Programmatic — The Future of Advertising

Traditionally, to purchase ads, you need to request proposals, manually prepare insertion orders, send quotes, and negotiate with an advertising partner to get your ad displayed.

And even after paying a predetermined, often hefty price, your ad might still land on the wrong audience, thus missing its intended goal. Programmatic advertising solves all of that and much more.

What is Programmatic Advertising?

It is the use of software to automatically buy and sell digital ad space through real-time auctions by using artificial intelligence(AI).

How Does Programmatic Advertising Work?

If you are an e-commerce shop owner selling sports shoes in Abuja, you can choose to only target football enthusiasts living in the city with a campaign goal of increasing website traffic.

In the past, such a campaign would be run manually, and you'll have to decide whether you should use Facebook or Instagram, should you put 40% of your budget toward video or display ads, or when is the appropriate day and time to launch your campaign. So many variables to consider before creating your campaign.

Programmatic advertising will take all these variables, combined with hundreds of other data points, including cookies and previous site visits and select the best bids and ad platforms to drive maximum traffic to your site.

So that's how it works—at least on the surface. What happens in the backend is quite sinuous, and here is how it flows:

1. A potential customer types in a search engine "How to tie shoelaces ?"
2. When presented with the results, the customer clicks on a blog that matches the query.
3. The blog, in turn, calls a supply-side platform(SSP), essentially saying "I have some ad space and a potential customer for advertisers, can you please give me something to show them?"
4. The various advertisers (demand side platforms) send their ads with the amount of money they are willing to pay in order to get their product in front of the potential customer.
5. After receiving the different offers, the SSP decide(usually the highest offer) which ad to display on the website and send it over to the blog, to hopefully get the visitors to click and purchase a shoe.

This whole process, including the algorithm analysing the user's profile based on the visitor's digital footprint, and deciding on the most cost-effective ad to serve, happens in milliseconds without the visitor noticing anything at all.

Why is Programmatic Advertising Important for Marketers?

Highly Targeted Audience

As a marketer, audience targeting can make or break your marketing efforts. Thus it is very important to access the relevant audience for your product or service.

Spending your media assets on one particular segment and wishing for the best result is no strategy. By using programmatic buying instead, you have the possibility to advertise to a more focused audience across different platforms, thus increasing your campaign's success.

Better Campaign Performance

It is tedious and time-consuming to independently set up and monitor each ad on its platform. This approach is neither scalable nor cost-efficient. Given the various platforms and factors to consider when setting your ad, this might even lead to a negative ROI.

Programmatic advertising allows you to perform data-driven targeted advertising by showing your product in front of the relevant audience. In conventional digital advertising, to improve your campaign performance, one has to wait until the end of the campaign to conduct a post-mortem in order to improve future campaigns.

Thanks to the constant streams of data and audience analysis reports, you can perform a real-time optimisation, minimize the amount of wasted media and increase your ROI.

Reach Large Audiences

Programmatic advertising provides enormous reach to marketers because of the millions of websites and advertisers available. This allows advertisers to simultaneously target audiences present across different channels that they might not otherwise reach.

Because programmatic advertising is extremely targeted and measurable, it can be used to achieve your advertising goals more effectively than other forms of advertising.

The newspaper Economist is a case in point. After a series of successful campaigns, the online publishing arm started to see a significant decrease in its membership as the audience considered the Economist to be a "handbook for the corporate elite".

The Economist used programmatic advertising to find more than five million previously unseen, retargetable users. Here are samples of the ads.

The Bottom Line

As the ads market is forecasted to reach more than $800 billion by 2026, programmatic advertising will play a huge role in this growth. Marketers that are able to adapt their digital campaigns and leverage the tools available will ultimately win.

Even better, pairing programmatic advertising strategies with other digital marketing strategies such as SEO or PPC will be game-changing.

References:

Digital Advertising - Worldwide | Statista Market Forecast. (2022). https://www.statista.com/outlook/dmo/digital-advertising/worldwide

Programmatic Ad Buying For Every Format – Google Ad Manager. (2022). https://admanager.google.com/home/capabilities/formats/

Programmatic Ad Buying For Every Format – Google Ad Manager. (2022). https://admanager.google.com/home/capabilities/formats/

The Economist: finding new readers with creative programmatic – (2022) display://econsultancy.com/the-economist-finding-new-readers-with-creative-programmatic-display/