4 Things to Know About Programmatic Advertising

Programmatic advertising may be the Holy Grail advertisers have been seeking for decades. It allows you to put your ads in front of only your target customers without paying for people who aren't potential buyers.In the digital world, media buyers no longer have to compare a wide variety of websites hoping to reach the optimal mix of target customers and waste circulation. Instead of buying media where customers might congregate, digital advertisers can now "buy" those customers directly, regardless of what website they're visiting.

Understanding the basics of programmatic advertising will help you decide how and when to use this now-mainstream form of messaging.

Programmatic Advertising Identifies Website Visitors Before Serving an Ad

Thanks to cookies and other data-tracking tools, websites, ad networks, and advertisers can track visitors and identify them by age, sex, income level, and other demographics. This allows ad brokers to place a marketer's ad in front of a target customer (by predetermined demographics set by the advertiser), regardless of what website the customer is visiting. While ad networks can't perfectly identify every visitor to a website, they can accurately guesstimate who is visiting a website (e.g. age, sex, income level) using artificial intelligence algorithms.

Using a demand-side platform, an advertiser can place its ads on a variety of websites — but only when a demographically desirable target customer is visiting that website. Publishers place their available ad inventory on exchanges, making it available for advertisers to buy impressions through the ad networks. The advertiser and websites only "meet" at the moment the ad is placed through the middleman (the ad network), which looks at data from both parties and decides where it's best to place the advertiser's ads. Demand-side platforms rely on demand-management platforms, which collect, store, and analyze data used to make the instantaneous decisions about where to place which ads, and when.

Two Options for Media Buying

Advertisers can opt for real-time bidding (RTB) or programmatic direct ads, based on their budgets and desire for certainty of ad placement. With RTB ads, a visitor comes to a website and advertisers instantly bid on who gets to serve their ad to that visitor, with the highest bidder winning. This identification, the bidding process, and the ad display all take place in a matter of milliseconds. Advertisers don't know what website their ad is running on, only that it's being seen by a desired target customer. Advertisers who want a fixed advertising rate for a specific number of impressions opt for programmatic direct ads, negotiating directly with a website owner to serve ads in front of a specific target visitor.

More Data Create Better Campaigns

One of the main benefits of programmatic advertising is it delivers real-time data from multiple parties involved in the process, allowing advertisers to modify their campaigns based on what the data tell them. Advertisers don't only rely on the data they get from their company websites. Ad networks, website owners, and others involved in the process contribute to the data pool, giving advertisers information that can lead to modifying ad buys, changing the ads being served, specifying the times of day ads are displayed, or targeting different devices.

Programmatic Provides More Flexibility

Using the data and technology provided by programmatic advertising, marketers have a greater ability to customize their ad campaigns. This can be done before a campaign starts by optimizing the automation of ad serving, or by allowing advertisers to modify campaigns mid-stream based on the data, views, clicks, or conversions the campaigns are generating.