What is Programmatic (And Should You Be Using It)?


Marketing Insights for ProfessionalsThe latest thought leadership for Marketing pros

Thursday, January 18, 2018

Learn how programmatic advertising is changing the face of modern marketing, and how to utilise AdTech to give your business or organisation a competitive edge – whilst avoiding the potential pitfalls.

Article 7 Minutes
What is Programmatic (And Should You Be Using It)?

Whether you work in marketing directly or are simply responsible for managing your company’s ad budget, you’ve probably been hearing the word “programmatic” a lot recently, even if you are not really sure what it means or how it translates in real-world terms.

Programmatic is currently the fastest-growing sector of AdTech, with data released by eMarketer indicating that it already accounts for nearly 75% of US digital display ad spending, and forecasts for 2019 will see this rise to almost 85%, or potentially even higher.

When you visit a website, social media forum or pretty much any other online portal – for instance, if you log into Facebook – you may well find that the paid adverts and promotions displayed seem to be predicting your needs and reading your mind with scary levels of accuracy (and the odd misfire) – and that’s AdTech in action.

Here we will:

  • Explain the foundations of programmatic AdTech
  • Outline how programmatic ad placement works
  • Share advice and insights on how to stay ahead of the curve when integrating programmatic into your marketing strategy

What is programmatic?

Search online for a definition of programmatic AdTech, and you’re apt to find yourself more confused at the end than you were at the outset because a lot of acronyms and terminology tend to get thrown around when discussing programmatic, which don’t necessarily clarify matters.

Put simply, programmatic is a method of automating the purchase of digital ad space from publishers, using computer algorithms to determine the value of the space in question and handle the purchase and ad placement process. But where programmatic AdTech really excels is in its ability to allow advertisers to connect prospects with targeted adverts with superior levels of control and accuracy – using demographics such as geographic location, age, gender, social group, interests, and even the type of device the browser is using and what time of day they are accessing the internet.

All of this is performed automatically in real time, using audience insights to deliver the right ads to the right viewer at the right time, increasing the chances of achieving an acquisition or conversion and so, maximising the efficacy of the ad spend.

How does programmatic work in practice?

Automation, automation, automation! Using traditional ad placement methods, companies and advertisement buyers purchase a set amount and type of ad inventory manually, taking a rather scattergun approach to achieving a certain volume of impressions and hoping that some of these will reach the right audience and result in a conversion. Demographic targeting can only be achieved insofar as it is possible to pick and choose the type of platforms and websites that ads are showcased on, and the type of demographics that such platforms attract.

Programmatic ad inventory purchasing streamlines the purchase, optimisation and placement of ads by using computer algorithms and automated systems to match targeted ads with platforms and individual browsers – using information that has been collated about the individual browser in question based on their wider browsing patterns, audience demographic, and market trends.

In the time it takes for any given web page that can carry an advert to load, information is transmitted via an ad exchange server, to determine which advert to place in that space, for that visitor. The whole process takes place digitally, and fast enough to ensure seamless page loading times for the visitor, without any tangible delay.

The next visitor to that same website page is apt to see a completely different advert displayed when they visit – again based on their individual user information.

Why you should be investing in programmatic inventory buying

To get the most bang for your advertising buck, you need to look at the type of platform or system for buying ad inventory that makes your money work the hardest – and if you’re not already working with programmatic AdTech, you’re likely to be lagging behind the competition that does.

Programmatic streamlines the consumer intelligence side of ad targeting as well as the process of purchasing and using ad space itself, allowing you to maximise the impact of your advertising spend, cut out dead wood, and save on wasted manpower hours and inefficiencies.

Given the benefits of programmatic in terms of automating the match between the right prospect, the right ad, real-time inventory buying and automated price setting according to supply and demand, few ad purchase and inventory management systems can claim to come close to the efficiency and economy of programmatic in terms of spend vs. yield.

Programmatic pitfalls to avoid

While programmatic is on the up, it remains a reasonably young technology that is still going through some teething troubles.

Fraud and manipulation are two of the largest challenges that programmatic buyers face by design, particularly given the potentially large figures that change hands when it comes to ad inventory buying. While the industry itself is taking steps to build trust and address common concerns such as fraud, piracy and software manipulation, the current lack of umbrella oversight across the industry as a whole leaves programmatic firmly in the realms of “caveat emptor.”

However, choosing a reputable programmatic ad agency or brokerage, utilising the appropriate analytics, and applying quality control measures and success metrics still remain the best methods of avoiding buying a lemon, regardless of how and where you purchase ad inventory.

Perhaps the most widely publicised challenge that programmatic advertising has faced thus far is the issue of transparency as it applies to brand perception and image. An investigation by The Times found that some of the world’s biggest brands were inadvertently contributing to the coffers of white supremacists, Islamic extremists and other decidedly unsavoury organisations by means of programmatic ad placements on YouTube, where ad revenue often represents a significant income stream for video publishers.

This is because programmatic automates ad purchase and placement, taking into account only the audience demographics as part of the matching process. This takes control out of the hands of brands and ad buyers when it comes to knowing and deciding exactly where and how any given advert is showcased.

The issue is so acute and has such large implications for reputation management that several large international conglomerates like L’Oreal removed all of their YouTube advertisements entirely earlier on in 2017  – although the industry as a whole is now attempting to tackle the problem by establishing best practices and policies for programmatic ad placement, and Google itself admits that it could be doing more to improve ad safety.

The future of programmatic

Currently, when most of us think of programmatic, we think of purchasing ad inventory for desktop and mobile browsers, which to be fair, is programmatic’s bread and butter, and is likely to remain so.

However, AdTech is more than just a one-trick pony, and programmatic is fast moving outside of the realms of online and mobile marketing alone to encompass out-of-home ad placement, as well as digital TV and radio advertising – all based on programmatic’s principles of consumer insights, automated ad placement, and smart matching.

The advent of programmatic correlates with the rising reach and popularity of on-demand TV streaming and viewing packages, which already utilises AdTech of its own to build user profiles and viewing predictions to enable on-demand services such as Netflix to tailor user suggestions to the preferences of individual viewers.

Savvy programmatic ad buyers and brokers are already beginning to target online streaming services and associated platforms with programmatic reach – and the forward-thinking marketing department or advertising manager should be considering how to put AdTech to work within these new growth areas to expand their reach and stay ahead of the competition.

To make better decisions with your marketing strategy, you need to keep up to date with industry trends. To view more, click here.

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