What Is Programmatic Advertising?

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Programmatic advertising is not new, but there’s still some confusion about what it really is. Surprisingly enough, a certain amount of that confusion takes place even within ad tech and marketing circles. It is time to set the record straight and find out what is meant by programmatic advertising and marketing and how to get the most out of this technology.

What is Programmatic Advertising?

There are two definitions we prefer: one simple and short, the other—longer and more detailed. Here’s the short one:

Programmatic advertising is the use of software to buy digital advertising.

If that’s not enough for your curious mind, here’s a more sophisticated definition:

Programmatic advertising (a.k.a. programmatic ad buying) is the process of purchasing digital ads automatically, by the means of algorithms and machines. Programmatic removes the human factor out of the process and allows for skipping tasks such as negotiations, tenders, and manual insertion of orders, which makes buying display space faster and cheaper.

Programmatic Advertising Explained: Why Do We Even Need It?

The question of whether or not the world actually needs programmatic ads is controversial, but it’s easy to explain why the technology is gaining momentum.

Today’s market is highly saturated, competition is tight. As a result, the majority of companies bet on display advertising to get noticed and remembered. Of course, they want as many ads as possible, on as many platforms as possible, at the fastest speed possible.

This is exactly what programmatic advertising is about. By removing so many manual tasks from the process, ad buying systems become more efficient and less expensive.

In the past, when advertising buying was done manually, one had to get in touch directly with a salesperson and spend hours or even days to negotiate all the terms from price and placement to audience targets and the number of impressions to be bought—not to mention manual insertion orders.

Today, when programmatic has become the dominant way of media buying, it is possible to buy display ads without the need to say a single word to a salesperson.

The Risks and Opportunities of Programmatic Advertising

It is clear that programmatic advertising has changed the entire digital marketing landscape, but was it a change for the better? Much like any tech trend, this one is associated with both opportunities and risks. Let’s discuss the biggest risks.

The Risks Associated With Programmatic Buying

  • Wrong placement

Unsurprisingly, removing humans from the ad buying process has its consequences When placed incorrectly or at the wrong time, even the most well-crafted advertisement can lead to disaster.

Need proof?

Check out the case of Citibank and its ad that was published in People magazine. Want some more? Check out the case of Trump’s election campaign ad placed next to an ISIS video on YouTube. Spend some time Googling, and you will most certainly find examples of programmatic advertising that went terribly wrong.

  • Bot fraud expenses

The number of times ads are expected to be seen defines the cost of a programmatic advertising campaign. Fair enough, right? There’s only one problem–bot fraud. In 2017 alone, fraudulent activity cost the industry $6.5 billion. According to statistics, about 9% of display ad views are not real. The situation is even worse for video ads: bots are believed to account for as much as 21% of all views. Who wants to pay for views that are not even real?

  • Less competitive viewability

In display ad world, viewability is usually considered one of the key metrics. The bad news is that sometimes programmatic ad buying affects viewability in a very bad way. As it turns out, those ads that are served directly to publishers are 27% more viewable compared to those served via programmatic deals.

The Opportunities Associated With Programmatic Buying

  • Scale and speed that can’t be achieved manually

There is one word that makes programmatic advertising so attractive–efficiency.

There is no way for a human being to analyze and take advantage of the large volumes of information that programmatic is capable of using. Automation makes it possible to scale ad campaigns without the need for more resources to be involved. Not to mention that speeding up the process comes as a natural side effect of using programmatic. “Display more ads in less time” could be the slogan of programmatic advertising.

  • Improved ad relevance

Thanks to programmatic advertising, it’s become possible to incorporate and process large volumes of data in order to deliver ads that are most likely to be relevant to end users. With programmatic, it is easy to take advantage of multiple data sources and use them altogether for the sake of improved relevancy.

  • International centralization

Media buying used to be difficult for brands that work in more than one market. It used to be difficult to deliver a consistent brand image when marketing products multinationally. Advertisers had to manage many media campaigns independently and partner with local agencies in each country separately. Needless to say, the process was confusing and time-consuming.

With programmatic advertising, it is fairly simple to execute one strategy centrally and let the software translate the central plan to multiple local markets.

How to Mitigate The Risks Associated With Programmatic Marketing?

As explained above, using programmatic advertising is associated with a number of risks. Here’s a few things to remember to when relying on programmatic for ad buying:

The demand-side blacklist matters. To avoid ads being placed on inappropriate sites, it is necessary to regularly monitor and update the blacklist.

The whitelist is just as important. When marketing a very sensitive product or service, it might be easier to create a whitelist of safe sites rather than working on a long list of sites to be avoided.

Mind the programmatic ad fraud. There are a few ways to minimize financial losses associated with bot fraud. First, request and analyze as many data reports as possible (watch out for numbers that look just too good to be true). Second, make use of algorithms provided by third-party vendors. Firms like Integral Ad Science and MOAT specialize in fraud detection, and using their service can help solve the problem of questionable traffic.

The Final Word on Programmatic Advertising

Programmatic advertising is gaining traction for many reasons but mostly because it offers a smart use of resources and time. Plus, it removes a huge amount of bureaucracy from the ad buying process.

On top of that, programmatic advertising is smart: not only is it helpful when one wants to launch a new ad campaign, but it also helps to optimize digital ad spend by giving real-time spend recommendations.

Given all said above, it’s clear that programmatic is a good choice for brands that still want to rely on display ads. Those who understand that display ads will soon sink into oblivion, however, should focus on value-added marketing instead.