The automated market for programmatic advertising based on user data is changing the face of digital marketing. It is developing rapidly, increasing its market value year after year.
Globally, 65% of digital advertising spending went to programmatic advertising in 2019. Meanwhile, in Poland, according to research by IAB Polska/PwC, programmatic advertising's share of the digital advertising market in the same year was 35%.
So if you are serious about your online activities, but you don't yet understand what the Programmatic Buying phenomenon is , this article is for you.
What exactly is Programmatic?
Programmatic advertising is the fully automated buying and selling of online advertising. Transactions in this model are much more efficient and effective.
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Target groups are automatically selected in such a way that they are recipients most likely to be interested in the category of products and services we offer them.
We reach potential customers at the right time, with the right message. The rest depends solely on our creativity and a well-thought-out strategy. As a result, we save time that would otherwise be spent testing multiple audiences (usually a process that takes several months) and budget that would otherwise be spent on high-quality traffic.
This, combined with the right advertising strategy and creative, can significantly shorten the purchase path. The entire process takes place within a single technological platform, providing access to multiple channels, from mobile devices to audio platforms, websites, and television.
How does automated advertising work?
It all starts with a website. Once the page loads, a signal is automatically sent to the ad exchange. All of this happens in a fraction of a second.
On an ad exchange, an auction is immediately conducted among all advertisers who have registered an interest in displaying ads on that site.
How does the system know who to show the ad to?
This is where cookies come in, telling advertisers what a customer is interested in and what their browsing history looks like. For example, if they've spent a lot of time searching for new designer shoes, premium shoe companies will present them with offers that align with their preferences.
Let's say you run a business that sells wedding dresses. You could create the following ad profile on the software platform:
- Female, aged 25-35.
- Location: near your wedding dress salons.
- Interests: wedding dresses and accessories.
- She spends a lot of time looking for wedding dresses during the day.
- The ideal time of day is from 17:00 PM to 22:00 PM (peak browsing time).
- Targeting desktop users (because, for example, having previously tested a campaign on the Search Network, you already know that this channel has the greatest potential in your case).
The platform also allows you to set a maximum bid, which is the most you are willing to pay for ad placement.
This is just a general example. In reality, there are many more targeting options available with the programmatic model. It's a plus for you if you've already defined your ideal customer quite precisely.
Are Programmatic Buying and RTB the same?
Let's make this clear once and for all. Programmatic is a technology; RTB (Real-Time Bidding) is just one method of implementing this technology. RTB can be viewed as a subset of programmatic (programmatic RTB), a piece of a much larger puzzle.
If advertisers decide to invest more, they'll be guaranteed to see their ads on targeted websites without having to participate in auctions. This is a popular option, as it doesn't require RTB, and is particularly popular with premium brands.
This buying method, often referred to as "programmatic direct," allows for very precise targeting of the advertising audience. The quality of traffic is significantly higher, so it usually also goes hand in hand with a higher ROI.
This is a more expensive solution, but it offers incomparably more advantages for advertisers. It solves their two biggest problems: wasted time and a partially wasted budget on advertising creatives targeted at a broader audience, only a portion of which is actually in the product's area of interest.
Does machine learning replace human work?
Absolutely not. This technology replaces time-consuming activities like bidding and negotiations. This frees up time for people to focus on activities that directly impact the success of the operation.
Those who live by the Pareto principle know how much benefit it can bring. Optimization and planning an appropriate strategy tailored to their goals are key aspects of campaign success, and for now, only a highly experienced specialist can guarantee this.
Programmatic buying saves not only money but also time.
Purchasing methods. It's too complicated! How do they differ?
It's true. In our conversations with clients, we've noticed that many of them have significant difficulty distinguishing between different programmatic inventory buying models. So, we're here to help.
In a programmatic system, we distinguish several different purchasing methods. These include:
Real-time bidding (RTB)
In this model, we purchase digital advertising through a real-time bidding process. Advertising platforms called ad exchanges are the venue for sale and purchase.
In practice it looks like this:
When an ad becomes available, a request for quotation is sent to the Demand Side Platform (DSP). The request is analyzed and sent back to the ad exchange, where it participates in an auction.
The Supply Side Platform (SSP) filters bid responses and sells ad space to the winner, the highest bidder. In the final step, the ad is displayed on the landing page. This all happens in a fraction of a second, taking less time than a website to load. This model is available to any advertiser.
Private Marketplace
This model is designed for premium publishers. They offer their ad inventory to a select group of pre-approved advertisers. It offers full transparency in the purchase, as advertisers always know which websites their ad will be displayed on. As with RTB, the purchase is conducted through real-time bidding, with the difference that the publisher must first approve the buyer. These are called closed auctions.
Programmatic Direct
Programmatic direct, on the other hand, is a model in which advertising inventory is purchased directly from the publisher. Before the campaign begins, terms and pricing are negotiated between the buyer and seller. Once these terms are agreed upon, the buyer can launch the campaign.
Transactions here do not take place in an auction system, and the price is set in advance.
This is undoubtedly a very desirable model in a programmatic system because it provides:
- high campaign effectiveness,
- the best quality movement,
- high advertising position,
- brand safety and increased trust in the brand (ads are displayed in places chosen by the advertiser).
The above points + a responsibly planned strategy can provide a brand with an uninterrupted stream of revenue.
Preferred Deals
The preferred offer model is similar to the direct model, with the difference that, despite the pre-determined price, the ad inventory isn't reserved exclusively for the buyer. This means that the publisher offers it to the buyer first, but if the buyer doesn't accept it, it is put up for auction in RTB or goes to a private marketplace.
Is Programmatic Buying the future of digital marketing?
All signs point to this. Advertising spending in this model is growing exponentially. It's currently projected to reach $98 billion by 2020. Brands are eager to invest in the programmatic model, and it's easy to understand why.
For entrepreneurs, time is money. So why waste it on bureaucracy when you can secure the best placements in milliseconds? Companies are increasingly aware of this, which is why they're opting for programmatic buying.
This approach will become increasingly common in the coming years. Those who choose a programmatic campaign typically don't return to their old habits. It's a bit like in the automotive industry: if you switched to a Porsche, would you want to go back to a Maluch?
So if you want to stay one step ahead of your competition and achieve what's not yet achieved, contact us as soon as possible ! Our specialists will develop a digital media development strategy for your brand, tailored to your goals.
Summary
The above article covers the following topics:
- This article explains the dynamically developing programmatic advertising phenomenon that dominates the modern digital marketing market.
- Programmatic is an automated advertising purchasing system that increases campaign effectiveness and optimizes spending by precisely matching the message to the recipient in real time.
- Programmatic advertising works through lightning-fast auctions on ad exchanges, where systems use cookies and detailed targeting parameters to display a perfectly tailored offer to a specific user in a fraction of a second.
- RTB is just one auction-based buying method within the broader Programmatic technology, which also includes the more expensive but more effective Programmatic Direct model.
- Machine learning automates tedious technical processes, allowing specialists to focus on strategy and optimization of various purchasing models – from open RTB auctions, through closed Private Marketplace, to direct and guaranteed Programmatic Direct contracts.
- The exponential growth in spending and the enormous savings in time and budget make Programmatic Buying the inevitable future and the new standard in effective digital marketing.
