Digital advertising was a $34.9bn market in 2016. In 2018, the industry broke the $100bn mark. While this growth is explosive, it’s hardly surprising. Not only are consumers spending more and more time online, but the technology used to target and place digital ads has also only gotten more powerful and intelligent. That technology, you might already know, is programmatic advertising.
Programmatic advertising’s efficacy is evident in its adoption. According to invespcro, in 2014, programmatic accounted for an estimated 55% of digital ad spending. In 2018, it accounted for roughly 82%. Combined, both of these two statistics paint a clear picture. Programmatic advertising has overtaken the industry, and you’d be wise to get on board. In this post, we’ll go over what programmatic advertising is, how it works, and how it can help you improve your advertising ROI and better reach your customer.
What is it?
Programmatic advertising is nothing more than an automated digital media marketplace. Instead of contracts and sales being made by humans, programmatic advertising uses powerful computing and machine learning algorithms to connect digital ad space with advertisers. This automation optimizes the entire ad buying processing, reducing costs, time spent, and human error. To understand how programmatic advertising works, we first need to understand the platforms that make it work, they are:
Data Management Platform
A Data Management Platform (DMP) is software that collects, stores, and analyzes data on consumer behavior. It is used by both advertisers and publishers to build audience segments based on factors like location, purchase history, or browsing behavior. Once a campaign is live, the DSP tracks performance against chosen KPIs and identifies the most successful leads, allowing for real-time audience optimization.
Demand Side Platform
A Demand Side Platform (DSP) is one half of the programmatic ad buying infrastructure. Used by advertisers to buy ad space from publishers, it leverages consumer data from a DMP to determine the expected value of any specific ad impression and does or doesn’t bid on it accordingly.
Supply Side Platform
A Supply Side Platform (SSP) is, as you might have guessed, the publisher’s version of a DSP. Rather than buying ad space, however, an SSP allows publishers to seamlessly list their available impressions for auction on multiple ad exchanges at once, allowing advertisers’ DSPs to buy them using a process called real-time bidding.
The Real-Time Bidding (RTB) process begins when a consumer loads an ad-supported app or webpage. The content’s publisher puts that impression up for sale on various ad exchanges using their SSP. Then, in the time it takes for the content to load advertisers use their DSPs to bid on the ad space, and the highest bidder wins the right to serve their ad.
These platforms are what make programmatic advertising the streamlined process that it is.
What’s in it for me?
While you should now have a better understanding of how it works, you may still be wondering how it’ll improve your business. The only clue a consumer would have that the ads are programmatic is that they are more relevant to them. Programmatic advertising offers several benefits that should improve the effectiveness of your ads and increase your ROI.
By eliminating the need for traditional media buying, programmatic advertising frees up your team to work on other aspects of your department.
Beyond saving you time, programmatic buying can also save you actual money and stretch your media budget further. Because you’re buying media one impression at a time, you can choose a bid based on the expected value of that impression. And with the expansive selection of online publishers to choose from, you’re able to quickly identify the optimal locations, and consumers, to reach.
Like virtually all of the digital space these days. Programmatic advertising is powered by data; a lot of data. It allows you to not only tailor your message but also tailor your audience. If you want to communicate with single working professionals in urban areas who read the New York Times, you can.
Not only does it use data incredibly well, but programmatic advertising also creates it. Instead of waiting months to see how well a traditional campaign did, a programmatic campaign offers you real time results. Which lets you track and respond to metrics like click-through and conversion rates as well as test differing messages and differing audiences.
It’s only the beginning
In the last decade, programmatic advertising has matured into the digital space and has become widely adopted as the standard practice, but it’s just getting started. As technology expands, so will the possibilities. We’ve already seen non-digital spaces adopt the programmatic model, and in the next decade, the sky might just (literally) be the limit.
If you want to know more about how MediJel can help you with programmatic advertising, drop us a line. We’d love to chat.