Applications of Automation and Artificial Intelligence in many industries made every sector, effective, efficient, profitable and more powerful than before.
Likewise, even in Digital Media Advertising, applications of Automation and Artificial Intelligence have shown successful results in this area, year on year, for all the players in the ecosystem, ever before.
One of the biggest trends in current global digital media advertising is, Programmatic Advertising
Programmatic Advertising is just a way to use data and technologies, to buy and sell digital media. It is not only a matter of RTB, or marketing automation, or just booking leftover inventory, however, it involves numerous things
Using Programmatic, global marketers can discover themselves in a diverse way, to do the very similar things they have consistently done and also stepped into a new generation of advertising
In the previous post, we have covered the below topics to understand, the definition of programmatic advertising in layman terms
Media & Advertising
Business in Traditional Digital Media
Automation & Artificial Intelligence
Applications in Digital Advertising
Data & RealTime
What is Programmatic Advertising?
Let’s look at the agenda of this Post
History & Rise of Programmatic Advertising
Programmatic Advertising Ecosystem
Inventory & Price
Data & Targeting
Devices, Ad Formats & Creatives
Control of Budget and Campaigns
History of Programmatic Advertising
Initially, the First display ad was launched in 1994. This is just like how content, images rendered websites, similarly in this case, it is a banner ad
In 1996, Adserver was launched. Publishers and Advertisers used Adservers for ad-delivery and ad-management.
Then, with the rapid increase in, the number of players in the ecosystem, a new player came into the picture. .I.e., Ad-Networks
The first ad-networks appeared between 1998 and 2000. The business of ad-networks grew with other players and, meanwhile, famous ad-networks such as Google AdSense were also launched.
In between 2005 – 2007, ad-exchange and Demand Side Platform launched.
Ad-exchanges centralize the marketplace, where buying and selling happens. The real-Timing Bidding method of buying started from here.
With an automated process, ads are bought and sold in real-time, meeting the requirements of players in the industry
From 2007 to 2010, the number of brands that adopted programmatic increased, and growth began.
Rise of Programmatic Advertising
Well, if you see this graph, this might seem familiar to you, as you might have already come across this graph from our previous post, where you got to see the basics of Programmatic Advertising.
This graph in the slide shows the percentage of annual share between programmatic and non-programmatic digital spend
In the year 2012, Programmatic advertising was 10% share of total digital spend
Later on, it increased rapidly on an annual basis, and reaching up to 69% by 2020, and is expected to reach 72% by 2021
This is 7 times increase, compared to the year 2012
Programmatic Advertising ecosystem
This is the simple view of the Programmatic Advertising ecosystem, which includes key Players, and Ad-Technology platforms that are interconnected to each other
Every transaction takes place in the ecosystem, because of a common product known as ad-inventory, and it is a source of advertising opportunities in the form of ad impressions which are supplied by Publishers or sellers and are purchased by buyers or Advertisers. In between them all technologies, features involved and help to make connections between them.
Advertisers, Ad server, Ad Agencies, Trading Desk, Demand Side Platform, DMP, and some other technologies are on the Buying side of the Ecosystem, and they’re connecting to, Seller Side, with the help of Ad Exchange.
Both buyers and sellers use Programmatic technology to make their process & Operations smooth and easier.
We’re going to cover each one in-detail in future Posts.
In this post, we are going to cover, Introduction to Programmatic Advertising, completely in Buyer’s Point of View and will cover Seller’s Point of view in the next Post
Here, Buyers or Advertisers means who purchase Ad Inventory which is created by Publishers
Let’s assume that, you started or owned a Restaurant business and offer all kinds of food varieties. It is running successfully and wants to grow and expand.
Now you want people to hear about your business, visit your place, and win more customers.
You’re planning to advertise your business. In addition to offline advertising, you have also chosen multiple digital channels and methods to reach consumers online.
Also included, Programmatic Channel in your marketing strategy.
