Guide To Programmatic Advertising Explained

What Is Programmatic Advertising?

Programmatic ad-buying typically refers to the use of software to purchase digital advertising. The old way of ad-buying traditionally involved referring out an RFP, manual insertion orders, and human negotiations. Both accomplish the same thing, but programmatic advertising simply uses machines to buy and sell ads online, all in milliseconds!

Programmatic ad-buying typically refers to the use of software to purchase digital advertising. The old way of ad-buying traditionally involved referring out an RFP, manual insertion orders, and human negotiations. Both accomplish the same thing, but programmatic advertising simply uses machines to buy and sell ads online, all in milliseconds!

Complete Guide To Programmatic Advertising

Why Is Programmatic Advertising Important?

Plain and simple, fast results. Going programmatic has made the words “efficiency and digital results” finally fit in the same sentence. Not so long ago, everything was done manually, which meant more middlemen placing their hand in the cookie jar to get a piece of the pie. Agencies loved to triple dip and drag their feet on the execution of digital opportunities. Going programmatic allowed advertisers to be much more efficient than ever before, which means the process is cheaper and superfast! Machines don’t need the upkeep, attention, and healthcare that humans need (not yet anyway). By removing humans from the equation, the costs for ad-buying dropped dramatically.

So, You’re Saying It’s Going To Be A Terminator Situation?

Not quite. We are simply just using technology and automation to handle simple tasks. Programmatic advertising still needs ad planning, strategy, and human involvement. We will always need some type of human oversight and strong digital strategy planning to keep up with marketing trends and consumer habits. Without human involvement and advanced technology programmatic advertising can suffer. We always recommend working with an agency that actually knows programmatic strategy, implementation and has human oversite when needed. You want to make sure the humans who are overseeing your ad spend actually know what they are

Is This The Future Of Your Business?

Most likely. It’s clearly impossible to know exactly what any business needs, but we know trends and analytical planning. Programmatic spends are on the rise and if something is on the rise, it’s worth taking a deeper look into. By 2020 programmatic advertising is projected to reach an annual spend upwards of 68 billion dollars, no joke! If businesses like yours, as seen on the graph, are increasing their spends programmatically, then maybe it’s time your business takes a closer look at programmatic digital ad spend. The first step is starting off with a monthly spend your budget can afford. Don’t jump into programmatic advertising expecting to immediately dominate your market. Every business has to have realistic expectations and understand what digital ads can and can’t accomplish. We recommend looking at an ad spend of 15% to 25% of your annual budget when considering a digital marketing budget. Programmatic advertising doesn’t just stop at digital ads, but now offers the following in programmatic advertising channels:

• Digital Video
• Programmatic Radio
• Connected TV
• OTT Content

We will cover these channel areas later in the article. The point we’d like to make is your business could streamline a lot of your digital marketing.

Programmatic advertising can be pretty complex, but we’ll keep it simple here. Since this all involves machine automation, it’s easier to begin by looking at who wants to go programmatic. Businesses want a better way to buy ad inventory to show ads to their exact online customers, and publishers want to sell ad space and make more money from their websites. We really have two sides:

1. Advertisers wanting to buy ad inventory at the best cost possible
2. Publishers wanting to sell ad inventory for the best possible price
3. Programmatic companies have the ability to collect behavioral data, which makes all this information even better. The ability to leverage ad buying with the combination of behavioral data means faster ROI for your ad dollars. Behavioral data can be collected in a few different ways:
4. First-party data
5. Second-party data
6. Third-party data

• Programmatic advertising can leverage all these areas to get your business the best results. First-party data is “loosely” defined as the audience data that your site collects and you will use this data internally. Second-party data refers to using someone else’s First-party data. You would be buying this First-party data directly from them to use, which would be considered Second-party data. Third-party data is everything else and usually refers to data collected by websites other than your own. This is where Data Management Platforms come into play. DMPs are a huge part of programmatic advertising, acting essentially as the warehouse for data collection. Data Management Platforms (DMPs) are much more than just data warehouses. They specifically help organize cookie IDs and then produce audience segments, which are used to target specific users with their online advertisements.
• Programmatic ad buying needs DMPs to help the automation be much more efficient, which leads to better results with your ad dollars.Here is how it all works…Programmatic media buying includes the use of DSPs, SSPs, and DMPs. Demand Side Platforms (DSPs) facilitate the process of ad buying on the open market. Data Management Platforms (DMPs) collect and analyze a substantial amount of cookie data that then allow marketers to make more informed decisions on who their targeted audience may be Programmatic advertising can be pretty complex, but we’ll keep it simple here. Since this all involves machine automation, it’s easier to begin by looking at who wants to go programmatic. Businesses want a better way to buy ad inventory to show ads to their exact online customers, and publishers want to sell ad space and make more money from their websites. We really have two sides:
• Advertisers wanting to buy ad inventory at the best cost possible
• Publishers wanting to sell ad inventory for the best possible price

1. Programmatic companies have the ability to collect behavioral data, which makes all this information even better. The ability to leverage ad buying with the combination of behavioral data means faster ROI for your ad dollars. Behavioral data can be collected in a few different ways:
2. First-party data
3. Second-party data
4. Third-party data
5. Programmatic advertising can leverage all these areas to get your business the best results. First-party data is “loosely” defined as the audience data that your site collects and you will use this data internally. Second-party data refers to using someone else’s First-party data. You would be buying this First-party data directly from them to use, which would be considered Second-party data. Third-party data is everything else and usually refers to data collected by websites other than your own. This is where Data Management Platforms come into play. DMPs are a huge part of programmatic advertising, acting essentially as the warehouse for data collection.
6. Data Management Platforms (DMPs) are much more than just data warehouses. They specifically help organize cookie IDs and then produce audience segments, which are used to target specific users with their online advertisements. Programmatic ad buying needs DMPs to help the automation be much more efficient, which leads to better results with your ad dollars.

