Enhanced Explanation of Programmatic Advertising

You can further reach the right customers with the right message at the correct time with programmatic advertising. So, does it wrap up the process of programmatic advertising? No. Read the guide below for an enhanced explanation of the process. 

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Understanding Programmatic Advertising

Programmatic advertising is a form of online advertising that utilizes different automated processes to buy and place ads. It is an automated technique of going to different publishers to purchase media. These publishers often offer ad space via ad exchanges. This purchasing type consists of site takeovers and static, audio, and video banners.

Implementing programmatic advertising often aligns with attaining brand objectives that lead to professional satisfaction. Programmatic ad buying is also considered a more intelligent approach. Compared to old-fashioned methods like ad networks or direct sales, it helps purchase and position advertisements efficiently.

How Does Programmatic Advertising Work?

Programmatic advertising helps automate the buying and selling of advertising space through various software. This involves automatic programs replacing human beings who would earlier choose which ads to run and when manually. Although there are various ways to indulge in this process, the most common way is through algorithms.

The algorithms can identify certain characteristics of an ad and then compare that part of the information with what advertisers are looking for on various platforms. Later, the ad will serve up if there is a match.

Another popular way to automate the process is through cookies. Different websites on your computer save these tiny files when you visit them. They contain information like usernames and passwords, so cookies remain harmless unless someone else gets hold of them. However, advertisers may use the cookies to show you adverts based on the websites you have visited in the past because they can trace your online activities.

Real-time Bidding and Automated Ad Buying

Real-time bidding (RTB) is an important aspect of programmatic advertising. It allows advertisers to bid on ad space in different real-time auctions. However, not all programmatic advertising transactions involve RTB. Some transactions depend on fixed prices or other methods rather than bidding in real-time auctions. Within the RTB,  the publisher’s ad space becomes available for auction when you visit a website or app. 

Advertisers then bid on this particular ad space depending on factors like the user’s demographics, browsing history, and the content of the specific webpage. The highest bidder’s ad becomes visible to the user instantly, all of which happens in milliseconds. RTB further enables advertisers to target their ads more effectively. It ensures ad placement optimization for maximum impact and relevance.Meanwhile, automated ad buying streamlines the process of purchasing ad inventories across various platforms and channels. Automated ad tech systems use data-driven algorithms to analyze audience behavior and trends. This allows advertisers to make informed decisions about where and when to display their ads. So, they can allocate their budgets, optimize campaign performance, and reach their target audiences with precision and speed by automating the buying process.

Targeting Methods in Programmatic Advertising

Programmatic ad targeting helps brands reach the right people with the right content. By tapping into consumers’ locations, behaviors, and more, these ads can reach ideal audiences for maximum engagement. 

Here are six effective targeting methods in programmatic advertising and how they can always help create a successful ad campaign. 

• Audience Targeting

Audience targeting enables businesses to serve ads to specific populations. It is usually based on several characteristics, such as household income, age, interests, and gender. 

A combination of first-party and third-party data can help generate audience lists that advertisers can buy and serve ads to later. This helps businesses know what type of customer they want to reach over time.

• Contextual Targeting

This method allows for relevant ads to appear alongside related articles by using data to determine what types of content appear on the websites. These ads often appear on editorial publishers’ sites.

The best example of contextual targeting is reading an online review for a pair of headphones and, shortly after, encountering an ad promoting noise-blocking earbuds

• Behavioral Targeting

This particular method looks at personal behaviors, such as website interactions, shopping habits, and product interests. This programmatic ad targeting type tries to understand the individual consumer. It focuses on targeting their unique lifestyle.

Behavioral targeting analyzes what different users do on the web pages they visit. Examples include:

• Adding items to a cart.
• Leaving a site without a purchase.
• Sharing a link with others.

• Geotargeting

This location-based targeting enables serving ads to people based on their respective region or zip code.

For example, an event planning company would want to use geotargeting to serve ads to nearby individuals when putting on a local show. Here, the target audience is within a reasonable distance and can attend and purchase tickets.

• Retargeting

This approach uses important data to serve different ads to users who have shown an interest in your brand earlier. Retargeting can be an effective strategy to encourage consumers to re-engage with your brand by revisiting the website.

Retargeting also helps rekindle consumers’ interest in your brand and encourages them to make further purchases.

• Cross-device Targeting

This programmatic ad targeting type allows your business to serve different targeted ads. Depending on device activity and use, you can run these ads across several digital devices.

Who Uses Programmatic Advertising?

You must understand who uses programmatic advertising and why to delve deeper into the process. Here are the six groups that use programmatic ads in the present scenario:

•  Brands

Brands use programmatic advertising to reach their target audience. Its associated technology helps them purchase and deliver display ads, video ads, and audio ads quickly and efficiently. Programmatic advertising also enables brands to gain real-time insights into their campaigns, which makes it easier to optimize them.

• Startups

Startups use programmatic advertising to launch their campaigns quickly and efficiently. These organizations can take advantage of the cost savings that come with automation with the technology. They can also use programmatic advertising to target their respective ads to specific audiences, which, in turn, can maximize their ROI.

• Small and Medium-sized Enterprises (SMEs)

Several SMEs are turning to programmatic advertising increasingly to reach their target audience. The technology enables efficient and swift purchase and delivery of ads. It also helps capitalize on the cost savings that result from automation. 

SMEs can also benefit from programmatic ads’ real-time insights. These insights fine-tune their campaigns and help them achieve the highest possible return on investment.

• Agencies

Agencies use different programmatic ads to help their clients effectively reach target audiences. Programmatic ads also allow agencies to target specific interests, demographics, and locations.

