Everything You Need to Know About Programmatic Advertising
Online advertising has turned into a billion-dollar industry. For the first time, businesses have spent more on digital ads in comparison to traditional marketing. After all, digital ads are highly targeted, cost-effective, and efficient in every way. However, with all the bells and whistles, it becomes challenging for businesses to determine where they should invest their money. With so many social media channels and options to choose from, finding the right marketing investment has become challenging for businesses.
This is where programmatic advertising comes in. Programmatic advertising uses artificial intelligence and real-time bidding to determine where you should invest your marketing money. In this blog post, we will be looking at “what is programmatic advertising” and how it works.
What Is Programmatic Advertising?
Targeting the right people, choosing the correct platform, and bidding the right amount are key factors in running a successful digital ad campaign. However, all these things aren’t possible for humans to perform accurately. Several calculations and factors go into targeting alone. As digital campaigns become more extensive, brands resorted to programmatic advertising, where buying and selling ads are automated. The spent on programmatic digital ads in the US grew by 10.4% in 2020. This number is expected to reach $96 billion by 2022.
Another aspect of programmatic ads is that it connects ad publishers with ad buyers. For instance, web owners with sufficient free web space can sell their space for advertisement, and programmatic ads make this possible autonomously. When advertisers want to launch a digital campaign, they contact their programmatic ad agency (trading desk). The agency uses a demand-side platform to automate the process of buying ads to meet campaign goals.
The demand-side platform allows ad buyers to find the right place to market their business. The demand-side platform uses data management platforms to target the right audience according to the budget, segmentation, and information shared by the client agency.
How Programmatic Ads Work?
Programmatic ads work by real-time bidding and evaluation of web visitors. It is a complicated yet fast process that determines the chances of a particular ad to work for a particular web visitor. For instance, if a web visitor matching the profile for the ad agency (buyer) lands on a publisher (ad sellers) platform, the publisher sends a request to the ad agency sharing the complete profile of the web visitor. The DSP then relays information to the targeting parameters and determines a bid for it. The agency with the highest bid wins the advertisement spot for that particular web visitor. Although this process might seem long, all the decision-making is autonomous and happens in 100 milliseconds.
Moreover, the best part of programmatic advertising is that ad space is sold per website visitor. Two people visiting the same website will have different ad layouts. Instead of selling ad space to each limited buyer, programmatic ads comfort all buyers by setting ads on the information available about website visitors.
What Are Programmatic Platforms?
Programmatic platforms like Publift offer wide targeting options based on AI and RTB. However, several other programmatic advertisement platforms and agencies can find the right services and get access to the right advertisers.
Programmatic advertising platforms are a part of the complete programmatic advertising process. Each part of the system works to provide the best advertisement and targeting solution for the buyer. Some programmatic advertisement platforms are mentioned above, such as demand-side platforms, supply-side platforms, and data management platforms. Let’s look at different types of programmatic platforms and see how they work.
Demand-Side Platform
A demand-side platform enables agencies to bid on an advertisement automatically for display and other forms of ads. The demand-side platform makes it faster, cheaper, and easier to bid on ads by automating it. The best part about demand-side platforms is that you buy ads and get the ability to bid on specific segments of the audience.
Demand-side platforms enable businesses to buy ads without wasting time and energy in manually contacting ad sellers. This makes demand-side platforms all the better and helpful. Moreover, as marketers no longer have to waste their energy on a task that can be automated, campaigns are created and designed quicker than before. In the US, 85% of display advertisements are done through programmatic advertising. The rest of digital marketing campaigns are also shifting to programmatic ads.
Supply-Side Platform
Supply-side platforms or better knowns as inventories are web platforms selling their space to advertisement agencies for a fair monetary price. However, the process of buying a space on the website is relatively different from what it’s assumed to be. For instance, if an advertiser wants to buy a position on an app or website for advertisement, they don’t have to conduct manual meetings with the said app or website owner. Instead, supply-side platforms will assist in buying advertisement space.
A supply-side platform is an automated software that connects thousands of advertisers and publishers looking to trade advertisement placements. The supply-side platforms assist publishers in finding the right advertisement agency based on Artificial Intelligence. The reason why businesses need a good supply-side platform is that their conversion rate depends on it. With a good supply-side platform, businesses can generate massive revenues at minimum cost. Their target audience and data align with the publishers under the supply-side platform. Therefore, advertisement reach and conversions are in perfect harmony because ads are only shown to people interested in buying the said particular product.
