Today’s consumers are bombarded with information every day. Their smartphones, tablets, laptops, and desktops constantly ring, bing, chirp, or ding for attention.
As a result, they’ve gotten really good at ignoring ads that aren’t hyper-relevant.
Marketers must be increasingly strategic about their digital advertising campaigns.
You could have an absolutely glorious ad, but it will only reach its full potential if it appears in the right place and targets the right people.
As a marketer, I can think of no greater disappointment.
Programmatic advertising takes the guesswork out of ad buying, selling, and placement. Using automated software, you can see exactly where your ads display, who's seeing them, and how profitable they are—in real time.
Is your organization disrupting the digital marketing landscape in your industry with programmatic advertising?
It should be. Programmatic display advertising spend is skyrocketing in the United States. It is expected to reach nearly $142 billion in 2023, up from about $75 billion in 2020.
This blog post will teach you how programmatic advertising can increase brand awareness, boost site traffic and engagement, and grow your business.
Let’s get into it:
What is Programmatic Advertising?
Programmatic digital advertising is the automated buying and selling of ad space across thousands of digital properties, like websites, apps, or social media platforms.
This process allows organizations and marketers to leverage user behavior data and display relevant ads to those who’ve searched for or interacted with content closely related to their services.
This method uses the following tactics to help marketers target audiences:
- Audience targeting (gender, age, education level, occupation, income, hobbies, interests, marital status, etc.)
- Behavioral targeting (website interactions, product interests, shopping habits, etc.)
- Contextual targeting (matching ads to relevant content or websites using keywords or topics)
- Cross-device targeting (delivering ads to a specific audience across their devices, like smartphones, tablets, laptops, desktops, and TVs)
- Retargeting (displaying relevant ads based on past website or landing page visits)
- Geotargeting (hyper-targeting specific audiences using location-based targeting)
Programmatic advertising is automated, complex, and computerized. Before I go over the benefits of programmatic advertising and outline how you can get started, let’s explore the question, “What is programmatic advertising?” through the lens of its key players: publishers and advertisers.
Website and app owners with digital ad space to sell.
Publishers use tools called ad exchanges (SSPs) to monetize certain areas of their websites or digital properties.
Marketers then purchase these unique spaces to advertise their products or services.
When consumers visit these sites, the SSP displays relevant ads based on predetermined criteria from the advertiser. Ads that get clicks generate revenue (for the publisher) and drive prospects to the advertiser’s digital property.
Brands who want to buy digital ad space.
Demand-side platforms (DSPs) are media platforms that brands, businesses, and agencies use to set up digital advertising campaigns. Once the campaign and creative are uploaded to the DSP, the software searches its network of publishers for the best placement based on the advertiser's criteria.
The process is automated and occurs in real time. It leverages data insights and algorithms to serve curated ads to the right users at the right time and price.
Programmatic advertising is a cost-effective way to quickly scale their advertising. It eliminates the manual, time-consuming work typical of direct buy advertising. While there is still plenty to consider (e.g., strategy, creative, media buying, ad placement, performance tracking, and campaign optimization), brands can go from ad creation to revenue very quickly.
Direct Buying vs. Programmatic Advertising
Programmatic advertising takes direct-buy advertising to the next level.
In direct buying, businesses must approach publishers one at a time. This slow and arduous process often involves requesting a media kit to obtain digital ad requirements like size, placement, and pricing so businesses. Media kits help identify which one or ones best fit their needs and budget.
Businesses submit proposals to publishers to negotiate terms for ad space, placement, and the number of ad impressions. This process is costly and inefficient.
On the other hand, programmatic advertising allows advertisers to automate this labor-intensive process, significantly expand their reach, and optimize ads on the fly using real-time data.
Here are three key differences between direct buying and programmatic advertising:
- Manual vs. Automation
Direct buying is entirely manual. It involves significant time, money, and the inevitability of human error. Programmatic sales use software, machine learning, and algorithms to purchase ads. While manual steps are still involved, these processes run automatically, saving marketers considerable time, money, and worry.
Programmatic advertising also automates reporting and optimization, allowing you to focus on value-add activities that enhance business insights and drive better decisions.
In direct buying, a package of ad inventory is sold to a client or clients at a predetermined, fixed CPM rate, which will be delivered at some time in the known future.
Direct buying is very predictable. Advertisers are basically paying for the “guarantee” that ads are being delivered to specific audiences.
Programmatic employs automation and real-time bidding, meaning real-time auctions occur for every individual impression, and advertisers never stop bidding. This creates a dynamic, unpredictable, and non-guaranteed marketplace.
Direct buying is often done in bulk, so pricing is almost always a fixed cost-per-thousand (CPM). Because programmatic advertising holds individual auctions for each impression, pricing can vary significantly.
Programmatic advertising is a smarter way to buy digital ads. It’s faster, more efficient, and cheaper than traditional (manual) methods.
Benefits of Programmatic Advertising
Brands used to rely mainly on traditional advertising to raise awareness and make money. Although offline strategies are still relevant, today's savvy consumers expect a unique and personalized online experience, including more access, more options, and more flexibility.
Worldwide digital advertising spend is projected to be $566 billion U.S. dollars in 2022. This figure is expected to increase rapidly over the next few years.
If you’re not using programmatic advertising in your marketing strategy, it’s time to reevaluate your digital ad strategy and increase your spend to meet these growing expectations.
