What is programmatic advertising?

15 July 2016

If you heard word programmatic before, and if you are a marketer you probably did, you know that it is something magical that promises you greater future, you won’t need to negotiate through your ads buying process; you’ll have an automation, efficiency, effectiveness, no human factors.

Imagine targeted people
And ROI that increased … oohh..
You may say I’m a dreamer
But I’m not the only one

Sorry, we’re getting really excited, when we’re talking about programmatic. So where were we? All those listed benefits are obvious, etc. But there are still a lot of those who are still confused about the term itself and function it has. And there are still debates about transparency, fraud and safety.
That’s why we decided to take a minute to have step by step overview. And we’re not trying to persuade you that programmatic will unlock potential that will make you rethink the value of marketing itself. Actually, frankly speaking, we are trying to persuade you. This “revolution” will take place and will last until something else big enough will come up, the rise of machines, for example.
What the hell it that.
We know you know it, you know we know it, but let’s do this quick overview anyway. JIC.
Basically, programmatic is software that automates the ad buying process. It’s not a media channel, but a new method of buying media. Thus you’re purchasing digital advertising without interaction with traditional salesmen, negotiations and manual orders. Machines transaction only.
Now, why? Efficiency and effectiveness – our favorite words in the world, that’s why.
The programmatic method allows you to make a smarter media buy. And the greatest thing is not automatic part, but the result: right message, to the right consumer, in the right context and at the right time.

So how come it can be that brilliant?
Less manual mistakes
We’re only as strong as our weakest mind. We still need to have someone, who will build the strategy and to handle campaigns’ details, but no more dealing with tags, no more insertion orders, and no more unreliable and expensive workforce. More time for thinking, planning, making approaches smarter, less time for red tape.
Targeting
It’s not that we want to go in circles and talk about the same thing over and over again, but we can’t help it, targeting is the most important part. It doesn’t matter how perfect the process is if the source material not that great, the result will be mediocre. To improve the outcome, you’ll have to improve the income.
The incoming data is the same: demographics, behavior, interests, but better processed thus more precise. The programmatic approach can offer you to focus on the person who will see the ad, rather than to think where to place it. And instead of buying media packages, that are pre-defined and pre-configures, you can buy solely impressions in real-time and pay for each impression that will occur as a result of match of all targeting criteria right now. More relevant message for appropriate consumer, better ROI.
Data selection
How does it know, where and whom to show the ad? Initially, advertisers have their own first-hand data like the history of purchases, etc. Then, there are not that first-hand data from data aggregators, companies, who usually have all kinds of demographic data. And of course, there are cookies and user accounts data to follow users step by step and to learn their behavior. All this is processed and analyzed, categorized and ready for usage; if targeting criteria has a match the system will make a bid on the impression.
On-job learning
With all listed above, the person who’s handling the campaign has a great chance to review the performance and all success and failure stories and make adjustments during the process.
OK. Those facts are clear, now some more thing to specify.
RTB and Programmatic. Same thing?
The short answer is “no, although” and the long is “yes, but”. All thumbs are fingers, but not all fingers are thumbs. Real-time bidding is our other favorite topic to talk about, is also a type of programmatic ad buying, but it is usually referred to real-time auctions ad purchases, which usually happens in private marketplaces or on open ad exchanges. So the difference between RTB and the direct programmatic is the difference in inventory.
Programmatic Direct has now auction in its process. It is a way for advertisers and publishers to simplify their relationships.  And due to the fact that publishers probably won’t offer their entire inventory available on exchange, Programmatic Direct will maintain more control.
Viewability
The key to success is how viewable is your ad, so you definitely need to set right KPI per viewable impressions (eCPM). The quality of inventory nearly doesn’t matter, the good news is that you can make your programmatic buying by purchasing only the top something of ads that are viewed for the longest time.
Fraud
The issue people are still talking about, when mentioning programmatic is fraud. It is still a possibility which is not eliminated. URL masking is a fraudulent practice, when instead of purchased inventory, sites with less reputation embedding ads that are meant for that “normal” purchased inventory. So advertiser can’t know for sure where his ads are shown.
Now how you can mitigate risks? Look a little bit above, bid on viewable impressions and use private marketplaces. Ad verification and pre-bid blocking for each impression will give you better control. And of course you should trust your sellers and inventory they sell.
In the future
We can’t tell for sure how fast programmatic will spread, but it definitely will. Programmatic buying is now taking over traditional ads as well, TV inventory and not only. We’re talking about the future all the time, but every other second while us talking it’s becoming obsolete and irrelevant. So go ahead and join the progress of automation.

Read also Main programmatic trends in 2016

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