Programmatic Advertising, Demystified (Finally!)

Running ads online can sometimes be baffling. Between search, display, social, and programmatic ads, businesses frequently settle with the more common options, often dismissing the more complex options for the sake of convenience. Programmatic ads are commonly sent to that bucket -- the "we'll get to it eventually" one that almost never feels like it would happen soon.

Truth be told, though, there are massive benefits to running programmatic ads -- and if you're tired of the confusion surrounding them, we're here to help out. Here's what you need to know about programmatic advertising (and what it takes to run it successfully.)

What is programmatic advertising?

Programmatic advertising is a method that automates the buying and selling of online ad spaces through software, allowing for more efficient and streamlined transactions. Unlike traditional methods, programmatic advertising relies on artificial intelligence and real-time bidding to determine where ads should be placed, targeting specific audiences based on data.

This technology-driven approach improves the precision of ad targeting and optimizes ad spends, ensuring brands achieve better engagement and reach more relevant audiences.

Programmatic advertising vs. media buying

While both programmatic advertising and traditional media buying aim to purchase ad space, the methods they employ to do so differ significantly. Traditional media buying often involves manual negotiations and ongoing communication with advertisers and publishers.

In contrast, programmatic advertising automates these processes, allowing for more dynamic and efficient execution of ad buys. This type of efficiency gives programmatic advertising the edge in reaching targeted audiences quickly and with greater accuracy.

Programmatic advertising vs display advertising

Although programmatic and display advertising both involve placing ads on digital platforms, their processes are distinct. Display advertising typically involves static placement of ads across specified digital locations, without dynamic adjustments or real-time data application.

Programmatic advertising, on the other hand, uses sophisticated algorithms and real-time data analysis to ensure ads are more relevant and personalized to users. As a result, programmatic advertising can enhance engagement and increase ad effectiveness substantially.

Types of programmatic advertising

There are multiple types of programmatic advertising, and if you are considering running ads this way, you should be aware of them. Essentially, it all boils down to:

Open marketplaces

Open marketplaces are vast platforms where advertisers can bid on a broad range of ad spaces from various publishers. This type of programmatic advertising offers advertisers the opportunity to reach large audiences but often lacks exclusivity and can be prone to competition.

Despite this, open marketplaces remain popular due to their widespread accessibility and ability to deliver high volumes of ad impressions.

Private marketplaces

Private marketplaces, in contrast, cater to advertisers seeking more controlled and exclusive access to premium ad inventories. These marketplaces involve a select group of advertisers invited to participate in the bidding process, ensuring a more curated advertising environment.

This removes some of the uncertainties associated with open marketplaces and usually provides higher-quality inventory and brand safety measures.

Preferred deals

Preferred deals allow advertisers to negotiate fixed price deals directly with publishers, ensuring access to the desired inventory before it reaches open or private marketplaces. This form of programmatic advertising secures the placement of ads ahead of the competition, providing more certainty about ad placement. By pre-selecting inventory, advertisers can focus on quality and audience targeting with greater precision and less risk.

Programmatic guaranteed

Programmatic guaranteed offers the best of both worlds, combining fixed price buying with programmatic efficiency. In this setup, advertisers and publishers agree on terms beforehand, ensuring that specific ad inventory will be purchased and delivered at an agreed-upon rate. This guarantees inventory availability while still utilizing programmatic technology to execute transactions seamlessly and effectively.

Demand-side platforms, supply-side platforms, and data management platforms

Demand-side platforms (DSPs) are crucial in programmatic advertising, enabling advertisers to manage multiple ad exchanges and data exchanges through one interface. They offer real-time bidding capabilities, allowing advertisers to buy digital ad inventory efficiently.

On the other hand, supply-side platforms (SSPs) enable publishers to list their ad space for sale in an automated way, optimizing their inventory for maximum earning potential. Data management platforms (DMPs) collect and analyze consumer data to aid DSPs and SSPs in making data-driven advertising decisions, enhancing targeting capabilities across digital campaigns.

Ad networks, ad exchanges, and ad servers

Ad networks, ad exchanges, and ad servers play integral roles in the programmatic ecosystem. Ad networks aggregate ad space across multiple websites, enabling advertisers to purchase bulk inventories that reach various audiences.

Ad exchanges, meanwhile, offer a marketplace for buying and selling advertising space, enabling real-time bidding and transactions. Ad servers facilitate the actual placement and delivery of ads on web pages, ensuring that ads reach audiences as efficiently and effectively as possible.

Real-time bidding vs header bidding

Real-time bidding (RTB) is a core element of programmatic advertising, allowing advertisers to bid on ad impressions in milliseconds. This real-time process optimizes ad placement based on current audience data and preferences.

Header bidding, a more recent technique, allows multiple advertisers to bid on a publisher's ad inventory simultaneously before reaching the ad server. This pre-auction process enhances fair competition and can result in higher returns for publishers by ensuring the best possible price for each impression.

The main advantages of programmatic ads

Programmatic ads offer several notable advantages, including enhanced targeting and reach. By leveraging data-driven insights, programmatic advertising ensures that ads are seen by the most relevant audiences, improving engagement and conversion rates.

The automation of buying and selling ad spaces increases efficiency, reducing time and resources spent on traditional ad buying processes. Moreover, programmatic ads allow for real-time optimizations, enabling advertisers to adjust and improve campaigns instantly based on performance metrics.

Programmatic ads challenges you should know

Despite their advantages, programmatic ads come with challenges that require careful consideration. Brand safety remains a persistent concern, as programmatic advertising can sometimes result in ads appearing alongside inappropriate or harmful content.

The complexity and fast pace of programmatic markets can demand high levels of expertise to navigate effectively. There's a need for ongoing transparency in reporting and analysis to ensure campaigns meet their intended goals and deliver desired outcomes.

Is programmatic advertising expensive?

The cost of programmatic advertising can vary significantly depending on the scale and intricacy of the campaigns. While efficiencies can substantially cut costs compared to traditional ad buying, the advanced technologies and platforms involved may lead to initial high setup fees.

Nevertheless, when optimized effectively, programmatic advertising offers a compelling return on investment by aligning budget spending directly with campaign goals and performance outcomes.

How to run and measure programmatic ads

Running successful programmatic ads requires a combination of strategic planning, precise targeting, and continuous optimization. Advertisers should begin by identifying clear campaign objectives and utilizing data to select appropriate audience segments.

Once ads are running, frequent performance assessments and adjustments based on key performance indicators (KPIs) are essential to maintain and improve results. By analyzing data on impressions, clicks, and conversions, advertisers can refine their strategies to maximize engagement and achieve their desired outcomes.

So, when are programmatic ads successful?

Programmatic ads succeed when they achieve balanced performance across targeting, engagement, and cost-efficiency metrics. Good creatives are also key in driving engagement and conversions, as is the ability to optimize campaigns rapidly based on real-time data insights.

Successful programmatic ads also rely on effective communication between all parties involved – advertisers, publishers, DSPs, SSPs, and DMPs – ensuring transparency and alignment of objectives for maximum campaign success.

All this can sound very intimidating and complex, but with a thorough understanding of programmatic advertising and a solid strategy in place, businesses can take advantage of the many benefits this advanced technology has to offer.

And if you need a programmatic advertising agency, make sure to contact Mayple. We'll match you with the best advertising experts for your needs, industry, and business size, so you can get down to work in just a couple of days.