The term programmatic has become synonymous with digital advertising, but despite its popularity, there’s often still confusion about the true meaning of the term, whether its remit has changed in recent years and how it works in the context of display and video advertising today. We’re here to set the record straight and give every marketer the confidence to tackle programmatic in 2018 by answering the question; what exactly is programmatic advertising?
It’s not a strategy, it’s a methodology
You’ll often catch people referring to programmatic as a strategy, or even a channel. When in fact, it’s neither of these. Programmatic is a methodology; it refers to a way in which to run advertising in order to improve precision, relevance and optimisation, rather than a place, format or an approach to running it.
Put simply, programmatic refers to the use of machines and algorithms to buy advertising space automatically, often in real-time. Programmatic advertising is the automation of an advertising process that was traditionally dependent on phone calls, faxes and meetings. It allows marketers to reach new and existing audiences with content that enriches the customer journey, rather than hinders it.
This is a far cry from traditional media planning where advertising campaigns were created by defining an audience, choosing specific media to fit that audience, booking a defined amount of advertising and then executing the campaign. Before programmatic, buying advertising was dependant on a large amount of manpower to determine which media to buy, how much to pay for it and how long to run it for.
The advertising ecosystem
So how does it actually work? This is where things can get a bit confusing and you might start to notice an array of acronyms and terminology that, if you’re no advertising guru, don’t make the job of understanding programmatic any easier.
The following diagram is a visual representation of the advertising ecosystem from brand to customer, with every step in between (don’t worry, we explain exactly what it means alongside it).
- The Brand (those wanting to advertise) will work with a Media Agency or Display Partner to plan and manage advertising campaigns. This can include deciding on the channel and developing campaign creatives (although some brands may utilise separate creative agencies for the latter).
- The Trading Desk is a team of specialists, often part of the agency, who buy advertising and optimise campaigns.
- They will use a DSP (Demand-Side Platform) to access inventory across Ad Exchanges (an open marketplace that facilitates the buying and selling of ads) and Ad Networks (companies that represent multiple websites and have relationships with Advertisers and Publishers to sell media on websites).
- These networks are also connected to a SSP (Supply-Side Platform) which is where Publishers (those who sell advertising space) sell their ad space to brands.
- The DSP and SSP talk to each other in real time to match relevant Brands and Publishers.
The result? Brands have their adverts published on relevant publisher websites, at an accepted price and targeting the right customer. The programmatic element of advertising allows all of this to be done automatically, with algorithms taking the instructions of trading desks to place the most relevant bids and select the most appropriate inventory. It also allows the process to be continually optimised based on the live advertising environment, rather than changes being made in hindsight.
Advertising as a whole has a vast range of benefits, namely helping brands to reach new and target audiences with their products, content and campaigns. But what specific benefits does programmatic add to the advertising mix?
- Efficiency – Automation and algorithms greatly reduce the amount of human resource needed to build and executive campaigns, giving digital marketers more time to focus on the all-important strategy and performance.
- Precision audience targeting – Customer data insights can be segmented at scale to create more effective and better performing target audience groups.
- Real-time bidding – Inventory can be accessed in the moment across billions of impressions and thousands of publishers, an impossible task without programmatic. This makes it easier for brands to get their adverts placed on quality publisher sites.
- Flexibility – Audiences can be changed, budgets shifted, and results optimised at ease, ensuring maximum value from digital advertising campaigns. Machines and algorithms take a lot of the guess work out of advertising, so that brands can quickly and confidently change direction to improve success.
With these benefits combined, one thing we’re sure of is that programmatic has created a powerful way of delivering advertising messages to potential customers.
When developing a programmatic strategy, you need to decide on a method, with the choice coming down to who your audience is and what you are hoping to achieve by advertising to them. Programmatic advertising isn’t limited to any one goal or objective and can achieve a whole host of different results. In fact, despite being commonly thought of in relation to the beginning of the conversion funnel, advertising can actually be used across the entire customer journey.
