertising?
In the past decades, programmatic advertising only covers display advertising format. But as technology develops over time, the range of different formatting options expands. Now, programmatic advertising covers a myriad of various formats, including:
- Display
Display ads are the oldest format used in programmatic advertising. But instead of remaining static, display ads have become ultimately dynamic, allowing marketers to create customized content—all thanks to constant advancements in technology. This format includes classified, search, and banner ads as well. They’re usually found on the sides, bottom part, and top-most area of a web page.
- Video
Video is one of the most powerful ad formats most marketers use in their strategy today. This is because most people are interested in watching dynamic content rather than static ad posts—it’s absolutely a high-growth market. Furthermore, video advertising can be instream or outstream.
Instream video ads can appear before, during, and after playing a video. They’re the ads that often interrupt while watching your favorite shows on a streaming platform, like YouTube. They often come with a ‘skip ad’ button for those not interested in seeing the ad.
On the other hand, outstream video ads don’t show up in an existing video. Instead, they appear on the website’s sidebar—in one of its corners, usually the bottom-right area. Probably, the most common outstream video ad is in-slide, which follows the user as they scroll down the web page.
- Native And Social
Native and social video ads are programmatic ads that can be incorporated seamlessly into the content of a website, social media, and other platforms. They’re often indistinguishable, as they’re able to blend well in the context. For example, they could be in the form of sponsored content—in which targeted context and ad tailoring are crucial.
- Voice
The birth of cloud-based voice service systems, such as Alexa, and the development of streaming applications, such as Spotify, have seen the advent of another ad format: voice. This ad format provides a valuable source of targeting focused on users and context. And it’s quickly evolving with search engines, particularly Google, offering programmatic audio ads on its DSP.
- Digital Out-Of-Home (DOOH)
At present, programmatic advertising is heading its way to the realm of out-of-home advertising. With this, you’ll be able to post your ads on digital signages in different places, such as bus stations and shopping centers. Plus, it removes the cumbersome process of advertisers, media sellers, and agencies, allowing you to optimize your ad content in real time.
- TV
As of this moment, the ad spending for programmatic advertising is not that big. In fact, its share is only 2.5% of total programmatic ad spending. Nevertheless, large companies, such as Google and Netflix, continue to set up the infrastructure to support the rise of programmatic TV ads. However, it still needs to be developed rigorously to succeed.
How To Buy Ad Spaces Through Programmatic Advertising?
Real-time bidding is the most common strategy to purchase media placements through programmatic advertising. It only takes a fraction of a second to declare the winning bidder and post the winning ad media. However, before you start programmatic buying, ask yourself the right question and come up with the right strategy for the goals you want to achieve.
Here are the most important questions you need to ask yourself:
Can programmatic advertising help reach your goals?
Can or should you use programmatic advertising to improve brand awareness and drive better conversions?
Can programmatic advertising boost your bottom line? If yes, how?
Once you determine the answers to these questions, you’ll need to identify the things you have to prioritize, especially when it comes to ad spending and placements. Of course, once you’ve found that out, the next thing to do is determine the right DSP. Here are the questions you need to ask when choosing the appropriate DSP provider for your brand:
Which DSP services provide the most reach and channels suited for your target audience?
How do they charge you? Is it based on a cost-per-click (CPC) or cost-per-thousand (CPT) basis?
Do they provide support facilities? It’d be best to have agency-style support where you can get the support you need, especially when improving and executing your campaigns.
How can they integrate with your current data management and creative management platform? You may consider choosing smaller DSPs since they’re more flexible when it comes to integration.
What Are Tips For A Successful Programmatic Advertising?
Of course, basic knowledge about programmatic advertising won’t be enough to succeed in the process. You must determine and employ the right techniques for an effective digital marketing campaign. Here are some tips you might want to consider:
- Know Your Marketplace
First things first: Research everything. As a marketer new to programmatic advertising, you’ll most likely encounter a lot of new terms and ideas you’ve never heard before. So, take your time to understand them better.
- Set Your Goals
As with any marketing strategy, digital or not, it’s important to set your goals at the beginning.
Start with all the data you have and identify the right marketing strategy for your brand. Then establish a well-thought-out strategy to define your short-term and long-term goals.
- Always Add The Human Touch
Just because everything is automated, that doesn’t necessarily mean ads should be deprived of the human touch. People won’t engage with you if you sound like a robot. This is why adding a human touch to your campaigns is crucial. Finding the right marriage between artificial intelligence and human intervention will significantly contribute to your success.
- Protect Your Ads From Fake News
One of the biggest challenges in programmatic advertising is its dependence on algorithms that may lead your ads to unwanted sites. These places promote fake news, such as conspiracy theories. To prevent this, make sure your blocklisted DSPs are consistently updated. Avoiding these sites will help you save your budget and improve the reliability of your ads.
Final Words
Programmatic advertising is one way to help businesses and their brands reach the right audience at the right time, with the right message on the right medium. By optimizing their advertising experiences, they’ll be able to avoid overspending while capturing the hearts of the people who are most likely to convert into customers. Thus, the future looks bright for programmatic advertising, and now may be the best time to hop on the rising trend in the marketing industry.