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Tag: programmatic advertising

What is Programmatic Advertising (And How Does it Work?)

An innovative approach that has revolutionized the way businesses connect with their target audience is programmatic advertising, a technology-driven, data-centric approach to procuring and positioning digital advertisements. In contrast to conventional ad-buying methods that include human negotiations and manual insertion orders, programmatic advertising utilizes algorithms and technology to simplify the entire process.

How Does Programmatic Advertising Work?

Let us have a look at how programmatic advertising works.

Data Collection and Analysis

Data collection and analysis involve the systematic gathering and examination of information about the target audience to inform and optimize advertising strategies. Marketers start by creating detailed profiles of their target audience. This includes demographic information such as age, gender, location and income level.

Understanding how users interact with digital platforms is essential. Marketers collect data on online behaviors, including browsing history, search patterns and the types of content users engage with.

Learning about the preferences and interests of the target audience helps in tailoring advertisements to be more relevant and appealing. This data can include information about the products or services users are interested in. Knowing which devices (desktop, mobile, tablet) and platforms (websites, social media, apps) the audience prefers provides insights into where and how to deliver ads effectively.

Marketers use various sources for data collection, including first-party data (collected directly from their own interactions with users), second-party data (shared directly with partners) and third-party data (purchased from external sources).

READ: Battling the “Data Wheel of Death” in Business Development

Ad Inventory Auction

This is a critical component of programmatic advertising that involves the sale of advertising space in real-time through auctions. In the programmatic ecosystem, publishers make their available ad space, known as ad inventory, accessible for advertisers to bid on.

Publishers, which could be website owners, app developers or other digital platforms, designate spaces on their platforms for displaying ads. This can include banner spaces, video slots or other formats.

Publishers provide details about the available ad space, including the type of content it will be displayed alongside, the target audience and the format of the ad (e.g., display, video, native).

Ad inventory is made available in real-time, often through ad exchanges or supply-side platforms (SSPs). These platforms facilitate the connection between publishers and advertisers. Ad exchanges or SSPs play a crucial role in the ad inventory auction. They act as intermediaries, managing the auction process and ensuring that the transaction occurs seamlessly. Advertisers, through demand-side platforms (DSPs), review the available ad inventory based on their campaign objectives and target audience criteria. They then place bids on the ad spaces they wish to secure.

The bidding process occurs in real-time. Advertisers set a maximum bid for each impression, and the highest bidder wins the right to have their ad displayed in the designated ad space. The auction process often involves dynamic pricing. The winning bid may not necessarily be the full amount the bidder was willing to pay. Instead, it could be a slightly higher amount than the second-highest bid.

Once the auction is concluded, the winning ad is immediately placed in the reserved ad space on the user’s screen. This entire process happens in a fraction of a second as the webpage or app loads.

READ: From Clicks to Conversions — How to Craft an Effective Online Advertising Strategy

Optimization

Programmatic advertising platforms constantly monitor the performance of ad campaigns in real-time. Metrics such as click-through rates (CTR), conversion rates and engagement levels are tracked to gauge the effectiveness of each ad.

The data collected during the campaign, including user interactions and responses, is analyzed to identify patterns and trends. This analysis helps advertisers understand what is working well and what may need improvement. Based on the insights gained from the data analysis, programmatic platforms make dynamic adjustments to various campaign parameters. This can include changing bid amounts, refining audience targeting, adjusting ad creatives or modifying the timing and placement of ads.

Programmatic advertising often leverages machine-learning algorithms to automate the optimization process. These algorithms can quickly analyze vast amounts of data and make predictions about which adjustments are likely to yield the best results.

READ: 5 Metrics for Measuring the Success of Emotional Marketing

Cross-Channel Integration

Programmatic advertising is not confined to a single digital channel. It can span a range of channels, including display advertising, video, mobile apps, social media platforms, and even traditional channels such as television and radio. Advertisers can manage and coordinate their campaigns across different channels through a unified platform. This centralized approach streamlines the planning, execution, and monitoring of cross-channel campaigns.

Cross-channel integration ensures that the messaging and creative elements of the campaign remain consistent across various platforms. This consistency helps reinforce the brand message and identity, contributing to a cohesive and memorable customer experience. Advertisers can leverage audience insights and targeting capabilities consistently across multiple channels. This ensures that the right message is delivered to the right audience, regardless of the platform they are using.

Programmatic advertising platforms can adapt to user behavior across different channels. For example, if a user interacts with an ad on a website, programmatic systems can adjust the targeting parameters to deliver more relevant ads on social media or mobile apps. Advertisers can implement sequential messaging strategies, where a series of ads are delivered in a specific order across different channels. This storytelling approach helps guide users through a narrative or marketing funnel.

