The term “programmatic” sounds vague, but keep the following definition in mind:
What is Programmatic Advertising [Definition]:
Of the nature of or according to a program, schedule, or method: “a programmatic approach to change.”
The Traditional Media Buying Conundrum
So what’s all the hubbub about this relatively new entrant to the advertising space and what does it mean for marketers?
Typically, an advertiser interested in driving awareness around a new campaign or inspiring direct action on the part of a target audience would bid on, manage and place ads on sites across the web.
To do so, that advertiser would leverage an ad exchange, ad network or a demand-side platform (DSP) to bid on and purchase ads. These ads are made available through a supply-side platform (SSP), which publishers use to auction off or sell space on their site.
These services have long connected with one another to serve the most appropriate ads every time a person loads a web page.
The problem is that many of the systems involved in this process are antiquated:
- Some operate in closed environments, struggling to connect data from various channels and devices to deliver cohesive, omnichannel experiences.
- Some only allow specific ad types, leaving out highly effective placements such as video and native.
- Some also largely disregard the preferences and behaviors of the end user, functioning instead as a contract between an advertiser and publisher wherein an agreement is made on how many ads will run.
Basically, this intrinsically impression-based relationship has been a huge disappointment for everyone involved. Advertisers end up wasting media spend by putting the wrong content in front of the wrong people due to minimal control over where an ad will show up. In turn, users associate irrelevant online experiences with both publishers and brands.
The Promise of Programmatic
While no silver bullet, programmatic does offer relief to advertisers in a few distinct ways. No longer pigeonholed by many of the woes referenced above, this automated process enables advertisers and publishers to buy and sell ads more efficiently.
Forget the tedious nature of manually negotiating purchases. Now computers and algorithms can calculate bids in real time per individual ad placement based on things like historical data and other parameters set by the advertiser.
Even more meaningful, targeting audiences has become a lot more granular. A smart advertiser can build and set audience segment profiles using first- and third-party data such as previous website behavior, demographics, geolocation and device type to ensure its message resonates with the intended user.
And revising a campaign based on real-time performance is finally possible. With programmatic technology, data is available instantly, allowing advertisers to optimize the performance of their campaigns while they are running.
The Advertising Industry’s Cracked Foundation
But with any new innovation comes criticism. Despite its rapid adoption, many critical issues plaguing the advertising industry remain. Ad fraud, transparency and walled gardens still pervade the practice of programmatic advertising.
The upside is that programmatic has shined an even brighter light on these major dilemmas. But as technology continues to evolve, so too will the status quo, forcing remedies for problems that have continued for far too long in the advertising industry as a whole.
That said, programmatic advertising isn’t going anywhere. eMarketer estimates that 73% of US digital display dollars transacted in 2017 were programmatic, approaching $33 billion. This year, that figure is expected to reach nearly $40 billion (81.5%), and by 2019, almost $46 billion (84%).