Let’s see what is the impact your advertising campaign will have if you have a programmatic channel in your marketing plan
Let’s assume an ad campaign with these details
The goal of 10 million ad impressions at
Rate of Maximum CPM(Cost per Mile) of $4
That is for every 1000 ad impressions for your ad, you will pay $4
Here Maximum value means that you don’t want to pay above that value for any available Ad inventory
Also, With a definite set of targeting
And Creative, Example, Image ad with 300×250
So, First of all, we need to find and choose the ad inventory
In terms of Exposure, let’s see the difference between programmatic and non-programmatic channels
In Non-Programmatic, buyers or Advertisers have only a limited set of Inventory access
For Example, Google Display Network is limited to Google partner sites
As we have seen in the programmatic advertising Ecosystem, it consists of Players such as Advertisers, Publishers, Media Agencies and Ad Networks, and other Ad Tech platforms, all of which helps to get access to global Inventory available in realtime
In Non-Programmatic it is, Manual Process of Media Buying which involves manual insertion orders, requests for proposals, Invoicing, human negotiation, etc
In Programmatic, Media Buying is Automated and in all those manual processes wherever required can be done with software platforms and it saves time for humans and also makes error free
When there is limited access to the inventory, it is evident that obviously Limited scale and Reach is possible
Whereas in Programmatic, connecting to multiple players and platforms makes inventory available at Scale and Reach
In non-programmatic, Buyers don’t have a choice of buying relevant impressions on an individual basis and have to purchase inventory in bulk and it is under the control of Publishers or seller
But in the case of Programmatic, Buyers can have a choice of purchasing inventory, by individual impressions, and get the maximum value for every single impression. This is under the control of buyers
Once you have the Inventory available, let us see at what price this inventory can be purchased by comparing both programmatic and non-programmatic.
In Programmatic Advertising, it is possible to find quality media at a lower cost.
Whereas in the traditional method, you are likely to end up buying at a higher price.
Let’s assume, that there is ad space, and you’re planning to purchase at a maximum CPM of $4 for your ad campaign
If you choose any non-programmatic channel, We can say it as Ad Space or Inventory buying, because you are purchasing all the impressions at once, at a fixed rate, where every impression is bought at the same price as shown in the figure.
Rate of CPM of $4 dollars means spending each impression at $ 0.004
1st, 2nd, 3rd impressions, and so on are bought at the same price.
You may not be sure, if all those impressions are delivered to the relevant users and if they are really interested in your Ad.
For example, your creative is an Image ad related to Food offers and mostly delivered to irrelevant users such as Sports, Education, Electronics, Books etc.
Out of 1000 impressions, if 600 impressions are shown to irrelevant users, those impressions are not worth enough when compared with the remaining 400 impressions. Moreover, You would have purchased those 600 impressions at a lower price.
This is just like buying vegetables in bulk where you may find that few are not fit for cooking.
Whereas In Programmatic Advertising, you don’t have to buy impressions in bulk, ad can be shown to the right person at a variable price for Individual impressions in real-time. We can say it as Audience buying.
You can see this, here on the right.
As you are in the food business, You can get the chance to choose the audience you are interested in and content related to food as well as special categories.
The price at which each impression bought changes depends on different factors and always less than the maximum price set by advertisers.
Finally, if we look at the average price at which impressions bought, in this case, it’s CPM
in Non-programmatic Net value is equal to the maximum rate at which you’re willing to pay here, in this example it is $4
Whereas in programmatic, Net Value is lower than the max rate, here it is $2.8 (just an example)
For the planned impressions, the Total Budget in Non-programmatic is $4000
And in Programmatic it is $2800, which is less than non-programmatic.
Any marketer always wants and tries to reach their goals with less rate. This can be achieved in Programmatic Media Buying
As a buyer, you might be really happy with the average rate at which all the impressions are purchased which inturn leads to savings on your budget for the same number of total targeted impressions.
What we have learned from this is?
