What is programmatic advertising and how to use it to scale your business?
Buying and selling digital advertising space manually is a thing of the past. Thanks to programmatic advertising, marketers can now order, set up, and report on ads automatically, for a much more efficient and effective process. This solution, which allows you to access any formats and channels through user-friendly platforms, appeals to a growing number of businesses looking to streamline their digital advertising. So, what is programmatic advertising? Definition and explanations.
What is programmatic advertising?
For those who are new to the concept of programmatic advertising, a definition is in order. While describing it as the automatic buying and selling of online advertising space is an accurate shortcut, it provides little clarification as to what the process actually involves.
Digital advertising depends on a market run by ad exchanges. These exchanges bring together advertisers (who wish to buy ad space online) and publishers (who own digital space they wish to sell, on their websites for instance) through computerized auctions.
Programmatic display advertising relies on algorithms and machine learning to automatize the process entirely, selling and placing digital ad impressions at record-breaking speeds via ad exchange platforms. Thanks to highly precise targeting methods and traffic data, the impressions are served with more accuracy, on any scale you may require. This results in better ROI for both publishers and advertisers.
Programmatic advertising: why use it in your marketing strategy?
Programmatic advertising has propelled advertising into the 21st century. Thanks to a plethora of networks and ad exchanges, advertisers can gain access to a much wider advertising space and reach thousands of websites simultaneously. This means that you can advertise at scale without putting in more work or increasing your budget significantly.
This system also offers better transparency and more advanced targeting thanks to KPIs that go well beyond CTR. Similarly, because everything is automated, data insights and reporting are available in real time, and you can adjust your placements as needed to maximize relevancy.
How does programmatic advertising work?
The programmatic buying flow unfolds as follows:
- A user clicks on a web page
- The owner of the space in question puts the ad impression up for auction (SSP)
- Advertisers place their bids on the impression (DSP)
- The ad impression goes to the highest bidder
- The user sees the ad on the web page they are visiting (the ad is “served”)
- The ad catches the eye of the user who might click and convert
All of this happens instantaneously as the algorithms calculate competing bids and select the most cost-effective one. Advertisers can even choose in advance the budget they are willing to allow based on the relevancy of the placement.
What are programmatic advertising platforms?
There are three main types of programmatic advertising platforms.
Supply Side Platforms (SSP) help publishers manage and sell their ad space (inventory) to advertisers. Some of these platforms interface directly with DSPs, while others simply connect to advertiser networks or ad exchanges to facilitate the process of selling inventory.
Demand Side Platforms (DSP) are web-based interfaces that advertisers can use to create campaigns and connect to publishers and ad exchanges. They can also leverage audience data to select the right type of inventory.
Data Management Platforms (DMP) are interfaces through which programmatic buying can target the right audience. Advertisers can use such platforms to create, collect, and manage audience data by tagging websites or establishing data sharing agreements with publishers.
How much does programmatic advertising cost?
Programmatic display advertising fees are calculated based on a predefined CPM, which is the price per 1000 ad impressions on a given website. The average rate hovers between $0.50 and $2, making programmatic CPM one of the cheapest forms of digital advertising.
CTV programmatic advertising
The web is not the only place where advertisers purchase ad space through programmatic advertising. The concept also applies to any connected device, including Connected TVs. This is where programmatic CTV comes in.
WHAT IS CONNECTED TV ADVERTISING?
Programmatic Connected TV advertising – or programmatic CTV – relies on the same principle as traditional programmatic advertising but allows advertisers to purchase digital advertising for video content on Connected TV devices.
HOW DOES CONNECTED TV ADVERTISING WORK?
Programmatic video media buying allows advertisers to reach consumers who have moved away from traditional television by showing ads on Hulu, Direct TV, Roku, etc. Thanks to this solution, programmatic video ads are streamed to any connected device.
