Before We start with programmatic advertising let me know if you have watched 2007’s award-winning TV Series Mad Men, which was centered around a fictional Madison Avenue Ad agency.
If you have watched the series you will understand when copywriter Paul explains Madison’s Media department to new secretary Peggy as “ This is the media buying department. This is where the client’s 90% cheque goes. That’s the whole shakedown actually. They don’t sell ideas or campaigns or jingles. They sell media at a 15% markup.”
Is it right? Advertising is just media buying. No, Nope! It is 1% Media Buying and 99% Not Media Buying. Media buying has always been and will always be key to the marketing business. It doesn’t matter how brilliant you will create ad copies or creative.
In the end, all that matters is where you are going to place your Ad because it’s the placement where users are intended to see your ad. Do you gotta! My point.
From the Mad Men era time has changed, now advertising is automated, complex and computerized. Programmatic Advertising has taken over traditional advertising. In 2018, 80% of the display advertising done in the US was done via programmatic advertising.
Let’s understand what programmatic advertising really is? And why marketers are turning their display campaigns to programmatic.
Programmatic Advertising Explained
In simple words, programmatic advertising is designed to replace human negotiations to buy ads and optimize campaigns with artificial intelligence(AI) in real-time.
There are 3 parties involved in the digital marketing space.
Advertiser: People who want to promote their product or services through buying digital ad space.
Publisher: Website or digital channel owners who sell their digital ad space for the advertisers.
The middleman (ad-exchange): The bridge between the advertiser and seller.
Ad exchanges are one who handles all the programmatic work at their end from online auction to picking up ad space.
How Programmatic Advertising Works?
In nutshell here’s how programmatic advertising works :
A person visits your site.
The Owner of the website put ad impression up for auction on SSP ( Supply Side Platform)
Advertisers on DSP (Demand-side Platform) offer bid for the impression.
The highest bidder wins the auction.
The ad impression (space) is sold to the advertisers and the ad is displayed on the website.
This whole process happens in a fraction of time. The competing bid is calculated by Ad-exchange according to visitor history.
Type of Programmatic Advertising
If you are familiar with the digital media buying you may have heard of real-time bidding. But this is just one form of programmatic advertising, another is programmatic direct.
In real-time bidding (RTB) ads goes into real-time auctions while in programmatic direct, advertisers buy guaranteed ad impressions direct from the publisher.
Most of the digital buying companies use both RTB and programmatic to ensure the best blend of placements.
Difference Between DSP & SSP?
What we see programmatic advertising is just 2/10th of it. It is an enormous ecosystem. DSP and SSP are two major tools that are used in this ecosystem for buying and selling ads programmatically.
Let’s talk about DSP first, DSP is a tool used by advertisers to buy ad inventory or digital ad space at the best price. DSP allows advertisers to manage multiple ad exchanges through a single interface.
SSP is much similar to DSP but SSP is used by publishers to sell their ad space called ‘inventory’. SSP’s are connected to multiple DSP or ad exchanges which opens up space for more potential buyers.
Benefits of programmatic advertising
Looking back 5-10 years ago, the benefits of programmatic ads today are unimaginable. Here are some of the amazing benefits of programmatic Advertising:-
Increased Reach: As a website owner with programmatic advertising you have reached to hundred and hundred of ad exchanges or DSP. While with programmatic advertising advertisers have access to millions of ad spaces available on websites. This helps both to scale and grow without any extra efforts.
Ad Relevancy: Programmatic advertising has given advertisers access to massive ad inventory across various ad exchanges so that advertisers can make sure to maximize the relevancy of the ads and improve the ROAS.
Real-time data insights: For optimization and scaling campaigns accurately we need real-time data to see how campaigns are performing. In programmatic advertising ad servers provide real-time insights about placement and performance so that you can scale at a rapid rate.
More Transparency, more control: Programmatic advertising has a layer of transparency that you will never get with old school advertising. With this kind of advertising, the advertiser has control over sites that are displaying ads in real-time. Advertisers can optimize according to the real data having more control.
Hyper-targeting capabilities: IP Targeting, Contextual Targeting and retargeting with programmatic advertising has made advertisers reach their ideal customers. Do you know only 2% of the visitors convert at 1st visit to the offer? While you can retarget customers and have a higher chance of converting.
Is it Hindrance or Jackpot for Newbies?
Programmatic advertising is going to be the future of display advertising. In fact, it is right now. In the US only by the year 2021, 88% of all display ads are assumed to be bought by programmatic advertising.