Non-programmatic is all about the Ad space buying, with Bulk purchase, at Fixed-price
Whereas Programmatic, It is Audience Buying, Purchasing individual impressions, at less than the maximum price in auctions in realtime
What makes it possible in Programmatic Advertising is It is because of Real-time Bidding or RTB
What exactly does that mean?
“Real-time bidding or RTB is an automated process of buying and selling of online ad Inventory on auction basis in real-time” which allows millions of ad opportunities to find the ideal customer
From the large number of eligible buyers who bid for every single impression, which is made available by the sellers to those buyers, participate in the Auction.
Among the buyers, Whoever wins, their ads are placed in the seller’s inventory. The whole process takes place in milliseconds
Every single impression purchased on a basis of a bid to get the best value which in turn keeps costs low. The value of each impression determined by Machines
All this happens in Ad Exchange which is an online auction marketplace where a large number of buyers and sellers connect for buying and selling of ad inventory in real-time.
The Ad Exchange is similar to the Stock Exchange. In the early stages of Programmatic Advertising, real-time bidding is only one type of method of purchasing ad inventory
With innovations and advancements in Ad Technology year-on-year basis, also providing solutions to every player as per their requirements in the ecosystem, there evolved new methods of buying along with an existing one
RTB is a subset of Programmatic Advertising.
If RTB is a subset, so, are there any other methods by which buyers can purchase Ad inventory in a programmatic way?
The answer is definitely YES.
PROGRAMMATIC ADVERTISING TYPES
Based on the Pricing Type, Number of Buyers and Sellers Involved, The volume of inventory,
Programmatic buying methods can be divided into four main types
Open Auction which is also known as Real-Time Bidding, where the auction is open to all eligible buyers, for every impression that made available in the marketplace
Likewise, Private Auction is also the same as Open Auction only difference is auction is open to only a few eligible buyers
In this table, there are another two buying methods Preferred deal and Programmatic Guaranteed which fixed pricing type and it is just taking over of Direct buying in Traditional method.
whereas, In the Traditional method of media buying Buyers cannot take the Advantage of Deals.
About all these Inventory Buying methods will be discussed in more detail, in future posts.
DATA AND TARGETING
Along with the Inventory part, Pricing and Buying methods, there is an important one that one needs to know about buyers and which motivates to bid every single impression and make it more valuable than other is DATA and Advanced Targeting
From Inventory buying to the audience buying using data in real-time with automated technology made Programmatic Advertising different from other digital channels
Data Management Platforms integrated into the Programmatic buying platforms that help to make purchasing decisions.
The Data used in purchasing decisions, by machines, have a huge impact on finding the right audience, who are actually interested in your products or services
Audience data can be made into several segments such as Demo, Affinity, In-market, Lifestyle, Detailed Demo, first, second and third party and so on.
Also, possible to create custom audiences using 1st party and third-party audiences.
But In case networks like Google ads, offers only Google’s own data
Using Audience data, we can avoid targeting irrelevant audiences and so that it reduces wastage of Ad spend. This also strengthens the targeting.
Once the data is ready to match the requirements, it doesn’t mean that you know everything about the user. One needs to use other targeting options too
In the case of the Traditional method, the data not in the picture makes it limited targeting and difficult to get reach and scale. It’s mostly broad targeting when you buy all kinds of users at the same price and the budget may be spent on consumers who may not be interested.
Whereas Programmatic has several targeting options and with narrow targeting, every dollar spent goes to the potential consumers of your product or service. So that we can reduce the waste of ad spend and help to show ads to the people that fit your specific target market.
Instead of guessing which websites, keywords, categories in the targeting list to include, programmatic advertising has these built-in targeting options in ad tech platforms
Examples of Advanced targeting Options in one of the DSPs are here for a quick look
Some of them like delivering ads targeting to specific geo, during lunch hours, Keywords, Categories, Brand safety, viewability, device, Position, and many more for granular targeting
STRATEGY & OBJECTIVES
Targeting based on each stage of the decision-making process, with the combination of Data and various other targeting options, is to make it as narrow as possible and to reach ideal customers
Whether the customer at any part of the purchase funnel, With the implementation of Various Programmatic strategies, brands can use data and targeting options to reach their Objectives like Brand Awareness, Consideration, Drive Action, etc.
