What Is Programmatic Advertising?

Programmatic advertising refers to the automated buying of digital media. Software is used to help facilitate and complete the transaction between buyer and seller. Before programmatic, media buyers negotiated ad inventory over the phone, through email or in person (terrifying, I know). The buyer and seller would determine rates, schedules, and more.

With programmatic media buying, data insights and algorithms automate the entire process. They’re designed to serve ads to the right user at the right time for the right price.

3 Components of Programmatic Media Buying 

Programmatic advertising involves three main components that work together to complete the automated media buy.

1. Ad Exchange

Where the magic happens. This is the platform where the deals are made between buyer and seller. Publishers list their inventory and advertisers buy the inventory all through the ad exchange. Advertisers connect to the exchange through a Demand-Side Platform (DSP) and publishers connect through a Supply-Side Platform (SSP).

 

2. Demand-Side Platform

A Demand-Side Platform, or DSP, is the software that advertisers use to buy their ad placements. Advertisers must sign up with a DSP, which in turn connects them to an ad exchange. DSPs allow advertisers to organize and manage their programmatic media buys.

3. Supply-Side Platform

The Supply-Side Platform, or SSP, is what the publishers use to connect their ad inventory to the ad exchange. This is the software that lets publishers sell their digital ad impressions automatically in real time. SSPs can connect to several different ad exchanges to ensure the publishers are connected with as many buyers as possible.

 

3 Types of Programmatic Ad Buying

There are three different ways you can buy programmatic ads. Each way offers different benefits depending on your budget, strategy and goals.

1. Real Time Bidding

Real Time Bidding (RTB) is an open auction where buyers bid on inventory in real time. The RTB auction is open to any advertiser or publisher interested in taking part. Real Time Bidding is a cost-effective way to buy media with a large audience.

2. Private Marketplace

Private Marketplaces (PMP) are invite-only auctions. Unlike RTBs, PMPs have restrictions on which advertisers can participate. However, there are instances where advertisers can apply for an invitation. PMP typically has more premium inventory than RTB. As a result, if an advertiser wants specific inventory or unique ads, they should choose PMP over RTB.

 

3. Programmatic Direct

Auctions aren’t the only way to buy programmatic ads. Advertisers can also work directly with the publishers (electronically) to place their ads. Bypassing the auctions helps ensure advertisers get their choice of premium inventory and ad unit. However, going direct is more expensive than RTBs and PMPs.

 

Programmatic Advertising Formats

Programmatic has continued to expand over the years. There a many different formats you can buy programmatically. So much so that advertisers can buy almost every unit of their comprehensive campaign through programmatic buying. Here are the most common programmatic advertising formats.

 

Programmatic Display Ads

Arguably the most basic programmatic format is the programmatic display ad. Also known as banner ads, these are the (traditionally) rectangular image-based ads you see on the top, sides or bottom of many websites. The main goal of banner ads is to promote a brand or encourage users to click-through to the advertiser’s landing page. As a result, the user will further progress through the marketing funnel. According to eMarketer, about 88% of all display ads are projected to be purchased programmatically in the US [1].

 

Programmatic Native Ads

Programmatic native advertising combines the power of native ads with the efficiency of programmatic media buying. Native ads are an advertising contradiction. In an industry hellbent on standing out, native ads are designed to blend in. These ads match the look and feel of the ad environment in which they are placed. The design, copy and formatting of native ads mimic those of the publisher website. So why would anyone want to create an ad that isn’t right in the user’s face? For starters, relevance.

These ads deliver contextually relevant content that the reader may actually care about. In addition, native ads aren’t immediately dismissed or overlooked. Readers may take the time to actually read the ad, since it’s a topic that interests them. Advertisers have taken notice, as the entire native ad sector is predicted to be worth $400 billion by 2025 [2].  

 

Programmatic Connected TV

Yes, even TV has joined the programmatic craze. Thanks to the advancements in technology, advertising on TV is more accessible than ever. Connected TV, or CTV, refers to the smart device you stream your shows on. CTV provides data and insights on viewers far more granular than what cable or broadcast TV can offer. With programmatic Connected TV, marketers no longer need to make target their audience based on antiquated and generalized small sample sizes. With 82% of U.S households owning at least one CTV [3], it’s clear this trend is here to say.