• Publishers

They use programmatic advertising to monetize their websites and mobile apps. So, publishers can sell ad space to the highest bidder by using programmatic ads. It also results in more revenue for them.

• Technology Providers

These professionals provide different platforms and tools that enable agencies, advertisers, and publishers to use different types of programmatic advertising. These technology providers include demand-side platforms (DSPs), supply-side platforms (SSPs), ad networks, and data providers.

Benefits of Programmatic Advertising

The future of digital marketing is always related to programmatic advertising. It helps you target consumers and get your message across different platforms. The best part about this online targeting process is that it works well for both small and large businesses. Here are some important reasons why you should use programmatic advertising:

1. Efficiency

Programmatic advertising allows you to reach a wider audience quickly and affordably. It is always faster than other forms of digital advertising. You can also track performance data to learn how well your campaigns are working over time.

2. Accuracy

Programmatic advertising is more efficient than traditional approaches like ad networks for placing or purchasing advertisements. This means the right people will see your ads, which can generate leads or sales for your respective business.

3. Reach

You can target several customers with programmatic ads. This includes those prospects who have never visited your website before. It may also involve those who had shown signs of interest in your product or service earlier. The best part is that you will find no middlemen fiddling with the process. So, you can buy your ad space at much lower prices than traditional methods. 

4. Transparency

Thanks to programmatic advertising’s transparency, advertisers can get all the details about their respective ad campaigns in real-time. This includes analyzing impressions, clicks, and costs. The process makes it easy for you to track results and make adjustments as needed, regardless of where your ads are running or on which platform.

How to Determine the Effectiveness of Programmatic Advertising?

If you are looking to measure the effectiveness of your programmatic advertising, there are a few different ways to go about it. There are two different ways to continue with the process, depending on the platform you use and your goals.

1. Track Your Impressions

This process of tracking impressions can happen through an ad server, such as Google Ads or Facebook Ads. You can also do it using a Programmatic Advertising Platform (PAP). Tools like DoubleClick Insights can help you see where someone clicks on your ads and learn how much time people spend on these ads.

2. Track Your Conversions

You can look at what kind of conversions generate through programmatic advertising by analyzing various signups for visits to a landing page, a newsletter, a trial subscription, or downloads of an app. You can track these conversions with tools like Adobe Audience Insights or Google Analytics.

Types of Auctions in Programmatic Advertising

Here are the various auction types used in programmatic advertising:

• Header Bidding

An important method in which publishers offer their inventories to several ad exchanges at the same time. Most of them follow this process before proceeding to use different ad servers. Publishers can increase the amount of competition by employing header bidding. This may help them boost their revenue.

• Exchange Bidding

A practice that operates on a particular server and includes an auction in which SSPs and exchange networks compete to win ad inventories. Many individuals consider Google’s exchange bidding to be the respective company’s response to header bidding. 

• First Price Auction

The advertiser wins if this person makes the highest bid for an impression. The same individual is responsible for paying the publisher. Meanwhile, the person who makes the highest offer in an auction with the first price determines the price of the impression. 

• Second Price Auction

An individual who came in second in a particular auction with a second price always determines the price of a particular impression. The advertising that places the highest bid wins, yet it only has to pay a little more than the other advertiser who is in second place. 

• Open Auction

A public marketplace that often brings together buyers and sellers in the pursuit of the highest possible offer.

• Non-guaranteed PMP deals

Publishers can restrict the number of advertisers who can access their ad space using this particular arrangement. Participation is contingent on receiving an invitation, so most publishers have a greater say over which advertisers can appear on their respective websites. 

• Programmatic Guarantee

The negotiation between an advertising agency or advertiser and a publisher for the purchase of reserved ad space. Here, automation often replaces the traditional human insertion order procedure. Later, the same advertiser or agency deals with the publisher directly.

Examples of Programmatic Advertising

Programmatic advertising automates the selling, buying, and management of digital ads. Here are some examples of top companies that took advantage of this method:

• Google

The search engine adopted programmatic marketing in 2014 to improve the effectiveness of its ad campaigns. The company wanted better results from digital advertising, So It focused on the Google Search app as part of its programmatic ad strategy.

The company used first- and third-party data to build ad targeting with a focus on all valuable audience members. The entire process was a success, which resulted in the following:

• 50% increase in brand awareness
• 30% more individuals reached three times more frequently
• 30% lower CPM than the previous year
• The Economist

The company used programmatic advertising to persuade different curious readers to try its publication. The process included analyzing extensive audience data to determine what content attracted readers and when. Later, the company built lookalike audiences for the recognized categories. Each segment received ads customized to its preferences.

As a part of the process, The Economist created around 60 different ad versions. The results included:

• 1 million unique website viewers
• 650,000 new prospects
• $650,000 in ad revenue
• 64% “awareness” increase in U.S. audiences
• 22% “consideration” increase in U.S. audiences
• 10:1 campaign ROI

Final Thoughts on Programmatic Advertising

Programmatic advertising has grown rapidly in digital marketing. The online advertising process provides many advantages to marketers, including efficient targeting, faster decisions, and cost-effective marketing campaigns. 

Furthermore, programmatic advertising allows you to make real-time adjustments to stay agile in the ever-changing market landscape. The process helps advertisers reach their desired outcomes efficiently and at a relatively low cost. Do you wish to leverage programmatic advertising strategies to benefit your organization? Then look no further than 6SMarketers. It helps you harness the power of data-driven campaigns to achieve your marketing objectives.