Nowadays, users are on multiple devices and watching content on different channels.
In Traditional Method, allows only a few ad formats like basic display, video, and others,
As Programmatic Advertising evolving into other media channels, Buyers have various options to target and reach consumers on various devices and channels, where they are,
And with various ad formats such as Display, Video, Mobile, Native, Social, Rich Media, Audio, Digital Out of Home, Connected TV, OTT, and others
CROSS DEVICE TARGETING
In the traditional method, it is difficult for marketers or advertisers to identify the same user across multiple devices
In programmatic advertising, cross-device targeting helps buyers to target the same user across multiple devices and ads can also be displayed on different environments too.
With this, Buyers can have unified messages about their ads and prevent repeated ads from showing the same user even if the frequency cap is set.
Programmatic technology provides solutions to optimize towards best performing creative in realtime
With the help of Dynamic creative Optimization, an advertiser can serve relevant ads, with the dynamic message, relevant to the user, that ensures accurate targeting
Sequential messaging can also be delivered to the consumers.
Buyers can still optimize towards the most effective messages for a campaign by using existing creative, in real-time
RISE OF PROGRAMMATIC
In this image, it shows the programmatic spend on a post, increasing on an annual basis
the increased time spent on Digital Audio when compared with Radio shows great opportunities here too as Programmatic evolves into Audio platforms,
Programmatic Spend on Connected TV is also growing rapidly
Even programmatic spending on digital out-of-home and OTT streaming platforms is also growing year by year.
In the traditional method, it is tough for Buyers to set up and run individual advertising campaigns on a separate platform
In Programmatic advertising, it allows you to run an Omnichannel strategy for your advertising campaigns
Using DSPs, Advertisers, Agencies, Trade desks, can centralize their media buys which includes various formats like display, video, Audio, connected tv, native and so on by integrating audience data, across multiple Inventory sources SSPs, ad exchanges, ad networks in a centralized management platform
Buyers can have a single view of all campaigns with different formats and customer journey
CONTROL OF BUDGET AND CAMPAIGN
Non-programmatic channels contain limited settings to control the budget, bid, and other ad settings
In Programmatic, Budget can be controlled in various levels with several pacing options and helps to spend Spend Smartly, Eliminate the budget waste on audiences who may not be your potential customers, and also reduces the cost involved in human involvement wherever necessary.
Buying a single impression at a time is a cost-efficient solution and is under the control of the Buyer
Budget can be split across Media as well as separate segments between objectives, Categories, Buying methods, Devices, Channels, ad formats etc.
Buyer have Flexibility of managing ad campaigns unlike traditional methods
Buyers can create different sets of data and segments that you want to test instead of having a single large campaign.
Setting Frequency capping not only controls, budget spending, and it identifies unique users but also helps in distribute ad messages evenly across targeted audiences
After the campaign is launched, In the traditional method, advertisers have to wait for a long time to see the results. Once the data is ready and by looking at the campaign performance and if you want to make any changes, but it is already too late
Whereas in Programmatic, platforms make it possible to get the reports in real-time and measure the performance of campaigns on various dimensions and metrics in granular
In the reports, we can also see sellers, buyers and have transparency over who bought at what price, costs, etc
This helps to obtain valuable insights, measure true value, optimize whenever and wherever necessary and improve the results
Optimization in real-time helps to make budget spend more effectively and also to reach ideal customers as well.
You can stop non-performing strategies anytime, and Optimize towards well performing strategies
Through AI learning, Buyers receive suggestions for optimization from DSPs like DV360. Either one can use those suggestions or take help of those and own ideas to implement
Buyers can Use various Bid strategy options and see how each one works. Bidding Options in DSPs help to reduce manual optimization work and saves time.
With all of these, buyers can test and learn from it, and then continue to optimize by applying changes whenever necessary.
