Programmatic Basics: Your Questions, Answered

October 3, 2015 mogointeractive

Programmatic advertising is changing the way marketers target and reach key audiences, but it still only comprises a relatively small set of total digital marketing and advertising spend. By 2016, however, this number is expected to rise above the majority of all digital advertising spend (to 63%).
So, what should marketers know about programmatic before this figure skyrockets?  Here are some programmatic basics.

What’s Programmatic Advertising?

First, you should know what programmatic advertising actually is, but the definition can be a little tricky to explain. Programmatic is “an array of technologies that automate the buying, placement, and optimization of media inventory, in turn replacing human-based methods.” However, this isn’t necessarily true. While the technologies available to execute programmatic advertising methods are generally robust, programmatic advertising definitely involves human beings! A good way to think of programmatic is to think of it as being only a partially automated process, where efficiencies can be created by taking humans out of the equation. Like cruise control on your car, it works – until a human needs to step in and make a change to the speed. 

Why Would I Use Programmatic Advertising?

The main purpose for using programmatic advertising methods is to make the best use of data possible in order to improve targeting strategies. Data provides the foundation for programmatic advertising to work well. In programmatic advertising, data is reduced to the individual or customer level, which can provide much more accurate targeting than say, a geographic region or buying a placement on a specific website. Programmatic allows for opportunities like lookalike audience modeling, cross-device targeting, and more. There’s also a good chance that if your advertiser is using programmatic methods, you’ll have access to preferred deals, where the prices of blocks of inventory are essentially fixed before going to auction. Preferred deals extend budgets and allow for more accurate, customer-level targeting.

How Does the Ad Exchange Fit Into the Equation?

Good question. The ad exchange is where all of the above takes place.

Programmatic advertising allows advertisers and publishers to buy and sell ad inventory. The marketplace where this occurs is called an Ad Exchange, and it’s a lot like the stock market. Publishers who wish to sell their inventory wait for a high bidder on that inventory, and in near-real-time, this sale results in an ad impression being shown. Ad Exchanges are different from ad networks, which are essentially the “stockbrokers” of the advertising world. Programmatic advertising connects buyers and sellers, removing the middleman.

There’s a lot to say about programmatic advertising, and we certainly couldn’t fit it all here. Digital advertisers – how have you leveraged programmatic advertising to achieve superior results in your digital marketing campaigns?