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by 2Point

Exploring the World of Programmatic Advertising

Haydn Fleming Chief Marketing Officer

Last update: Nov 16, 2023 Reading time: 8 Minutes

Programmatic Advertising

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Programmatic Advertising

At 2POINT, we’re passionate about the evolving digital landscape and how it offers businesses incredible opportunities to grow and engage with their audience. Programmatic advertising changes the way we approach media buying and audience targeting.

Let’s dive into the intricacies of programmatic advertising, the benefits it brings, and how it’s transforming the advertising ecosystem.

What Is Programmatic Advertising?

Programmatic advertising is the automated process of buying and selling ad inventory in real time through an algorithm-driven platform.

It’s like a stock exchange for ads. Here, machines take the driver’s seat, using data to decide which ads to buy and how much to pay for them, all in the blink of an eye.

It started as a way to purchase inventory but has since become a strategy using high-level algorithms and real-time bidding.

Essentially, it is the industry’s commitment to showing more relevant ads to consumers and more value to advertisers.

How Programmatic Advertising Works

Automated Buying and Selling

Automation is the bedrock of programmatic advertising. It replaces the traditional methods of digital ad buying, which were manual, slow, and lacked precision.

Through automation, advertisers purchase ads more efficiently and publishers monetize their content more effectively.

Real-time Bidding (RTB)

RTB is the live auction environment where programmatic buying thrives.

As a user loads a webpage, information about the page and the user is sent to an ad exchange, and advertisers bid on the opportunity to display their ad.

The highest bidder wins, all in real-time.

Data and Targeting

Data is the currency of programmatic advertising. It gives insights into who the audience is, what they like, and how they behave online.

This data allows advertisers to segment audiences and target them with precision.

Top 3 Benefits of Programmatic Advertising

1. Efficiency and Cost-effectiveness

Programmatic advertising automates much of the ad-buying process, allowing for a more efficient market with less manual effort.

With algorithms, programmatic advertising reduces wasted impressions, targeting only those users who are most likely to be interested in the ad.

All programmatic platforms allocate ad budgets in real-time so that money is spent in the most efficient way possible.

2. Precise Audience Targeting

Programmatic advertising allows for targeting based on many data points, from demographic details to browsing behavior.

Ads can be personalized on the fly to cater to individual preferences and behaviors, making them more relevant to each user.

With the right ads reaching the right people at the right time, programmatic advertising increases the chances of engagement.

A more engaged audience translates into higher conversion rates.

3. Data-Driven Insights

Programmatic platforms give real-time analytics that helps advertisers understand how their ads are performing.

The insights allow advertisers to continually refine their campaigns. Campaigns improve over time, becoming more effective and efficient.

3 Most Faced Challenges in Programmatic Advertising

1. Ad Fraud and Brand Safety

Ad fraud can range from bots generating fake clicks to domain spoofing where advertisers think they’re buying space on premium sites but aren’t.

There are several ways to tackle ad fraud, including using anti-fraud technology, choosing reputable partners, and closely monitoring advertising metrics.

These brand safety tools and strategies ensure that ads don’t appear alongside content that could hurt the advertiser’s reputation.

2. Transparency Issues

One challenge in programmatic advertising is the complexity of the supply chain, which isn’t transparent about where ads are placed and how much they really cost.

Blockchain technology is a potential solution for bringing transparency to the supply chain. It records each transaction in a ledger that can’t be modified.

Navigating this challenge requires working with trusted platforms and partners and demanding clarity on the programmatic transactions and outcomes.

3. Ad Blockers

Ad blockers reduce the reach of programmatic campaigns by preventing ads from being displayed to a segment of the audience.

Strategies to avoid ad blockers include improving the quality and relevance of ads, so users are less inclined to block them, and creating content that naturally integrates ads.

Finding the right balance between user experience and ad revenue minimizes the impact of ad blockers while maintaining monetization strategies.

Focus on growth while 2POINT handles the planning, creation, and execution of your online platforms.

Top 3 Key Players in the Programmatic Ecosystem

1. Demand-Side Platforms (DSPs)

DSPs allow advertisers to manage multiple ad exchange and data exchange accounts through a single interface. This streamlines the ad buying process, saving time and resources.

