Touted as the future of digital advertising, programmatic marketing is an ever-growing sector that attracts marketers globally. In 2014, Google spent 74% of its digital advertising budget on programmatic. According to eMarketer, programmatic advertising in the US is expected to reach $46 billion this year. eMarketer further predicts that by 2020, programmatic will account to 86.2% of all digital display ads.
The only barrier that hinders marketers from this new arena is their lack of knowledge of the process and uncertainty about leaving traditional marketing techniques and purchasing of ads. But there’s no denying the fact that programmatic is the future.
Programmatic vs. traditional ads buying
As experts from programmatic advertising agency War Room explain, programmatic is all about removing third-party providers in the digital media buying process. In traditional ads buying process, marketers and advertisers would need to work with ad networks or publishers when purchasing ad inventory. Here they discuss and negotiate the details of the ads such as the pricing, sizes, placement, etc.
In programmatic, ads buying process is made automatic through the use of data and technology. There is no interaction with middle-men so there’s also no need for unnecessary negotiations on positioning and pricing. This results in a faster, more efficient, relevant and highly targeted digital marketing.
Two types of programmatic advertising
Programmatic marketing strategies can be carried on two types of programmatic deals: Real-Time Bidding (RTB) and Programmatic Direct. Basically, these two categories of programmatic differ in the method by which ad placements are sold or made available.
Real-Time Bidding (RTB)
RTB is also referred to as open auction because available ad space is sold in an open auction. Advertisers can choose from a pool of impressions and buy them through auction-type bidding. Impressions are sold as soon as they become available and the pool is automatically updated. Advertisers can adjust their bids depending on the constantly changing market condition. The only downside with RTB is that the availability of inventory is not guaranteed.
Unlike in RTB where programmatic ads are sold in auction-type bidding, in Programmatic Direct, publishers reserve their inventory and sell it at a fixed price. In Programmatic Direct, the inventory is sold directly to buyers skipping ad networks and traditional ads sales techniques. A third-party company or a private marketplace with control over the pricing, data overlays, and terms guarantees impressions and ad space. In this method, buyers directly transact with the seller. This method of programmatic advertising is becoming more and more common lately.
There are two ways by which advertisers can purchase ads through programmatic direct:
Agencies or advertisers deal directly with publishers. They negotiate the terms of the deal such as the targeting, placement, volume, and pricing. Publishers provide a deal ID for the transaction which advertisers can buy directly. Preferred programmatic deals help in decision-making through the use of available data. It helps advertisers decide whether to bid (and buy) an ad impression at a negotiated price.
Private Marketplaces enable advertisers to have exclusive access to a publisher’s pool of impressions. Demand-side advertising platforms (DSPs) usually have their own Private Marketplace where selected advertisers can access available inventory. Only invited customers can bid in the private auctions. Compared to open auction, Private Marketplaces offer premium inventory to invited customers before the inventory is rolled out to the public.
Why consider programmatic marketing strategies?
Programmatic has the potential of revolutionizing the digital marketing industry from both the marketer- and publisher-side. Basically, it veers away from traditional digital marketing methods by validating and delivering based on available data. Programmatic also ensures accountable media delivery that is based on numbers, particularly ROI. For publishers, it provides an efficient method of monetizing their inventory.
Programmatic does have some challenges too, such as the need for premium inventory that is not available in standard programmatic categories. Hence, some advertisers are still required to fulfill these exclusive and unique campaign needs.
But despite some drawbacks, programmatic is seeing an increase in spending over the past several years. This is mainly because of the predictive ROI and yield that proves beneficial to publishers and marketers.
To sum it up, programmatic marketing strategies align media with real-time data to ensure ROI. Programmatic lets you spend only on ads that will have the most impact on your digital marketing campaign.
Given the advantages of programmatic advertising, it’s not entirely surprising why many advertisers and marketers are now shifting to it and it is expected to continuously expand in the coming years. If you haven’t begun using programmatic, it’s high time you seriously consider this new arena.