What Is Programmatic Marketing And Buying?

It is a well-known fact that online advertising has become a highly fragmented industry in today’s digital world. Advertising industry is held up by shady ad inventory, fake traffic and ad fraud. Marketers and advertisers are spending huge budgets for online advertising campaigns, and the ROI is often not guaranteed. As a result, the advertising industry is adapting to new technologies and platforms as a change and upgrade, and one such highly advanced technology is Programmatic marketing or advertising.

programmatic-marketing-and-buying

“Programmatic marketing is the ‘future’ of the advertising industry.” Have you ever heard or read something like this? Yes, you might be, Programmatic is the new buzzword in every sector as well in marketing also.

But are you not sure what exactly programmatic marketing is and how it helps your business? Then you are in the right place.

This blog will be your introduction to programmatic marketing. The goal of this blog is to explain in simple words about programmatic marketing and how it works.  In addition and most importantly, what benefits it holds for marketers and entrepreneurs interested in growing their profits with online ads.

What is  Programmatic marketing?

The programmatic marketing is an artificial intelligence technology with programmed algorithms. These algorithms analyse the data allowing the optimization of real-time campaign towards an audience are more likely to convert.

In a nutshell, programmatic marketing or advertising is using an automated system to make media buying decisions instead of doing it manually. In order to achieve that, the automated system needs to be fed with consumer data, inventory data,  goals of the campaign, potential media buys, ad formats. Thus the automated system analyses the multiple data points and makes accurate decisions through artificial intelligence.

Manual negotiations play a crucial role in traditional advertising. But in programmatic advertising transactions are processed through automated digital technology interfaces. Therefore, the entire add inventory buying happens way faster and more efficient.

How programmatic marketing works?

Programmatic marketing or advertising utilizes ad exchanges and the platforms like DSP, SSP and DMP. So let us understand about ad exchange and platforms before knowing how programmatic marketing includes them to optimize the advertising and buying.

Ad Exchange

An ad exchange is a digital marketplace which serves as a platform for advertisers and publishers (website owners) for buying and selling ad spaces (or ad inventory). Buying often take place through real-time auctions.

In real time auctions, advertisers will bid the price for the ad space made available by the publisher in the ad exchange. The highest bidder will get the space.

Some times buying happens directly on a fixed price by publisher without bidding.

DSP (Demand Side Platform)

Demand side platform (DSP) when integrated into the ad exchange, it analyses various factors like geographical location, previous browsing behaviour. This analysis allows buying ad spaces from a wide range of publisher sites that targets a specific audience. Data management platforms (DMP) provides the data to Demand side platforms by collecting and analyzing the cookie data from websites.

SSP (Supply Side Platform)

Supply side platform (SSP) is basically the same as Demand supply platform (DSP) but from the other side. Where DSP helps advertisers, SSP helps online publishers to automate the selling of their ad spaces or inventory.

Programmatic marketing definition

Here is an easy explanation to understand Programmatic marketing.

“The integration of DSP and SSP to the ad exchange and allowing Artificial Intelligence(AI) to make a decision of buying the specific ad inventory is what we call Programmatic marketing or advertising.”

Adexchange integration

Programmatic advertising functioning

Now let’s go through the step by step process of programmatic buying and advertisement.

When user or consumer is browsing a website, the publisher sends the ad space dimensions to the SSP.  In the next step, SSP analyses user data and decides what can be the most relevant ad to serve and the price of the ad inventory. Then DSP values the website ad space and submits a bid amount. SSP picks a winning bid and serves the ad of the advertiser who wins the auction. All this process happens in a matter of milliseconds.

Programmatic advertising infographics

In this process programmatic marketing excludes manual negotiation of ad rates and ad insertion orders. Thus the manual traditional ad inventory buying is replaced by automation and artificial intelligence.

A big data analytics is needed with all manner of information, preferences, trends to make the programmatic advertising work. Significant data help algorithms to analyse and distribute the advertisements predicted on behaviour and interest.

For example, let us consider there is a cosmetic product at a price 10k per unit to be advertised. So to distribute this ad creative the programmatic algorithms targets the websites which are mostly visited by females between age 25 to 40, with an average income of more than 80-90k, drive sedans and live in the South Bombay.

The more data is analysed the much much more accurate and optimized your campaign will be.

Is RTB and Programmatic advertising same?

