If you have been hearing the word “programmatic” far too frequently in recent years, you aren’t alone. If you don’t fully understand what it is, then, fear not, you aren’t alone either! Jimmy Kimmel had once famously called programmatic the “gluten” of advertising. And just like gluten became a hot buzzword for the food industry, programmatic, too, has been one of the hottest buzzwords in the last few years for ad tech.
Programmatic advertising isn’t something new. It has been around for a while now, but has gone mainstream in the last few years, replacing traditional ad-space sells for mobile websites and mobile apps.
WHAT IS PROGRAMMATIC MEDIA BUYING ANYWAY?
Have you ever wondered why you see ad for hotels in the city right after you just searched flight for that place? Or when you shop for a product and keep seeing the ad for it in other app or websites? That’s all programmatic at work.
In simple terms, programmatic advertising is using automated technology for media buying, as opposed to traditional (often manual and tedious) methods of digital advertising.
The traditional process of digital advertising is particularly slow and depends a lot on manual processing. A typical process involves several request for proposals (RFPs), human negotiations and manual insertions of orders (IOs), making it rather slow and inefficient when dealing with hundreds of thousands of orders at a time. With traditional advertising, ads are purchased in bulk and advertisers have little control over the ad inventory they buy, thereby also limiting the optimization of the campaign to reach the right audience. The ads placed as such target a site, rather than an individual.
With the arrival of programmatic technology, the digital ad-space ecosystem is fundamentally different. Using programmatic, advertisers can target individuals utilizing data to serve ads that are relevant to them and speed up the buying and selling process. Using audience insights, advertisers can reach out to the right person, at the right time,in the right context and, most importantly, at the right price.
How does now programmatic help mobile advertisers expand their campaign? To begin with, a DSP will utilize sets of data to identify the best user for the campaign. It then buys an ad inventory through an auction, one impression at a time. The DSP is connected to multiple SSPs and Ad Exchanges that can provide the required scale to reach a large number of impressions. With this, developers can buy an impression at the price specific to their campaign based on the information of the person who is going to view the ad. This breaks through the clutter of non relevant ads, granting access to the audience best suited for the campaign, thereby reducing the possibility of inefficiency and waste.
DIFFERENT TYPES OF PROGRAMMATIC BUYING
1. Open Marketplace or Open Auction
Real Time Bidding (RTB) is often confused as being synonymous to programmatic, when in fact it is only a subset of it. RTB is a type of programmatic buying process, whereby the buying and selling of online ad impressions is done in real time through auctions that occur in the milliseconds before a webpage or an app loads. The RTB ecosystem has two main entities – DSPs and SSPs, or Ad Exchanges. A typical process of serving an ad through RTB starts with the publisher sending their inventory to an Ad Exchange, which can be understood as a platform to hold an auction (much like a stock exchange). Advertisers use the DSPs to place a bid on each impression, determined by the value of the impression. The winning bidder gets their ad served on the publisher’s website. This way the advertisers are able to better target their audiences by having greater control over the inventory and choosing the impressions that are bring most value to them, thereby limiting ad wastes. For example: a company targeting baby products would only buy ads on the sites visited by parents or couples.
In November 2010, The RTB Project, previously known as OpenRTB Consortium, assembled to develop a new API specification for companies interested in an open protocol for the automated trading of digital media across a broader range of platforms, devices and advertising solutions. The OpenRTB standard was adopted by the IAB in 2012.
2. PRIVATE MARKETPLACE (PMP)
Private Marketplace or PMPs are an invite-only marketplace that allow high caliber publishers to set aside certain ad inventory packages and sell them to a select buyer or group of buyers through a private auction mechanism, transacted through Deal IDs. As a middle ground between open auctions and direct deals, PMPs are preferred by advertisers who want to gain access to premium inventories on a website or an app before it is made available for open auctions.
For advertisers, PMPs offer a close working relationship with the publishers, thus giving them greater transparency to track and control over the ad inventory, while the programmatic technology eliminates the need to do direct buys with multiple publishers like in a traditional environment.
Within a PMP too, there can be different kinds of deals between advertisers and publishers, such as first-look, pre-negotiated or second price rate, etc. eMarketer predicts selling through PMP to reach $3.3 billion in 2016.
3. PROGRAMMATIC DIRECT
Programmatic Direct is a type of automated buying process where you can buy a guaranteed ad space without an auction. This route is preferred by companies who want to focus on their brand safety and premium placement on a preferred publisher’s website or app. For example: A medical pharmaceutical giant would prefer to place ads on a health website because the website already has the right audience for it. Media buyers negotiate deals with sellers up-front on all impressions as a fixed CPM, much like in the traditional method, but without the IOs; i.e, the buying process doesn’t require manual (human) intervention to be executed.
WHY IS IT IMPORTANT?
At the heart of programmatic lie efficiency and speed, both critical for the way mobile advertising functions. By working on various levels of targeting capabilities, programmatic campaigns are more effective as they interact with customers on a personal level. Another main advantage of using programmatic is the scale – it lets marketers manage campaigns across multiple devices and channels using a single dashboard and deliver ads across thousands of publishers.
The traditional model of mobile advertising leaves a vacuum between the user and the advertiser. It works on a one-fit-all approach and ad formats such as banners and interstitials do little for the audiences, who are bombarded with messages that are non-relevant to them. This leads to inefficiencies in ad campaigns, while leading to waste in audience as well as ad budget. Programmatic advertising comes as an answer to the prayers of advertisers who can now remove this vacuum and offer more efficient, reliable, personalized campaigns, in real time.
PROGRAMMATIC: THE WAY FORWARD
The future of mobile advertising is programmatic, with research from eMarketer predicting that 83% of all ad buying in 2017 will be traded this way. Advertisers are beginning to fully understand the potential of programmatic campaigns, changing the ecosystem. For advertisers and publishers alike, programmatic holds promise than traditional ads. As the mobile advertising ecosystem becomes more sophisticated and more complex, businesses should rush to make the most use of programmatic, as the latter will continue to evolve, further shaping the world of ad tech.