 

Programmatic Paid Social Ads

In today’s world, social media should be part of every marketing budget. While you can organically post on your social media pages, only those who follow you will actually see it. That’s what makes programmatic paid social advertising so impactful. In fact, programmatic paid social has allowed marketers to advertise to 4.48 billion social media users across different social networks [4].

 

Programmatic Audio Ads

Audio ads are no longer just for the radio airwaves. The rise of digital audio streaming services like Pandora and Spotify have brought on new opportunities for advertisers. Programmatic audio ads are highly targeted and efficient. Unlike radio ads, the listener must listen to the entire ad, reducing the waste in media dollars. Furthermore, you can pair your audio ad with a companion banner ad to include a visual element. Programmatic audio ads continue to rise in popularity as its estimated digital audio ad spending will increase 16% over last year [5].

 

Programmatic Video Ads

Like we mentioned with Programmatic Connected TV, marketers have more access to video advertising than ever before. However, video ads don’t necessarily mean television spots. Programmatic video ads can work in-stream, where they play before, in the middle or after your desired video. In addition, out-stream video ads can play in banner ads, in your social media feeds, in the middle of an article, and elsewhere. Programmatic video ads are an effective way to tell your brands story, especially when done right.

 

Targeted Advertising With Programmatic Buying

One of the huge benefits of programmatic buying is the variety of ways you can target your ads. As a result, you’re able to find and reach the right audience with the right content. Here are the top programmatic targeting methods.

 

 Audience Targeting

Audience targeting is one of the most commonly used targeting methods. Marketers are able to target specific audiences based on characteristics like gender, household income, age, interests and more. At Wingman, we use our proprietary audience management platform haloAMP™ to perform hyper-focused audience targeting. By connecting first-party and third-party data points, we’re able to find your most relevant audiences that are ready to purchase.

 

Contextual Targeting

Of course, there are other ways to find the right audience beyond just looking at their characteristics. Contextual targeting is another method that focuses on where your audience goes, rather than who they are. With contextual targeting, marketers decide where to place their ads based on the publisher’s content. This helps ensure that your ad is relevant and reaching an audience interested in what you have to sell. For example, a car dealership may consider advertising on a car enthusiast website.

 

Behavioral Targeting

Behavioral targeting looks at consumers’ personal behaviors. Things like shopping habits, website interactions and product interests are all taken into account with behavioral targeting. This method involves collecting web searches, purchase histories, frequently visited websites and other information to build out a user profile. As a result, marketers can better understand what their audience wants, avoids and purchases. With behavioral targeting, consumers won’t receive random ads. Instead, they’ll only see ads that draw from their past behaviors when they revisit a website or reconnect to a network.

 

Geo-targeting

Location, location, location. Through geo-targeting, ads are served to consumers based on their zip code or region. With these little tracking devices, also known as our phones, in our pockets, geo-targeting has never been easier or more accurate. Geo-targeting is especially useful for local business trying to reach their neighboring customers.

 

Retargeting

Retargeting is technically a form of behavioral targeting in that it focuses on consumers’ interactions with your brand. Retargeting works by serving your ads to consumers who have previously visited your website. It allows you to remind your audience of your products and services after they leave your website without buying anything. By showing relevant ads to consumers who have previously shown interest in your brand, you can increase brand awareness and, hopefully, conversions. In fact, 65% of online consumers notice and consider ads showing products they viewed from another page [6].

The Benefits of Programmatic Advertising

Beyond the many ways you can hyper target your audience, programmatic advertising offers marketers a bunch of benefits. Some of these are benefits traditional media buying couldn’t even dream of 10 years ago.

 

The Automated Process

We touched on this before, but it’s worth repeating. Having the entire buying process automated allows for the advertisers and publishers to be extremely efficient with their time. With automated systems, media buyers don’t need to spend hours researching which website or platform to use. Furthermore, they don’t need to take the time to speak to a rep to negotiate rates and place the ads. Instead, there’s an algorithm that does all of this for them, making the process faster and more accurate.