Several levels of auctions are available, each with its own price and set of parameters, from the general open exchange to the private marketplace inventory sale. The latter offers specific placements that fewer bidders compete for.
HOW MUCH DOES CONNECTED TV ADVERTISING COST?
Programmatic CTV offers premium ad space for which marketers should expect to pay anywhere between 3 and 5 times more than for a standard video placement. CPMs for video advertising on the web typically reach about $15, whereas Connected TV advertising can exceed $65. With that said, the return on investment is almost guaranteed to be better than what one might expect from less expensive forms of marketing.
How to start with programmatic advertising?
Once you are ready to begin, get acquainted with your audience personas, which will help you define the right strategy to address them in a way that resonates with their expectations. Use your KPIs to decide which programmatic ad networks or exchanges are right for you.
HOW TO FIND THE RIGHT PROGRAMMATIC MODEL?
There is no one-size fits all when it comes to programmatic advertising.
Using a DSP (Demand-Side Platform) tends to make the process more straightforward, provided you select one - like Vibe - that will allow you to manage your ads across different networks.
Private Marketplaces (or PMP) offer a much more exclusive experience. That’s the type of agreement Vibe has with our channel partners.
In addition, you will need to decide between an open auction or a programmatic direct model. The first is also known as RTB – or Real-Time-Buying – and allows advertisers to enter auctions where inventory prices are set in real time and the highest bidder wins the impression. Thanks to an audience-driven algorithm, this model makes for a well optimized and very specifically targeted campaign.
Programmatic direct, on the other hand, provides a one-to-one media buying experience where advertisers and publishers discuss the terms of their arrangement with little automation involved. If you need to handpick your ad spaces, this is the way to go.
HOW TO USE DATA EFFECTIVELY FOR PROGRAMMATIC ADVERTISING?
Knowing and understanding your market is essential if you wish to make the most of your advertising campaigns.
First-party data, which is the data you collect from your own transactions, social media, email signups, etc. provides direct and accurate information about your clients. It will help you understand where and how your typical customer consumes content, so you can reach them under the best possible conditions.
Paying close attention to what defines your target demographic (age, occupation, family makeup, etc.) will prevent you from wasting your efforts on ineffective placements so you can reach the best ROI.
HOW TO DEFINE THE RIGHT KPIS TO MEASURE THE PERFORMANCE OF YOUR ADS?
Analyzing the right KPIs will let you track the success of your investments. One of the benefits of programmatic advertising is how much control it allows advertisers to have over their campaigns. Which means that if you examine the elements that matter to you the most to assess the performance of your ads, you will be able to fine-tune your approach until you achieve a satisfactory ROI. For instance, you could look at your impression to conversion ratio, or determine how many sales you achieve from these conversions.
Examples of programmatic advertising campaigns
Real-world examples that showcase the power of programmatic advertising abound.
One such example was the Economist’s award-winning campaign, where ads relied on humorous, witty, and thought-provoking headlines to target readers whose cookies revealed that they hadn’t visited the Economist’s website as much as they might want to. According to eConsultancy, the campaign resulted in 650,000 new prospects for the paper, along with an ROI of 10:1!
Audi also turned to programmatic advertising when launching its customizable vehicle. The brand worked in close collaboration with Google and leveraged customer data instead of relying on siloed information. This means that they were able to use programmatic advertising to target the most relevant customer touchpoints. In addition, users were offered the chance to customize their dream car through an online tool. Audi then used the designs created to include them in personalized dynamic ads, resulting in an increased conversion rate (four times higher than what traditional methods generate).
As for the Hotel group IHG, it set up a programmatic ads campaign to encourage users to book via their own websites rather than through third-party sites like Booking.com or Expedia. Their ads featured a “book direct price” option, which programmatic allowed the company to target at people looking for accommodation.
Programmatic advertising provides an affordable and accessible solution for those looking to have more control over their marketing. Thanks to this solution, you can target your ads more effectively and achieve better ROI.
