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Programmatic advertising -meaning and process

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In today’s era of highly diverse, advanced, informed and competitive markets, it is a very daunting task for any marketer to reach their target audience at an affordable cost. A little mistake in targeting could bring the marketing to a standstill, due to non-conversion.

It has become very significant for every marketer to understand programmatic advertising meaning to pursue advanced marketing as per the modern requirements.

According to a recent estimate by Publicis Groupe’s media agency Zenith, programmatic advertising spend was worth $106 billion in 2019. The projections suggest that programmatic ad spend will reach $127 billion in 2020 and go further to $147 billion by 2021.

Programmatic ads spend is also increasing as a ratio of total digital media spending. Programmatic ad spend will increase from 65% of all digital media spending globally in 2019 to 69% in 2020, and eventually will reach 72% in 2021.

This proves the fact that programmatic advertising is massively growing and has become very powerful. The latest programmatic technology is taking the digital world to a completely new level.

This article will give you a complete and comprehensive overview of what is programmatic, programmatic advertising meaning, its process and importance.

Programmatic advertising meaning

Programmatic advertising meaning

Programmatic advertising or programmatic marketing means automated buying, selling and optimization of online advertisements in real-time with the purpose of showing a specific ad to a specific set of prospective customers.

The digital campaigns are purchased automatically instead of buying directly from publishers, i.e. using machine learning and artificial intelligence in place of human negotiations.

This process involves bidding on advertisements through real-time auctions which enhances efficiency, effectiveness and transparency to both publishers and the advertisers.

Programmatic platforms develop their databases in such a way that all types of formats and channels can be accessed programmatically.

These platforms segment audiences on the basis of different demographics like location, interest, behavior, age, gender, status, culture, etc. using data analysis so that advertisers pay only for ads delivered to the right people at the right time.

What is programmatic display advertising?

Programmatic display advertising is a set of technologies that allow advertisers to place online display advertisements in front of potential customers while they are browsing publisher sites that carry the advertising.

Programmatic ads

Why programmatic marketing?

Programmatic ads are so significant today that no marketer can survive in such a competitive market without it.

Here are a few reasons to go for programmatic:

  1. Efficiency

It creates efficiencies by using machine learning to optimize campaigns and avoid ineffective inventory. It ensures a larger reach in real-time without much effort. It is much more reliable than traditional ways of online advertising.

  1. Enhanced Targeting

Programmatic ads provide a platform that targets ads across many different channels and devices in real-time. It collects data from the market, classifies it and prepares a database for detailed and enhanced targeting. It has an audience ready for every need of the market which benefits both the advertiser and audience.

  1. Easy access to ad databases

Advertisers can advertise on the basis of ready-to-use databases of segmented audiences prepared by programmatic platforms in advance according to their specific requirements. Advertisers are not required to find or segment audiences.

  1. Consolidated campaigns

The campaigns for all programmatic advertising channels are consolidated in a single system across devices and formats allowing advertisers to handle all types of advertisements on one platform.

  1. Enhanced productivity

Since programmatic campaigns manage all aspects of the ads, the advertiser gets spare time to look after the more important aspects of his business, like operations, administration, etc.

  1. Reduced costs

Advertisers only pay for the number of impressions they receive. So they don’t have to pay anything if there are no impressions, i.e. when no person in the audience sees the ad. Generally they are charged per thousand impressions.

  1. Bright future

As the amount of money spent on programmatic ads is increasing exponentially year after year, it is very clear that it has a very bright future.

Programmatic marketing

How programmatic advertising works?

Many advertisers are confused as to how to do programmatic advertising? To comprehend the process of programmatic advertising, let’s first understand its participants and ad technologies:

  • Advertiser

An advertiser is a person or business that pays for the advertisements of its products, services, events, brands, etc. on any channel. It bids to buy ad inventory on websites.

  • Website publisher

A website publisher is the individual or organization which produces or sponsors websites. It sells ad space (inventory) on its websites.

  • Advertising exchange

An ad exchange is a platform that mediates between publishers and advertisers. Exchange connects the parties to one another and assesses the price and the quality of the ad impressions.

  • Data management platform (DMP)

DMP is a software platform used to collect and manage data. It provides data to businesses to identify segments of audiences, which can be used to target specific users thus improving targeting.

  • Demand-side platform (DSP)

DSP is an ad tech software platform for advertisers to purchase and manage ad inventories from multiple ad sources through a single interface.

  • Supply-side platform (SSP)

SSP is an ad tech software for digital publishers to sell, manage, and optimize online advertising space on different channels.

  • Consent management platform (CMP)

CMP is an ad tech software that provides publishers with a tool to obtain and manage users’ consent while collecting, handling, sharing, buying or selling users’ data online. The purpose is to pass all consent-related data to the respective ad partners.

What is programmatic advertising

The process of programmatic advertising is as follows:

1.   Message sent on user’s entry

The process of programmatic advertising automatically starts in a millisecond as soon as a user arrives on a website associated with programmatic advertisements. Then the website publisher automatically sends all the details of its ad space to a supply-side platform, i.e. SSP.

2.   User analysis

Now the SSP algorithms evaluate user analytics, on the basis of user demographics such as behavior, interests, engagement level, social engagement, location, time per visit. This data analysis plans and determines which ad content would be relevant to a particular user.

3.   Evaluation and bidding

In this step, the corresponding demand-side platform or DSP comes into action. The DSP evaluates the worth of that user’s impression and accordingly gives it a value. The DSP then prepares and submits a bid to the SSP.

4.   Selection of winning bid

Now all the bids participate in a bids auction in which the SSP reviews and selects the highest bid as the winning bid.

5.   Delivery of ad

Finally, the ad is delivered to the user.

It’s worth noting that the whole of the above programmatic ad buying process happens within milliseconds, so the user gets to see the webpage he is visiting with the ad displayed as soon as he enters the website.

Read – HOW TO START DROPSHIPPING ON SHOPIFY?

What is programmatic display advertising

Read – HOW CHATBOT WORKS?

Conclusion

A question arises in many advertisers’ minds, ‘Is programmatic advertising worth it?’

Considering its all the benefits like multiple efficiencies, affordable costs, bright future the answer is definitely yes. An advertiser should go for programmatic for the overall growth of a business.

Read – WHAT IS SALES FUNNEL IN DIGITAL MARKETING?

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