Let sophisticated algorithms decide the best space and time for your ad using programmatic advertising. Buying online space for your advertisements can be tedious, time-consuming, and daunting if you are shopping online for your digital billboard.
Let’s take a look at how the future of ad space buying can benefit you when deciding when and where your next advertisement should go.
Let’s take a look at how programmatic advertising can facilitate the ad buying process.
What is programmatic advertising?
Programmatic advertising is buying and selling of online advertising space autonomously. All this takes place on a market space utilizing A.I. that connects advertisers to publishers. Before, advertisers had to negotiate space, time, and placement for ads on their own.
Now, computers use algorithms to determine, based on budget, when and where to purchase ad space that is most beneficial to the buyer. Hence, allowing these programmatic algorithms to determine the right time and place to display an ad to your audience may prove to be in your favor.
Programmatic platforms include:
- Mobile devices
- Digital out-of-home advertisements (DOOH)
- Social Media
Artificial intelligence gathers information on website visitor’s behavior. Then it determines in real-time how to optimize campaigns that will more than likely convert to sales. Programmatic companies collect information on their own or through a third-party data provider. They take into account location, time, and device. Even the weather too.
The goal is to only serve relevant ads, especially to the customers that will most likely buy. The A.I makes a decision based on information gathered all together. Information such as time on a website and including how many pages the visitor viewed per visit. Massive amounts of data are collected. And this data is explicitly analyzed through cookies for determining who your audience is.
There is a vast amount of data at your fingertips. And it’s all to help you determine how to optimize your campaign on the fly to reach your customer’s eyes. You can first target them on their mobile device. Then when they switch over to their laptop, you can immediately catch them there as well.
Now on to how buying ad space works.
How programmatic ad buying works?
Let’s first go over crucial components to how this digital auction house functions before the actual buying:
- Demand Side Platforms (DSPs) allow advertisers to determine the cost of an impression and to place a bid.
- Supply Side Platforms (SSPs) allow publishers to determine the highest price for their space and offer the space to advertisers for sale.
- Ad Exchange is where the auction takes place.
- Ad Servers place the winning bidder in the space.
- Data Providers gather information to improve each transaction. They give information like context, the best place for the ad, and hyper-local targeting.
There are two leading platforms for how buying occurs. The first is real-time bidding (RTB). This platform is essentially an on-going auction for available online space on multiple devices. Buyers look over what space is open and place bids for amounts they can afford. If the proposal wins the auction, the ad servers notify the buyer instantly, and the advertisement immediately appears on the device.
In contrast, programmatic direct eliminates the auction-style of bidding in favor of an immediate purchase. This form cuts the hassle of having to place bids after reviewing space but instead allowing the SSP to find space. Of course, these networks guarantee placement, set visibility parameters, and metric goals.
RTB gives you the freedom to select which online space best fits your budget. However, winning bets decide who gets the placement. Whereas, the downside to direct buying is a higher CPM (cost per thousand) when compared to bidding. It is essential to determine which platform best fits your budget.
Programmatic buying in steps
Let’s take for an example, a website that’s configured for programmatic advertising ad-buying utilizing RTB. First, you place your maximum bid amount for an impression through a network. Before the page loads, an auction takes place among bidders for space. Next, the winner has their ad displayed.
The process can be broken down to six steps.
- The potential customer clicks on the website for roller skates.
- The owner of the site puts up an ad impression for auction into the marketplace.
- The ad marketplace holds up the auction to potential bidders.
- The highest bidder for that impression wins the bid.
- The ad displays to the potential customer.
- Potential customers click on the ad, let’s say it’s a brand of roller skates you sell, then potential customers turn to potential buyers.
All this happens in milliseconds!
What about T.V.?
The previous example is typical for most devices. But what about T.V.? Days of television are not out the door yet. Even though mobile devices seem to be their replacement currently. Advertisers can take advantage of this new form of advertising, just like how Volvo did.
Volvo’s T.V. campaign produced 526,000 unique engagements in over 95,000 homes. As a result, they saw a sales increase of 35% within that group. Think of how a local dealership running a campaign in its domestic market could have similar results also. For instance, brand awareness alone can result in sales through exposure.
Why use programmatic advertising?
Why? Because of the endless possibilities that come with automating your advertising. Think of the time spent when searching for ad space, negotiating, and monitoring progress. What could you do with your most precious resource, time, instead?
Consider your target audience. No longer do you have to “pay to spray” your ad to a general audience in random places across the internet. That method surely doesn’t work anymore. Instead, use the data gathered to understand your audience. Then target only them through multiple platforms.
