Targeting to the right audience has always been a challenge for digital marketing managers with traditional display advertising as part of their campaign planning. Programmatic advertising addresses this challenge using technology to deliver an automated solution with intelligent processes that give greater control and transparency to the advertiser and granular audience targeting.
Regardless of how good the advertising creative is – the suitability of the placement and the audience that view it is what will make the channel productive and this is where programmatic really helps – especially with Real Time Bidding (RTB).
Real Time Bidding
Advertising can be scheduled and purchased in advance, however the most popular form of programmatic is Real Time Bidding (RTB) but it is not the only way of utilising programmatic. With Real Time Bidding (RTB) impressions are sold and purchased on an individual per impression basis not purchasing by the thousand (CPM). The opportunity, auction and placement happens in a fraction of a second automatically without human intervention across many different networks.
Behavioural profiling is used to match the advertiser’s requirements to the visitor that has just arrived on the site and that match varies the size of the bids based on how likely they are to convert.
Programmatic isn’t just a way for publishers to sell unpurchased advertising inventory but provides advertisers with far greater insights of their desired audience and a rich understanding of who they are and how they behave online and on what device. This differs from the traditional method of purchasing a large number of impressions on a single website to be served to anybody visiting that site based on an aggregated profile of the site’s users from the publisher.
Using RTB programmatic the advertiser can quickly determine the effectiveness of their target profile and make the necessary amendments to improve their response.
The Programmatic Journey
The journey begins when a consumer visits a publisher’s website that features advertising space. The publisher who owns that website sells that advertising impression for that individual users that has just arrived through an online auction system and a number of advertisers provide bids that they are prepared to pay for serving their advertising creative if the consumer matches a pre-defined set of criteria matching their campaign objectives. The highest bid wins the auction and that advertiser’s creative is served onto the page and given the match of consumer profile and advertising relevance it is hoped they will click through. This process happens in approximately 100th of a second.
Programmatic Advertising Technology
The journey above relies on a several technology platforms to bring together the three stakeholders – visitor, publisher and advertiser in order to deliver a highly targeted ad creative to that visitor:
- Supply Side Platform (SSP) – used by publishers to sell their advertising space and accept advertiser bids at the auction for buying impressions
- Ad Exchange – the marketplace where the inventory and user information meets the advertisers requirements and auction
- Demand Side Platform (DSP) – brand or agency use this to define their requirements, what impressions to buy and how much they will pay
In addition to those platforms a Data Management Platform (DMP) is also used to hold visitor data to be screened against the advertisers audience requirement.
For programmatic advertising there are three tiers of data that provides the information needed to make informed decision about their advertising targets
- First party data – is the information held by the advertiser on their own customers
- Second party data – is captured by an entity external to the brand (such as an agency) and used to inform the advertising strategy
- Third party data – is externally captured and accessed for a fee by the brand and available to any brand
Whilst programmatic puts more control into the hands of the advertiser, there are many complexities in managing a successful campaign that can be a big ask for in-house teams without significant investment. Using an agency can be more cost-effective to begin with for scaling and accessing an experienced skillset. This includes a deep understanding of the objectives of the campaign as well as the audience profiling and behavioural characteristics required to deliver the ambitions of the campaign. The IAB have produced a calculator that helps advertisers determine fees for programmatic. For the larger and more advanced organisation with significant annual ad budgets having an in-house team to manage the DSP can be the best solution.