 

More Transparency

Programmatic buying gives marketers a window into where their money is going and how their campaigns are performing. In addition, marketers will know what kinds of customers are viewing their ads. As a result, marketers can determine the efficacy of their current campaigns as well as better plan for future ones.

 

Insights In Real-Time

Speaking of transparency, marketers can get real-time information about their campaign’s performance. This real-time advanced reporting gives immediate insight into what is working and what’s not. As a result, marketers can adjust and optimize their campaigns on the fly to help ensure the best possible results.

 

Longer Reach

With multiple ad exchanges and networks, marketers have access to thousands of websites right at their fingertips. This allows them to advertise on multiple sites at scale with affordable pricing and no additional work. Furthermore, with programmatic CTV, marketers can extend the reach of their broadcast TV campaign into the connected TV audience.

 

Increased Relevancy

Access to more websites doesn’t just mean increased reach. With an abundance of ad inventory, marketers can also ensure their ads are relevant to the specific audiences they’re trying to reach. Programmatic gives media buyers the opportunity to buy premium ad space that their audience may deem credible and note-worthy.

 

Lower Cost Barrier

The open ad exchanges allow for more accessible and affordable premium inventory. Many platforms, networks and stations require a minimum spend that may be out of a marketer’s budget. However, with the programmatic ad exchanges, you can buy premium inventory at a much lower spend barrier.

Less Wasted Budget

Between the enhanced targeting, transparency, real-time insights and lower cost, your media dollars will get more bang for their buck. Programmatic buying will help ensure more of your media budget goes to your actual target audience.

 

The Secrets To Successful Programmatic Advertising

Programmatic advertising is a powerful tool. But there are certain things you need to know to make it work for you. Keep these best practices in mind next time you execute a programmatic media buy.

 

Know Your Audience

Before you start targeting your audience, you need to know exactly who it is you’d like to go after. One of the best ways to understand your audience is through segmentation. Audience segmentation is the process of separating your audience into different groups based on similarities.

You can segment your audience based on shared traits, such as interest, habits, or personalities. Furthermore, you can segment based on demographics, income, or industry. Segmentation allows you to organize your audience and learn about them on a deeper level. As a result, you’ll be able to tailor your marketing to each segment, creating a more personalized and powerful message.

 

Connect Your Data

We touched on this earlier but connecting your data can be crucial for finding the right audience. By using both your first- and third-party data, you’ll have a better idea of where to allocate your programmatic marketing budget. You’ll also have access to more reliable data, as you won’t just be relying on your vendors’ numbers.

 

Cap Your Frequencies

Frequency caps allow you to manage the amount of impressions a specific user receives. This can be done on a monthly, weekly or hourly basis. By capping the frequency, you help ensure consumers don’t view your same ad multiple times to the point where they become annoyed. After all, the last thing you want is your marketing efforts actually damaging your reputation. Frequency capping lets you allocate your media budget more efficiently and helps make sure more people see your ads.

 

Be Smart About Your Creative

This is your big chance to show your consumers who you are, don’t mess it up with lazy creative. You want your ads to grab your audience’s interest and make them care. There are a few ways to help ensure that happens. For starters, keep your ads simple. Try not to overdo it, otherwise your message will become complicated and confusing. In addition, have a clear CTA. The consumer should know exactly what you want them to do after viewing your ad. Furthermore, make your ad relevant. You’ve done the work and research to understand your consumer, here is your chance to connect with them.

 

Make Sure You’re Buttoned Up

You just put in all that work to craft the perfect programmatic advertising strategy and your creative worked! The user clicks on your ad to check out your site. Are there typos? Is it easy to navigate? Is there a clear place to purchase your product? These are all things to look for with your website. Make sure your site is as user friendly as possible. Otherwise, all that hard work was for nothing, and your programmatic media budget was wasted.

 

Want To Learn More?

When it comes to programmatic advertising, we can talk your ear off. But we don’t want to bore you. Instead, we’ll show you exactly how programmatic can help elevate your brand and increase your ROI. Call Wingman Media today to discuss how programmatic will fit into your marketing budget. We promise it’ll be worth your time.