Is there a time in the history of marketing where more buzzwords have been thrown around? Perhaps some of the most pervasive are the terms used in digital ad buying…especially “programmatic.” But what the heck IS programmatic advertising?
Don’t worry, it just means “automatic”
In marketing terms “programmatic” refers to using software to purchase digital advertising. At its core, “programmatic” means “automatic.” So, programmatic advertising is the automated process of buying and selling advertising online.
OK, so we know what it means…but why does it matter? Programmatic advertising is at the heart of Facebook, Google, Amazon, and virtually every digital advertising platform. Gone are the days of the traditional media buying process that involves RFPs, human negotiation, and manual insertion orders.
Programmatic advertising is the media buying process where ads are purchased through auction-based systems or publishers directly, and served across devices to a specific audience. Essentially, programmatic advertising uses software and automated processes to both purchase and run digital advertising campaigns in real time.
Programmatic advertising is similar conceptually to the real-world scenario of purchasing coffee.
When at Starbucks, you wait in line, step to the counter, then proceed to give your order to the barista. “Small, double mocha latte, twice whipped, extra soy milk.” Then, you pay. After providing the barista with your order and completing the transaction, a human behind the counter “springs into action” and begins making your coffee.
That person physically gathers the components of your order to create it by hand. This takes time, effort, and cost. This process is very similar to that of placing a traditional media buy with an ad agency, or directly with a publisher.
- Establishing a relationship with a reputable website or publisher = waiting in line for the barista.
- Specifying the size of the media buy = the size of your coffee.
- The audience you want to target = your coffee’s base.
- The time frame you want the media to run = extra ingredients.
- Paying for the drink = paying for the ad insertion.
After ten minutes of manual creation, the barista has finally completed your order. They call out, “decaf mocha latte, twice whipped, extra low fat milk!” which was not what you ordered.
During the manual ordering process, something didn’t translate. Now, the coffee has been wasted and must be remade.
There are several potentially problematic aspects of this process:
- It’s relationship-based.
- It’s a manual process with tedious creation.
- It’s often expensive and can be wasteful.
Think about a scenario where the above process was automated. Instead of tedious with potential for wasteful mistakes, it is extremely simplistic.
- You walk up to a machine.
- Tap the screen for your selection.
- “Small, double mocha latte, twice whipped, extra soy milk.”
- Pay a reasonable amount directly into the machine – no human interaction needed.
Then, within seconds, a perfectly-made coffee is ready and available for you to consume with:
- No prior relationship needed.
- A completely automated transaction.
- Blazing fast creation.
- Fair cost.
- Zero potential for waste.
Unless you yourself manage to select the wrong ordering options. Now, imagine utilizing this type of automated machine not to buy coffee, but ads. Welcome to the world of programmatic.
The old days of digital advertising buys resembled the Starbucks example. The process to purchase media was tedious, relationship-based, and didn’t allow the advertiser to access their target audiences in the scalable manner that’s available today.
Programmatic ad-buying allows advertisers to move away from mass media buys and towards a system that more precisely targets relevant audiences. It provides stronger results by showing the right ad to the right user at the right time with the right message. Programmatic ad buying not only helps to deliver stronger ROI, it also helps find receptive audiences that will pay attention and respond to the ads.
Bang For Your Buck
As attention and budgets have gone increasingly mobile, it has become more complex to measure where a media buy will have the largest impact.
A core benefit of programmatic automation has to do with the fact that gathering and analyzing data is done much more efficiently, making it possible to draw on the insights that benefit the effectiveness of your campaign.
However, programmatic takes things one step further.
You can easily track where an ad is shown and how much engagement it receives, then use that data to tweak your campaign and reinvest in the right areas. Essentially, it’s being able to determine what, if anything, needs to shift in order to get better results. Make the necessary changes and repeat.
Programmatic buying is largely about process reform. For some, efficiency and cost savings are the primary drivers for using programmatic buying. For others, it’s about finding receptive audiences.
In practice, all of these benefits go hand-in-hand to drive performance. Leveraging the precision of targeted advertising via programmatic makes it possible to lower your overall media cost by eliminating waste and, in turn, increasing your ROI.
As a small business, you have the ability to identify and segment a potential buyer or lead based on behavior tracked online. This allows the system to properly assign and identify the potential value of your target. You’re able to effectively target and price target users based on their actions.
Consider these examples:
- A user that hasn’t been to the brand’s site in 30 days should be bid on differently than a user who has visited the site within the past 24 hours.
- If a user has read reviews of the exact products you sell, that user can be targeted differently than someone who hasn’t read online reviews at all in your industry.
- A user who is connected to or shares the same behaviors as your best customers can be targeted differently than someone who has nothing in common with your customers.
In the end, the inputs for programmatic ad buys are defined by your goals, then combined with the data and audiences you must reach in order to realize them. From there, a programmatic buying platform can execute media buying processes by precisely targeting relevant audiences.
Programmatic advertising is all about utilizing technology to make a human’s job not only more efficient, but more intuitive.
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