Programmatic advertising has an undeniably huge number of terms and acronyms associated with it. From RTB to DMP, it can make you feel like you will never get your head around it.
But don’t give up. This blog is here to help you get to grips with programmatic advertising, providing you with all the answers that you need to take advantage of its potential. So let’s dive straight in.
What does Programmatic Advertising mean?
Programmatic advertising refers to the use of automated technology to facilitate digital ad purchasing. By using technology rather than humans, ad impressions can be bought and sold instantaneously in a bidding system that works within the time it takes for a page to load. This is known as real-time bidding (RTB).
Ultimately, the goal of programmatic advertising is to ensure the right ad is presented at the right time to the right person; using technology rather than humans to improve efficiency and reduce costs.
Let’s put this into a real-life example. Typically, when a user visits a site, this triggers a bid request from the publisher (the owner of the site) to an ad exchange. An ad exchange is an online marketplace that acts as an intermediary between the publisher and the advertiser to facilitate the purchasing of ad space.
This bid request will contain data about the user such as their demographics. If this data suggests the user is an advertiser’s target audience who may be interested in their ad, they automatically submit bids to win this impression – this is real-time bidding. The highest bidder wins and the personalised ad is served to the user.
What makes programmatic so effective?
1. Highly personalised ads
Programmatic advertising uses a data management platform (DMP) which collects, stores and sorts data about site visitors. This data can then be matched up with the user characteristics the advertiser has chosen to serve ads to, so allowing them to serve targeted, personalised ads to every user.
For example, a DMP could collect information from a user that reveals they are male, aged 55-65 and live in York. An advertiser who wants to serve ads to users that fit these characteristics would then be able to send an automatic bid request to purchase this ad impression.
Because you can be more confident that the ads you are serving are going to the right people at the right time, you are minimising wasted advertising budget by serving ads to users who are not interested in your offerings.
3. Requires less resources
Because programmatic is automated, it requires far less manpower than traditional, manual ad buying. Once you have set up your algorithms, deciding who your target audience is and how much you want to bid, you can sit back and relax as the automation of programmatic advertising purchases the best available ad space for you.
So is programmatic the future of advertising?
If you are interested in serving digital ads, programmatic is the way forward. And don’t just take our word for it.In the UK alone, £1.8bn was spent on programmatic digital display ads in 2015. This is expected to soar by 37% to £2.46bn within just a year.
And programmatic ads are not only huge on desktop and laptop. In the US, 2015 saw mobile programmatic ad spend rise higher than desktop/laptop’s $6.10bn (£4.33bn), soaring to $9.33bn (£6.62bn).
Programmatic Keywords: All the words you need to know
We have put together some of the most commonly used, and commonly confusing, programmatic terminology to help you get to grips with programmatic advertising.
An ad network acts as an intermediary between sites that have ad space (the publisher) and the advertisers/buyers who wish to place their ads on this space. It collects the ad space supply from the publisher and matches it with the bids of the advertiser.
Attribution is the process of identifying what user actions have contributed and led to the conversion. A value is then given to each of the actions to determine how important they were in generating the conversion. This is important for advertising as it informs you how successful your ads are.
A cookie is a tiny piece of data that is saved by a web browser. In the context of programmatic, it stores data about the user so advertisers can find out about them and know if they are the right audience to target with their ads.
Display advertising is a type of online advertising that contrasts with solely text-based ads by being primarily composed of images, audio and video.
A data-management platform is a piece of software that collects data about the user and then sorts it in order to segment the user into an audience type. This can include their demographic information, browsing history, location and much more. Advertisers can then use this segmented data to inform their purchasing decisions.
A demand-side platform is a piece of software used by advertisers and agencies to purchase advertising in an automated fashion.
Prospecting and Retargeting
Prospecting involves targeting new, prospective customers that have not visited your site, but have similar characteristics to your existing website users.
In contrast, retargeting involves targeting customers who have already visited your site, but not yet converted. They have shown interest in your site’s offering and so a display ad may encourage them to complete their purchase.
Real-time bidding, known as RTB, refers to the instantaneous selling and buying of online ad impressions. It takes place within a real-time auction, within which advertisers bid and the highest bidder wins, having their ad served on the page. It takes places with milliseconds as the page loads.
Through a unique combination of intent and conversion data, Ve can deliver relevant advertising to the people who matter most to your business. Find out more about our programmatic advertising solutions.