From the experience of managing campaigns, Buyer can get a chance of a continuous learning curve about how programmatic campaigns are performing as per the strategy which is different from traditional methods of set it and one go approach.
in the Traditional method, Buyers cannot get transparency of where their ads serve, costs and fees involved, customer journey in the purchase funnel, and so on
But in Programmatic Advertising, With transparency layer, Buyers can see on which sites their ads are placed, customer journey through purchase funnel, insights, costs and fees associated in the ecosystem, and so on
Buyer can obtain True Return on Investment with transparency in overall media buying
It also helps to Build trust among buyers in the ecosystem, build relationships with everyone in the supply chain and start to invest more in this sector which also benefits other players.
Inventory Quality helps to determine, whether the ads being served in the right context, shown beside the content if it is safe for brand reputation,
Ad impressions actually from humans or any invalid traffic, or ads actually seen by consumers or not, and many more.
All of these factors have an impact on inventory Quality.
Programmatically, having access to Global inventories includes a large number of different types of content.
Even with all the targeting settings with all relevant audience data, categories, and so on, what if an ad is shown alongside content that is unsafe or inappropriate for the brand’s reputation and image?
For example, when a Famous Automobile company Brand launches a new model and if an ad related to it is shown next to an article or content related to a road accident. That affects the Brand image or reputation right ?.
Brand safety targeting has come into the light to exclude unsafe content and protects brand reputation
It ensures buyers only purchase Advertising Inventory that meets the brand safety requirements
Some of the brand safety targeting options are Digital Content Labels, range from general audiences, Teens, Matured audiences, Adult, Not yet rated etc
Sensitive categories like Adult, Weapons, Violence, Alcohol, Politics etc.
DSPs like DV360 provide options like targeting exclusions to exclude any keywords, categories, placements and some others. For example, during pandemic situation buyers can exclude topics, keywords, websites related to those if they feel it affects brands’ reputation.
The First impression is the best one, Advertisers always want to make it.
In Addition to Brand safety, there are other factors that have an impact on Inventory Quality are
Viewability, Ad Fraud, domain spoofing, and Invalid traffic and so on, Which causes buyer’s loss of lots of Ads spend
Buyers have to make sure, they find the High-quality inventory that drives a much higher ROI and ensures that they reach the targeted audience
With Ad verification technology, Buyers can ensure their ad shown on the quality inventory and get the most value for their ad spend.
They can work with ad technology vendors and verified partners.
DSPs have integrated technologies like Brand safety and Viewability, also have the option to choose third-party ad verification technology like IAS, Doubleverify, MOAT etc.
Buying inventory from authorized sellers who uses Ads.txt can address the issue of domain spoofing having all these in the picture make Buyers to move towards programmatic and most of the major brands are already adopted and started to bring in-house
Let’s conclude these with below main points
One of the major benefits of programmatic advertising is that potential audience reach with narrowing targeting to ideal consumers and track the performance
TRANSPARENCY in ecosystem and media buying
Programmatic Media Buying is Customer-Centric and provides consumers with a better experience of advertising during their journey in the Purchase funnel. Buyers can send messages and offers that are relevant to them which Inturn delivers better results with better response rates and Return on Investment
With all collections of data points, buyers can target consumers with more Personalized ads that can be used to tailor their brand experience in real-time.
Buyers can spend on Programmatic Advertising campaigns and can save a lot of time and money in getting massive reach and scale of Quality Media and right audience which is difficult in Traditional Method of Media Buying
Redefining in all points can improve over Efficiency for every move. Overall, the Efficiency is greater than any other media channel
Increases Return on Investment
Finally, targeting the right user at the right place at the right time with the right message at the right price is possible in Programmatic Advertising.
We gave our best to make you understand the overview of Programmatic Advertising in Buyer’s Point of View. We will cover, seller’s or Publisher’s point of view in the next post.
In case if you are completely new to this subject, don’t worry, we will be covering every topic with basics in future posts. Stay connected to Learn Programmatic advertising in detail and keep updated in the industry.
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