5 Benefits of Programmatic Ads
Programmatic ads are much faster, cheaper, and detailed than the regular ad buying process. As a result, it has numerous advantages for both small and large-scale businesses. According to the current evaluation of programmatic ads, its value is expected to reach 147 billion USD by the end of 2021. This is because it’s an excellent way for businesses to find potential customers without investing much time or effort. Here are some advantages of programmatic ads that will help you understand why this AI-powered advertisement campaign is trending.
1. Increased Transparency and Control
Programmatic ads are highly efficient and transparent when it comes to advertising on the web. They offer an additional layer of transparency that allows marketers to see the exact sites they are advertising on and the type of customers visiting their ads. Programmatic ads offer new controls over ad spent and customer segmentation that isn’t possible through traditional advertising.
2. Real-Time Measurement
Real-time reporting is every marketer’s dream. Evaluating data and changes as they come can allow greater control over digital marketing. Through programmatic ads, it is possible to view real-time measurements and data analytics. Although, we won’t recommend making any changes for a week. This advertising method is very unique and efficient compared to billboard marketing and other traditional marketing tactics whose results are impossible to capture.
3. Greater Efficiency
With real-time measurement comes greater efficiency. As digital marketers adapt to editing and optimizing their ads on the fly, they make sure to target customers interested in their product/service. Moreover, real-time measurement shows how well the creatives are performing. In case of underperformance, creatives can be replaced quickly in a programmatic advertisement.
4. Greater Targeting Capabilities
Programmatic advertising has enhanced targeting capabilities of agencies and allowed them to capture a much wider audience. Through programmatic advertisements targeting can be as specific as IP targeting and location targeting. This means if a business only works at a certain location, it doesn’t need to bear the additional cost of wider targeting. Moreover, programmatic ads are also used for retargeting purposes. After all, only 2% of customers convert when they first visit a website. Retargeting campaigns bring in the remaining 98% and ensure maximum conversions are delivered.
5. Enhanced Audience Reach
The most significant benefit of programmatic advertisement is increased audience reach. There are 3.5 billion people on the internet at any given time, and Google has a volume of 70,000 search queries per second. Programmatic ads make sure businesses capture a maximum audience and, most importantly, an audience according to their segmentation and targeting. As soon as a display advertisement is launched, businesses can see who viewed the ad, where it is placed, and its reach. Businesses can then get better analytics and determine whether the ad is performing well or not.
Difference Between Ad Network and Ad Exchange
Ad networks are a thing of the past and were actively used by advertisers to publish ads on different websites and apps. However, as programmatic advertisement made its debut, ad networks have been slowly replaced with ad exchange. If you have been actively pursuing the digital marketing industry, you might have heard a lot about ad exchanges. However, if you are wondering about the difference between an ad network and an ad exchange, read below.
1. Suppliers
One of the primary differences between an ad exchange and an ad network is the connection with suppliers. Suppliers are known as publishers, those who are offering their platform for displaying advertisements. In an ad network, buyers bid on a network of suppliers without ever knowing whom they are bidding on. On the other hand, ad exchange has more transparency in the matter. It allows greater control over which website you bid on.
2. Inventory
In digital marketing, inventory refers to the space available on a publisher’s website to display advertisements. In an ad network, the inventory is aggregated, meaning that all websites have to submit their open spaces, and the ad network picks one spot for each ad. However, an ad exchange follows a bidding rule of advertisement, meaning that the advertiser with the highest bid scores a particular inventory (spot on a website). This rule helps suppliers utilize their space adequately, and each website visitor has catered a unique ad.
3. Relevant Ads
An ad exchange network can deliver the right ads to the right customer. For instance, a person with the data relevant to real estate will be shown similar ads through display network ads. However, the difference lies in deep-rooted targeting. In an ad exchange, customers viewing real estate services will be shown properties within their budget; this is because ad exchanges rely on a deep targeting algorithm.
On the other hand, ad networks will show real estate ads on a display network based on simple targeting mechanics, such as location and zip code. Moreover, ad exchange verifies a web visitor’s profile and asks the DSP system for bids. The DSP system runs the web traffics profile against the data provided and determines the most profitable bid. The DSP with the highest bid wins a position on the publisher and finds the best ad results possible through Artificial intelligence.
The Bottom Line
Digital marketing has been advancing at the same pace as technology. As artificial intelligence grows, ad networks slowly upgrade to calculate massive data and deliver exceptional targeting results. All this calculation is speeding up the process of Big Data and 5G networks. After all, when volumes of data need to be crunched in 1/10 of a second, internet speeds need to as fast as possible. Therefore, technology and digital marketing are growing hand in hand. If you want to survive in the diverse and modifying landscape of digital marketing, you need to stay up-to-date with the latest trends.
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