Some of the popular DSP providers include The Trade Desk, Google’s Display & Video 360, and Amazon Advertising.

In programmatic campaigns, DSPs help automate the purchase of digital advertising, helping advertisers buy efficiently.

2. Supply-Side Platforms (SSPs)

SSPs are used by digital publishers to manage, sell, and optimize available inventory.

For publishers, SSPs guarantee the best possible revenue for their ad inventory through programmatic channels.

SSPs vs. DSPs: How They Differ

While SSPs are designed for publishers to maximize the prices of their ad spaces, DSPs are tailored for advertisers to buy ads at the most optimal price.

3. Ad Exchanges

Ad exchanges are digital marketplaces that facilitate the buying and selling of ad spaces, typically between DSPs and SSPs.

Open ad exchanges operate on a more public scale, where many advertisers can bid on the inventory, while private exchanges offer inventory to a select group of advertisers.

Ad exchanges are the engines of the programmatic advertising world, matching buyers with sellers in a dynamic, real-time environment.

Trends and Innovations in Programmatic Advertising

AI and Machine Learning

AI does plenty of the decision-making in programmatic advertising, from bid adjustments to targeting optimizations.

Machine learning algorithms analyze vast amounts of data to look for patterns that inform audience targeting strategies.

AI tools can also optimize ad creatives, testing different versions and using the one that performs the best.

Cross-Device Targeting

Cross-device targeting allows advertisers to reach users on multiple devices.

With the increasing use of mobile devices, mobile programmatic advertising has become a crucial element of digital campaigns.

Tracking and attribution across devices help advertisers understand the customer’s journey to purchase and attribute conversions accurately.

Programmatic Video and Audio

Video advertising continues to grow within programmatic advertising, with formats like interactive and vertical videos.

CTV advertising offers opportunities to reach audiences on smart TVs and streaming devices.

Programmatic audio advertising is also becoming more popular, with ads being served on streaming services and podcasts.

Bottom Line

Moreover, we’ve covered a lot of ground here, from the fundamentals to the fine points of programmatic advertising. With the constant evolution of technology and strategies, the future of programmatic advertising looks both exciting and complex.

2POINT is a full-service digital agency focused on branding, animated websites, and fully managed digital and social marketing.

Whether you’re a global brand or a local shop, we’ve got the strategy to help you grow. Stay ahead of the curve with 2POINT.

FAQs on Programmatic Advertising

What is programmatic advertising and how is it different from traditional advertising?

Programmatic advertising is the automated buying and selling of online ad space, using algorithms and real-time bidding to place ads efficiently. Unlike traditional advertising, which often involves manual effort, programmatic advertising relies on technology to purchase ad space, resulting in more precise targeting and efficient spending.

Can small businesses benefit from programmatic advertising or is it only for large companies?

Absolutely, small businesses also reap the benefits of programmatic advertising. It levels the playing field by giving access to the same advanced targeting and buying capabilities that larger companies use. With the right strategy and understanding of the programmatic ecosystem, small businesses achieve high-impact advertising results without the need for large-scale media buys.

How do programmatic platforms protect my brand from appearing on inappropriate sites?

Programmatic platforms typically have brand safety measures in place, which include blacklists (sites where your ads will not appear), whitelists (approved sites for your ads), and contextual targeting (ensuring the content surrounding your ad is appropriate). Additionally, many platforms have integrated third-party verification services that give additional layers of brand protection.

What kind of data is used in programmatic advertising to target audiences?

Programmatic advertising uses a variety of data to target audiences, including demographic information, browsing behavior, purchase history, and interests. This data comes from first-party sources (like your own CRM), third-party data providers, or through partnerships with other platforms. All this data creates detailed audience segments, meaning highly specific targeting.

How is the effectiveness of programmatic advertising measured?

Effectiveness is measured using a range of KPIs (Key Performance Indicators) such as click-through rates, conversion rates, viewability scores, and ROI. Programmatic platforms also facilitate A/B testing, allowing advertisers to compare different ad sets and optimize based on performance. Real-time analytics allow continuous monitoring and tweaking of campaigns for better results.

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