No. RTB is programmatic buying and part of programmatic advertising, but programmatic advertising necessarily doesn’t use RTB every time. Some publishers make their inventory available in advance for a fixed price. Thus there won’t be any auctions and buying is direct.  Even though the buying is direct between a publisher and advertiser, programmatic tools are used to negotiate, analyse and serve relevant ad.  This kind buying which is programmatic is known as Programmatic direct or Programmatic guaranteed.

How to plan a programmatic marketing campaign?

Let it be how much updated technology you use without a prior plan you are not going any near to get the benefits. You should have an optimized plan before launching programmatic marketing campaign, and this is how it should be;

1. Define a strategy

First of all figure out the purpose of your advertising campaign. Then think how programmatic marketing can be helpful more than traditional buying for your kind of campaign. All this gives you an idea to build a strategy for the efficient utilization of programmatic marketing.

2. A/B testing

Create A/B test versions of creatives and landing pages. So you can choose the best to place as an ad in purchased ad space for optimized conversion.

3. Setup pricing policy

Segment your target audience for the campaign. Segmentation and grouping audience on various factors helps you to know how much to spend on each group to optimize ROI. So that you can figure out supply, and set up a pricing policy for the campaign. And also you can adjust creatives and landing pages to match targeted segments.

4. Select DSP

Research all the available DSP platforms and select the one which is best suitable for all your campaign needs. Targeting and reporting capabilities are the critical criteria to choose the DSP.

5. Frequent optimizing

Your advertising campaign should be optimized frequently. Break down your advertising campaign time frame into short periods and revise creatives, sources, prices periodically.

Benefits of programmatic marketing

The benefits of programmatic marketing are relevant to today’s digital world where marketers need their ads to be targeted and personalized. Even though there are a lot of tools which can achieve the needs, programmatic marketing with its automation and AI takes it to the next level.  Below are the benefits Programmatic marketing offers to the advertisers and marketers.

1. Low CPM (Cost Per Impression)

Programmatic marketing involves in acquiring the remaining inventory, rather than premium stock. Advertisers are allowed to choose ad space from the pool of ad inventory with varied ranges of CPM.  Which means access to the inventory is increased and flexible. So with this more availability of inventory CPM reduces.  Because of this, there will be a positive impact on your ROI, even if some of the views and impression do not reach the consumer.

2. More transparency

Programmatic marketing provides the advertiser with more transparency on the purchasing of inventory. Transparency helps you to know creative variants used, ad placement, and how the add is performing. Visibility into these events provide insights on top publisher placements and best-performing ad creative variants. Transparent visibility into these events is a necessary for media optimization and programmatic provides that.

3. Targeting capabilities

Segmentation of your audience to marketing lists is easy through programmatic marketing as it is automated and programmed.  This helps you to target the right audience, in the proper context, and at the right time.

4. Data and insights

Programmatic marketing works by gathering and analyzing the data more efficiently through automated technology. It can compare the insights and draws the suggestions to improve the efficiency and performance of your campaign.

5. Tracking capacity

Programmatic advertising offers useful and accurate tracking abilities. Advertisers can effectively track ad placement, what level of engagement it receives. This data can be used to reinvest the budget in the right areas.

6. Faster campaign launch

With programmatic buying, reduces waste of time in launching a campaign. Because the automated nature of programmatic advertising helps advertisers to connect with audiences across any device, at any time in a fraction of a second.

7. Easy negotiation of price

Programmatic marketing provides advertisers with an efficient, integrated and direct buying platform.  Programmatic buying allows the advertiser to directly buy from the source, instead of going through agencies. So negotiating the right price happens in less time.

Summing it up

Finally to conclude, programmatic marketing is  going to become an essential component of every modern marketer’s digital strategy. Indeed there will be some initial hesitation from advertisers to adopt the programmatic advertising.  But as it already made its mark, allowing many publishers to participate in the real-time bidding, now advertisers are showing a keen interest to shift from traditional buying. Publishers are also excited about programmatic buying, as it offers them a tremendous opportunity to promote ad space.

Programmatic advertising can lower the cost, workload of ad inventory buying and can increase ROI of the advertising campaign. But all these are not a guaranteed without a strategy for the advertising campaign .

Programmatic advertising will be a new force ruling the ads, but your creativity, intuitive understanding and optimization capability as a marketer will control the force.

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Harsha Vardhan Janaki

Harsha studied Mechanical Engineering and chose writing as a career making use of his critical thinking skills. Interested in examining and analyzing the digital revolution and its impact on human life. Currently studying the transformations of marketing in the digital era. He is a 2 part introvert,1 part extrovert, 1 part geek, 2 part cinephile, 2 part bibliophile.

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