READ: Cracking the Code of Business Marketing — 10 Strategies for Success

The bottom line

In the dynamic landscape of digital marketing, programmatic advertising emerges as a transformative force. Its automated and data-driven methodology not only boosts operational efficiency but also equips advertisers with the ability to make timely and informed decisions.

As businesses increasingly immerse themselves in the digital domain, the comprehension and utilization of programmatic advertising’s capabilities are unquestionably crucial for attaining success in marketing endeavors.

 

Andy Beohar is the Managing Partner at SevenAtoms, a leading B2B demand generation agency. SevenAtoms is dedicated to driving growth for SaaS and B2B businesses through innovative and optimized paid search and is recognized by Google as a Google Premier Ads partner. At SevenAtoms, Andy plays a strategic role in managing paid search campaigns. Let’s connect on LinkedIn and Twitter!

The growth of programmatic TV advertising

Five years ago, the nation’s first programmatic CTV/OTT (connected TV/ over-the-top) campaign kicked off the advertising industry’s wildest ride since the times of “Mad Men.” We’re still calling it the Wild West, but there’s a new, post-pandemic reality: the ad-tech revolution of real-time, omni-channel micro-targeting has firmly established programmatic as the dominant advertising paradigm.

Instead of Madison Avenue and bloated, incumbent networks calling the shots, it’s now the invisible hand of the market forcing sellers to do right by buyers. Consumer demand for relevance and a better experience has compressed advertising best practices into today’s high-tech and better-behaved moral new normal.

Relevance

Consumers intuitively know how they do not want to be treated: No more hitting them over the head with abusive over-exposure, and no more spraying irrelevant garbage to the masses and praying that a few will buy the dog food. That worked for the networks, brands and agencies for many years, not so much for the viewers.

Data-driven advertising, micro-targeted to households and individuals with messages tailored to their tastes and habits – across thousands of channels and devices – is what consumers want. With no sports, a distaste for news and less mind-numbing ad repetition to mollify them, they now expect nothing less than meaningful, respectful relationships with their programming and brand engagement.

Thanks to digital streaming, network TV can no longer count on viewers being where they want them and when. Unless it’s the Super Bowl, it’s wrong to expect viewers to plan their lives around the networks’ schedules. Advertisers will have to find consumers, instead of the other way around, and with programmatic micro-targeting, they can. Advertisers can earn and keep those relationships by delivering a positive customer experience.

Following people around and monitoring their online behaviors seemed a bit creepy at first. But consumers have gotten used to their digital exhaust being tracked and monetized, and have tacitly agreed to trade some measure of privacy for relevance and free content. With this acceptance, a moral covenant has evolved between buyer and seller: use that personal data to serve ads that matter, but protect and treat that data with discretion and respect. New privacy laws are seeing to this, but programmatic CTV/OTT  ads in particular are evolving toward more quality consumer experience and intimacy, which in turn builds brand trust. The earning of that trust benefits advertisers, thus the responsibility for keeping that trust lies with them.

Programmatic is based on audience targeting, not content targeting toward popular programs. The decisions behind automated, real-time bidding for inventory rely on layers of real data on individual buyer behavior instead of the demographic assumptions of what group types might watch a certain show. Programmatic is not only relevant, but immediate, serving ads of interest to likely buyers.

Reverence for people’s time and money is paramount. With relevant ads being served with moderate frequency across the long tail of omnichannel programming, why would people want to pay for multiple subscriptions to avoid the ads? It seems morally wrong to force people to pay for a single channel with so many choices out there. Take a clue from the cable companies who rank down there with congress and cockroaches in consumer favorability studies. It’s too late for them to start building trust now, and the next subscription-based content platform may be too late to the game as well.

Respect

Viewers are finding their sweet spots, the math connecting them to meaningful marketing is winning out, and the smart advertisers are coming out heroes by achieving cost efficiencies, and respecting and protecting the customer experience.

Those big upfront ad-buy contracts that the mega brands just clawed back during the pandemic were the lifeblood of Madison Avenue and the entrenched network industrial complex. But ad-tech is for everyone. Not only has programmatic CTV/OTT changed the relationship between buyer and seller over the last five years, it has democratized the ability for even the smallest advertisers to access new technology.

What programmatic really did over the last five years was to empower consumers. They led the change, the technology enabled it. Brands, agencies and content platforms are quickly adopting new technologies, and creating new moral imperatives to everyone’s benefit.