Four benefits of programmatic advertising include:
1. Increased ad efficiencies
Programmatic advertising streamlines labor-intensive, manual processes into a single platform. It fast-tracks campaign launch time and gives brands visibility on thousands of relevant sites.
It expands audience diversity far beyond manual capabilities, meaning you can reach a virtually untapped market in minutes.
2. Increased cost efficiencies
Programmatic advertising software provides real-time reporting on ad performance, average cost-per-bid, and average cost-per-click. Brands can leverage this data to reduce costs and boost ROI.
3. More media buying transparency
DSPs give brands deep real-time data and more actionable insights (e.g., placement, performance, and cost) than traditional media buying strategies.
4. Real-time audience targeting
Optimize, target, and engage with specific audiences:
a. Location-based targeting (e.g., geofencing, event targeting)
b. Contextual targeting (e.g., using keywords, topics, and metadata to match ads with relevant content or websites)
c. Site retargeting (e.g., displaying relevant ads based on search history)
d. CTV/OTT (Connected TV or “over the top”), e.g., TV or streaming ads
e. Cross-device targeting (e.g., mobile, tablet, laptop, desktop, TVs, or other connected devices)
Common PPC Campaign Goals
Reach specific audience segments on any device, wherever they go. Programmatic advertising drives:
- Increased brand awareness
- Higher traffic to your website
- Deeper insights into your audience
- Higher ROI and advertising metrics
- Decreased overall ad spend
- Increased ad visibility
- Enhanced paid search and other advertising efforts
8 Tips to Get Started
Programmatic advertising is an efficient, cost-effective, customizable, and data-driven way to buy paid digital media—but you need more than algorithms to achieve optimal results.
Here are eight tips to help you get started:
1. Choose a partner.
To achieve higher revenues with programmatic advertising, consider partnering with a skilled marketing agency (or hiring an in-house expert).
Programmatic DSPs are complicated and challenging to master. Combining human expertise with machine learning and AI, your ad campaigns will outperform auto-optimization—every single time.
2. Define goals and develop a creative strategy.
Once you’ve selected an ad partner, it’s time to define your business goals and develop a creative strategy because your business goals will determine your DSP settings.
For example, you'll need to target more extensive areas, like cities or communities, rather than specific zip codes to increase brand awareness. Developing messaging that appeals to larger and more diverse audiences is also vital.
2. Get strategic about data-gathering
Programmatic ads process a lot of high-quality data quickly. Typically, they use these three data types to inform your campaigns and target customers:
Consumer-direct data (e.g., search history, lead forms, social data, survey results, customer feedback, etc.).
Another brand’s first-party data that can be purchased.
Google's Universal Analytics (UA) is changing to Google Analytics 4 in July 2023. This update involves full privacy considerations to comply with Europe's General Data Protection Regulation (GDPR).
As a result, businesses will not have access to third-party data (e.g., data from giant aggregators like Google and Facebook). I recommend prioritizing first-party data collection so you're ready for the switch.
5. Choose the best ad formats.
Creative formats have several possibilities, including display, video, native, and streaming services. A skilled marketing agency will recommend which are right for your business based on current industry trends, industry knowledge, your available budget, and business goals.
6. Build your buyer personas.
An essential first step in ensuring campaign success is defining your ideal customer. Work with your marketing agency or in-house marketing team to clearly define your buyer personas using research, surveys, interviews, and more. It's okay to have multiple!
Include a range of criteria, like age, gender, education, household income, ethnicity, interests, etc.
7. Identify your targets.
Use data and pre-defined goals to ensure your ads reach the right audience. Here are some of the most common targeting tactics:
a. Leverage behavioral targeting
Identify customers across multiple devices using their demographics, behavioral attributes, intent, etc.
b. Define target websites
Optimize your target audience by combining behavioral targeting with a list of targeted websites or apps.
c. Build high-value customer lists
Purchase data from other resources.
d. Retarget site visitors
Re-engage users who have taken specific actions on your site.
e. Target specific prospects with geofencing
Target consumers within a clear geographic perimeter (e.g., event, zip code, or other places of interest).
f. Use contextual and keyword targeting
Display ads based on website content.
g. Don't forget CTV/OTT
Advertise on television shows, YouTube videos, or other video content.
8. Measure results against goals.
Measuring programmatic ad campaigns is crucial for ensuring you’re reaching the right audience and maximizing your ad budget.
Here are the most common metrics:
a. Return on ad spend (ROAS)
The amount of revenue for every dollar spent.
b. Clicks and cost-per-click
The number of ad clicks divided by the campaign cost.
c. Conversions and cost-per-conversion
The number of specific (goal-oriented) actions divided by the campaign cost.
d. Bounce rate
Whether visitors leave your site without visiting other pages (after they click on your ad), high bounce rates often indicate a technical problem, incorrect audience targeting, or incorrect messaging.
e. Session duration
The length of time a user stays on your site after clicking on your ad (e.g., engagement).
9. Optimize and improve campaigns.
Don’t be afraid to kill your darlings. If your metrics say a headline, description, or something else isn’t performing, change it. Killing your darlings will improve your ad performance over time.
Partnering with a professional marketing agency (or hiring an in-house expert) to run your programmatic advertising will give you the expertise needed to optimize digital campaigns and achieve your business goals.