- Prospecting – Prospecting campaigns are a way for brands to increase awareness with an audience who has not visited their website before, done by presenting eye-catching creatives and engaging messaging. These campaigns will target relevant potential customers, which is achieved by creating audience segments based on an analysis of onsite customer behaviour. They can focus on both increasing reach and performance. Prospecting campaigns will usually measure the performance metrics of clicks (CTR), conversions (CPA) and return on investment (ROI) and undergo extensive optimisation throughout the process to ensure the audience being targeted is one that is most likely to engage, click and convert. As with all campaigns, it’s really important to ensure the branding of your adverts matches your website landing page. When a customer clicks on an advert, they should (and expect to) see consistency.
- Retargeting – A method focused on targeting customers who have already visited your website, but who didn’t make a purchase. The objective of retargeting campaigns is to turn browsers into buyers and is achieved by delivering more tailored, relevant and engaging adverts. Retargeting campaigns utilise your brand’s first party data to create retargeting segments based on specific onsite behaviour (for example, time spent on certain pages). An example of effective retargeting would be: User visits a fashion retailer and spends time looking at red shoes, staying a certain amount of time on a product page but exiting without purchasing. Later when browsing the internet, this user will be shown an advert promoting the brand, or specifically the shoes, they had been looking at earlier. The whole process is aimed at converting more sales from interested customers.
We’re rounding up our introduction to programmatic advertising with an overview of different channels associated with the methodology. A channel, in the context of advertising, is defined as the medium through which brands share their promotional messaging. In recent years, the number and quality of channels available has greatly increased, particularly thanks to the emergence of new and enhanced technologies. Let’s take a look at the most common digital advertising channels used by brands today and how and when you should use each.
- Display – Display ads, also known as banner ads, are arguably the most well-known of all the advertising channels and appear in a range of sizes and placements across different publisher sites. The purpose of display ads is to display general or targeted messaging (dependant on the chosen method and strategy) to visitors of a website. They are designed to be clicked and should lead through to a landing page relevant to the creative and messaging being promoted.
- Video – Video is an increasingly popular advertising format, particularly used for awareness campaigns and to reach new audiences. Although not a new medium, it’s an area where brands are finding increasingly more innovative ways of using it. Video advertising can take varying forms: In-stream ads are video ads with various starting points that disrupt video content (an example would be the adverts you see before watching YouTube videos). They tend to be 30 seconds in length, can be skippable or non-skippable and take place pre-roll (before content starts), mid-roll (interrupting the content) or post-roll (once content has finished). Out-stream ads refers to video ads embedded within content on a website and can be either in-read (an ad which expands while reading an article) or in-display (a video ad in a display banner slot). More recent developments in video advertising have paved the way for dynamic interactive video, which allows brands to connect their video with a responsive website, helping viewers to take immediate action in relation to the video content they are watching.
- Native – Native advertising is paid media that matches the visual design of the website it appears on. The result is that the advertised content looks and feels like the rest of the site, therefore seeming less like an advert and encouraging more customers to interact with it.
- Social – Social media is an ever-growing channel, both in organic and paid media. Social advertising refers to any content on a social media network that is paid for. Ads can be standalone in the form of promoted posts or part of wider paid campaigns. The format, specifications and criteria for social adverts will depend on the social network being used, for example Twitter, Facebook or LinkedIn.
Advertising campaigns don’t need to be limited to one channel and can be cleverly crafted to combine different formats to gain maximum reach, impressions and performance across the entire journey, from awareness to purchase.
So, there we have it - an introduction to programmatic advertising in less than 2000 words. We’ll admit - the programmatic advertising environment is vast, complex and ever changing. However, by understanding the basics, you have the foundations to start your brand’s digital advertising journey and the knowledge you need to engage with advertising experts that will help you achieve your goals.
Ve's Programmatic Digital Advertising solution uses extensive data into audience groups and expert media trading insights to help brands reach new and existing audiences with creatives and content that enrich the online customer journey. Find out more about how we can help you to deliver advertising that works.