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Programmatic advertising

Programmatic advertising is the automation of buying and selling advertisements using mainly real-time bidding (RTB).

 

Marketers use demand-side platforms and supply-side platforms to automatically place ads in desired locations. 

Programmatic advertising automates repetitive tasks and allows companies to reserve human labor for high-value tasks.

Programmatic advertising drives efficiency and allows companies to process mass quantities of data.


Q: How does programmatic advertising work?

A: Programmatic advertising involves connecting the dots and integrating with a myriad of partners in the advertising ecosystem to make the end-to-end automation of advertising work. It starts with software that allows companies to plan, measure, and optimize their advertising campaigns across nearly all channels. Companies will use a demand-side platform (DSP) which connects to  supply-side platforms (SSP) to automatically place ads in strategic locations across a variety of digital and traditional channels. For example, a company that creates a video ad and wants to host it on Hulu or CNN.com doesn’t need to manually go to those sites and add the video. Through programmatic buying, the ad is distributed and published automatically. 

And not only are there multiple types of partners that a company can integrate with from a platform-to-platform standpoint, but there are also data providers, who are partners who help marketers find where their audiences are. For instance, a brand might want to target the 18–24-year-old demographic. They could do so by using audiences defined in a data management platform (DMP).

Q: What business goals are associated with programmatic advertising?

A: Depending on the advertisers, the intended business outcome may differ. For a retailer, the business outcome they may want is to drive sales on digital properties and in their brick-and-mortar shops. 

And there are different ways a brand can measure how well programmatic ad buying ties back to the business goal. If the business outcome is happening in a digital environment, they should be able to tie an online sale back to an ad. If the business outcome is to have someone go into the store and make a purchase, there are ways to tie those offline sales back to digital advertising via different partners.

Q: What are the benefits of programmatic advertising?

A: The main benefit is that programmatic advertising drives efficiency. It also allows companies to focus on higher-value tasks. By removing some of the repetitive tasks, programmatic advertising allows marketers and advertisers to focus their time and energy on jobs that provide more value. Programmatic advertising is focused on trying to offer back time to marketers so they can focus on more important things, like figuring out the strategy and finding audiences. It gives companies tools so they can focus on what's important to them. 

A company’s goal should be to drive a business outcome in the most efficient way possible, and software helps process more data than would be humanly possible. And programmatic advertising provides insights that help brands make the best decision regarding their business choices.

Q: What is the benefit to the consumer?

A: The main benefit to the customer is consistency. Consistency is the spirit of the user experience, and advertising is part of that experience. As a brand, your advertising campaigns are part of the message you want delivered to your users or your consumers. And advertising is part of the overall experience of interacting with your brand. With programmatic advertising, there are generally only one or two platforms managing the overall advertising experience, so the channels aren’t siloed. The campaign is cohesive. 

The consistency of the user experience should be much better with programmatic advertising compared to non-programmatic advertising. With programmatic advertising, you can better manage exposure. One of the most painful things customers experience is overexposure to an ad because the campaign is siloed. The brand will know where and how often a customer has been exposed to the ad and create consistency across all their channels.

Q: How does a company make the switch to programmatic advertising?

A: There’s no one path. The path a company takes to programmatic advertising depends on a couple of factors, one of which is in-house expertise. Programmatic advertising solves for the automation of buying advertising, but it also comes with the complexity of using software to do so. Companies need to have or acquire some knowledge and some level of expertise to make the best of the move to programmatic advertising. They should think about the right setup in house, like the types of competencies they need to bring in so they can make the best decisions about defining project milestones as they shift away from a more traditional process of buying advertising. 

It's also important for brands to take more control of their advertising spend, and moving into programmatic advertising is a way to do that. Companies need to understand the realities of the market, how to reach their audience, and what limitations exist. An important thing to remember is that brands can’t make the shift completely in a day, so they should start small, taking one step at a time. Start by trying to bring some competency in house and partner with the right agencies and vendors to form the right project plan for the company.

Q: How do companies avoid siloing channels?

A: Using a demand-side platform takes care of some of the work of breaking the silos between channels. A DSP helps companies reach an end user independently of the environments where they consume content. When it comes to breaking some of the team silos, companies should take a step back and consider whether siloed budgets are helpful. Instead of having a separate budget for the search team and a separate budget for the social team, a company can look at the budget holistically. Companies should take a step back and think about how to allocate ad budgets according to overall business objectives and data-driven decisions.

Q: Should programmatic advertising always be omnichannel?

A: Omnichannel digital marketing is what companies should shoot for. History shows that you're going to always have nascent channels that won’t fit into a current omnichannel platform. For example, in the past few years, how users consume video content has completely changed, and it’s going to continue to change. Some users only consume TV-like content through digital devices, instead of a traditional TV set. Changes in the way people consume content will always require advertising technologies that are specific to new mediums, which may be a bit too new to include into the consistency of an omnichannel platform.

Q: What mistakes do companies make when using programmatic advertising?

A: Companies sometimes make the mistake of going too fast too soon. It’s a significant move. When the shift to programmatic advertising happens too quickly, the results are not clear that the process is as efficient as it could be, because the necessary competencies were not met. Brands can avoid this mistake by having a plan, not being too ambitious, and setting milestones down the road to check their progress. They should also have a clear understanding of the overall business goals related to programmatic advertising and make decisions with the right inputs.

Q: Does programmatic advertising have limitations?

A: Programmatic advertising is only as good as the methodology used to deliver ads into a medium. For example, with linear TV, the limitations of programmatic advertising are driven by the limitations of delivering ads into a linear TV environment.

Programmatic advertising is also limited by walled gardens, which are browsing environments that restrict or control the information a brand is able to access. So sites like Facebook or Google may not provide the same level of information or targeting capabilities, which prevents companies from buying ad space on Facebook at the same level as a more open environment.

Q: How can companies optimize the programmatic advertising experience?

A: Programmatic advertising is great at simplifying some of the more manual tasks and getting them out of the way, but at the end of the day, companies still need to understand the different ways to advertise to a user. They need to understand the different environments and the limitations and benefits of each, so they can make better use of the software. The software is powerful. It lets you do a lot of things, but you need to have some kind of understanding of the underlying technologies.

Companies can rely on the software and still understand where ads are being placed. They should know how to measure the efficiency of the ads and how one environment is different from another. By understanding the limitations or opportunities, companies can design the best user experience.

Q: How do privacy concerns affect programmatic advertising?

A: Issues and concerns surrounding privacy affect programmatic advertising quite a bit. These concerns are not specific to programmatic, but affect advertising in general. Tools exist today that allow a user to choose not to be exposed to targeted campaigns. User privacy concerns have been taken more and more seriously for the past 5–10 years and have entered the realm of the legal world. 

In Europe, for instance, with the GDPR, users now have to opt in to targeted advertising. What that means for the advertising ecosystem is that programmatic platforms have to make sure that at every point they know about the status of a user and if they opted in. Companies need to take that into the decision-making flow of delivering ads. But at the end of the day, it's good to see these tools being made available to the end users.

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