Let’s go back to using roller skates again as an example. If the visitor to the roller skate website were to visit a social media channel, then they would be retargeted there as well. This target would be under the same campaign targeted at those in the market for roller skates.
You significantly reduce wasted advertisement money spent by going after the most likely to buy only. In real-time, you can adjust your bid for CPM depending on how highly valuable that impression is at the moment.
Imagine publishers wanting to run multiple ads from different sources. They would have to design, track, and monitor progress for each advertiser manually. On the other hand, advertisers would have the same issue dealing with multiple publishers. Automation has streamlined the entire process of buying and selling ad space.
Budgets change along with campaign goals. As your targeted ads continue to achieve the goals you set, your budget will more than likely grow as well. Increase in bids for CPMs allows for a higher viewability to your ads.
Ad viewability is a significant concern. To some advertisers, it’s why they are not fully on-board for autonomous bid placement. That’s why above the fold and below the fold ad spaces each has their marketplace. Above the fold (ATF) generates higher amounts of leads and conversion. In contrast, below the fold (BTF) creates more brand awareness.
These separate marketplaces add more flexibility to your campaign goals.
Real-time tracking has its benefits. Advertisers and publishers know on the spot whether or not an ad is working. You can see who is viewing, interacting, and the location of the interaction. Additionally, whether or not the impression is legitimate. No need to wait for reports that can take up to days to get back. Or weeks. Or worse, months.
Due to low cost, programmatic advertising is more accessible. For example, the average prices of programmatic CPMs range from $0.05 to $2. Compare that to the average of $10 CPM of a direct buy. You get more out of your advertising budget rather than before. In fact, for smaller brands with small budgets, this works best.
It’s apparent as to why this would be beneficial instead of human-driven trading. After all, you get up to 10x more out of your advertising budget with programmatic advertising.
How to use data effectively for programmatic ads
A data management platform (DMP) identifies all of your audience by gathering information using ad tags. DMPs use these tags to track customer interactions and frequency with apps, websites, ads, and emails.
DMPs are good at storing large amounts of data. And also segmenting data into different demographics that you can then target precisely. Information like:
- Browsing History
- Social Media Channels
All of this information is vital to optimizing your campaigns for maximum efficiency. The more you know about your audience, the better you can target them with ads. To convert them to customers, after all, is the goal.
DMPs and your CRM data are first-party data that combines with DSPs third-party data to create better bids and placements for your ads.
But you are additionally creating personalized ads targeted at an individual within a larger group. Look at how a billboard on the side of the road that shouts at every driver. Now imagine targeting every female driver between the ages of 25-35 that owns an SUV. Maybe likes Starbucks. Also, she lives in Dallas. And who occasionally updates their Facebook status. You get the picture.
Once you have your data, then you can move onto targeting your demographics using these common target tactics:
- Contextual targeting – This takes the context of a website and targets ads that relate. Roller skates for a roller-skating website.
- Keyword targeting – Gluten-free would be a specific keyword targeted on a website dedicated to food recipes. Someone looking for a gluten-free recipe would be the target.
- Data targeting – This form of targeting takes what it knows from cookies, browser history, to show an ad that may not align with the context of a website.
- Geo-targeting – This relatively new form of targeting is for location-based ads. An ad for a restaurant wouldn’t target in another state, but instead a person 5 miles away.
Future of advertising
In 2015, 32% of money spent on online ads, $59.8B, were through programmatic advertising. In 2021 that percent is estimated to be 51% and totaling $129B. The future is in automation and artificial intelligence.
More than ever, we are connected between our mobile devices, T.V.s, and computers. You are given you the unique opportunity to serve up personalized ads to individuals over multiple platforms. Through data collection, you can better understand your audience accordingly.
Not to mention what is working or not working on converting them. All this is done in real-time autonomously through programmatic advertising.
Not only are personal devices serving up ads, but out of home digital billboards in smart cities are utilizing this new form of advertising too. Static advertisements are becoming a thing of the past. Dynamic ads are the future.
Sporting events can advertise their sponsors and up to date scores. A local bookstore can promote an upcoming sale a block away from its location and expire when the deal is over.
Why you should embrace the future
Ultimately, possibilities are limited by advertisers imagination more so than their budget. Programmatic advertising is the future of dynamic and engaging ads that encourage potential customers to take action.
What could you do with real-time insights of your audience? How are you currently tracking them? Are you still relying on older, slower methods when tracking your audience’s behavior to your ads?
The future is here. It is in programmatic advertising that uses DMPs and an Ad Exchange. Take the guesswork out of where you think your ad fits best. Forget about guessing altogether. Artificial intelligence has solved those problems.
Now all that is left is creating the advertisement. Focus more on developing the perfect ad. And less on how you are going to get it in front of the right eyes.