Online advertising is now 129 billion dollar industry.
For the first year ever digital ad spend is set to exceed traditional media spend. Overall this is great news for businesses, as online advertising offers more options, lower costs and more flexibility than traditional media advertising.
But one of the big challenges with all these bells and whistles of online advertising is figuring out, how to select what platforms to advertise on? There are more options (Display Ads – CPM, CPC, CPA, Search Ads, Social Media Ads, Influencers, etc) than ever and it can be overwhelming for businesses. This is where Programmatic Advertising comes, it changes the game.
What Is Programmatic Advertising?
Programmatic ad buying typically refers to the use of software to purchase digital advertising as opposed to the traditional process which involves an RFP (Request For Proposal), negotiation and a manual insertion order. So that means you’re using machines to buy ads instead of doing a manual place and buy one to one type of deal or negotiation.
Programmatic Advertising uses artificial intelligence in real-time bidding (AI+RTB) to help automate and streamline the ad buying process.
In a nutshell, Programmatic campaigns allow you to specify a target market, budgets and goals for a campaign. Ad Experts can figure the campaign and use AI to place ads across dozens of ad networks to reach your highly targeted audience. This all works in a similar way to how a lot of modern investing programs work.
How Does Programmatic Advertising Work?
You specify what percentage of your portfolio you want to invest in different types of stocks and bonds, what your risk tolerance is, and software programs can help determine the best path to financial success. For programmatic advertising, let’s go through a quick example. If you’re trying to sell a new high-tech winter jacket, you can choose to only target ski enthusiasts from Western Canada and create your goal to be, I want to increase e-commerce purchases. A programmatic campaign would take all these parameters and analyze them against hundreds of data points to select the best ad platforms and bids to drive maximum ecommerce sales. The recommended strategy might be to dedicate 30 percent of the budget to Snapchat ads, but only on weeknights after 6:00 p.m. because that’s the time that they’re performing the best.
Putting AI to work for an ad campaign can be very, very powerful. There are a few other key advantages to running a digital ads campaign with programmatic advertising. First, access to dozens of ad networks. It can be time-consuming and tedious to set up individual ad campaigns on each platform. Programmatic advertising connects automatically to platforms like Google Ads, Instagram, Facebook, Simpli.fi, Pandora, AdsWizz, and more. One expertly crafted campaign can get you maximum visibility across multiple networks.
Second, highly targeted campaigns. Through the power of AI your ads are only shown to the people who fit your specific target market. Instead of guessing what sites and keywords your market is utilizing, programmatic advertising has this step built-in. And third, your campaigns are delivered across devices. Programmatic campaigns reach users where they are at, whether it’s a mobile device, tablet, or desktop. This allows you to run a true omni-channel strategy for your ad campaigns. If your business has a crystal clear target market that you want to go after, programmatic advertising is a fantastic option to consider.
You cast a wider net with your digital ads and have access to tons of ad platforms but also very targeted campaign elements.
Programmatic Advertising Explained
Another illustration, say you have an app and if you go through the traditional direct RFP process. In the below image, your app has an ad unit in green of 320 x 50 pixels and every month your app generates 10 million ad impressions for this ad unit from users opening your app and using it. You are using Google’s DFP as your ad server and so every month you have 10 million ads that run through that ad server and you have a month to sell those ads (audience/inventory/impressions) as you want to monetize. So you go out directly to an advertiser and try to sell to them. So let’s say you go to Coca-Cola and you convince them to buy 5 million ad impressions every month of this ad unit. You have just sold 50% of your ads to one advertiser. But you need to sell 5 million more, so you get in front of Nike and they agree that they will buy two and a half million. Now 75% of your ad impressions for this ad unit is sold and then lastly you go to McDonald’s and they agree for two and a half million impressions.
Now you have done a direct deal with advertisers and sold 100% of your ad impressions for the agreed months. This is great if you’re going to do that and you’re getting the highest price possible. There are really no middlemen here you’ve gone direct to the advertiser, so you don’t have to pay an agency or an exchange or any sort of network, any fee. The obvious disadvantage here is that one, it’s difficult to get in front of these people especially if you’re a small app. And two, even if you do get in front of them there is no guarantee that they’ll actually buy, so it could be that you get in front of advertisers and you sell only 75% of ad impressions. You still have two and a half million impressions every month that go unsold and you really don’t want that. That’s lost potential revenue for you. So it’s a great idea but there are really only a few very large apps and very large publishers that are able to get that audience directly with major advertisers and are able sell out all of their inventory directly.