Here is how it all works…

Programmatic media buying includes the use of DSPs, SSPs, and DMPs. Demand Side Platforms (DSPs) facilitate the process of ad buying on the open market. Data Management Platforms (DMPs) collect and analyze a substantial amount of cookie data that then allow marketers to make more informed decisions on who their targeted audience may be.

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There Are 4 Main Types Of Programmatic Advertising Without Referring To Devices:

1. Open Auction
2. Private Auction
3. Preferred Deals
4. Programmatic Guaranteed

The flow for how ad inventory is sold, from first priority to last, is explained in this graph: From direct deals to open auction, ad inventory is sold starting with the best opportunity for the publisher and advertiser to what’s left over for open auction. Each of these different programmatic buying options offers their own pros and cons. Depending on your business needs and goals, there are a few different benefits to each different programmatic buying opportunity.

What Is Open Auction Bidding?

With an open auction inventory prices are decided in real-time and any publisher or advertiser can participate in the bidding process. Open auction is what’s typically known as “programmatic advertising” since it’s referring to an open opportunity to buy and sell ad inventory. There are some cons to this type of programmatic advertising bidding. Some issues are ad fraud, brand safety, and lack of transparency to the agency or brand.

Open auctions are still a great place to start when looking at programmatic advertising, it’s at the bottom of the flow but still a majority of agencies and brands use this type of bidding to get their ads online. The use of third-party data and a huge audience size allows for bigger branding opportunities to the masses. If you are looking for premium inventory or very specific targeting rather than what’s on the Google Display Network (GDN), then an open auction isn’t the best fit for your placement.

What Is A Private Auction?

A private auction is just that. It refers to real-time bidding (RTB) auction for digital inventory by invitation only. The inventory is typically limited to a specific number of advertisers. Private auctions create the ability to have premium inventory than what an open auction would offer but without the extensive targeting capabilities. Private auction opportunities are great if you know exactly who you want to be in front of. The issue with this type of programmatic advertising is the loss of the ability to leverage the best price opportunity. If you want a semi-premium ad inventory within a private marketplace, then a private auction is the way to go.

What Are Preferred Deals?

Preferred deals are pretty simple and allow for powerful targeting around a more premium inventory. In a preferred deal environment, you agree to pay a specific price without guaranteed inventory. Since there isn’t a guarantee on inventory, campaigns can struggle to have their goals met. But if you want higher quality inventory before it ends up on the open market, then this is a great option to utilize.

What Is Programmatic Guaranteed?

Programmatic guaranteed deals are almost all NOT programmatic. Programmatic advertising usually refers to the buying and selling of ads through automation and leveraging multiple opportunities within that. With preferred deals, you agree to a certain number of impressions for a specific CPM. Since guaranteed deals come right behind direct deals, within the programmatic ecosystem, the inventory tends to be better. Guaranteed deals are best when you want to run a big brand campaign against a large audience size. If you want extensive targeting or the ability to optimize the campaign partway through, then the preferred deal isn’t the best option. These deals work best for branding and non-lead generation type of campaigns

What Is RTB?

Real-time bidding refers to the machine automated buying and selling of online impressions through real-time auctions that occur as a page refreshes, all within milliseconds. These actions are usually facilitated by an ad exchange or by a supply-side platform.

Why Is RTB Important?

Relevance. Real-time bidding allows your ads to be targeted around specific users instead of focusing on specific sites. In the past, if a business wanted to show ads to people who like watches they would buy ad inventory on those websites they thought would be visited by this type of person. With the implementation of RTB, your ads can be shown based on who the audience is rather than on guessing what site this type of customer would visit.

Think of a back pack that follows the customer around, always there. RTB is one way of doing programmatic advertising, and it could be worth looking into depending on your needs. Now that we’ve covered how programmatic advertising works and why it’s important, let’s dive into different types of ad networks and exchanges.

That’s How It Works, But There’s More…

Just like there are many different ways to buy a car, there are many different ways to purchase and place ads online. Going through an ad exchange would be one of those options. An ad exchange is a digital marketplace that allows for the buying and selling of advertising space, often through real-time auctions. An ad network typically aggregates inventory from a range of publishers, marks it up, and then sells it for a substantial profit.

An ad exchange is supposed to be more transparent since it allows the buyers to see exactly how the impressions are being sold and for what price. Private exchanges are used to control inventory and those who can buy it.

Private exchanges will also control the pricing. Private exchange buying allows for a more controlled environment, but it’s not always better. Sometimes, it can be much more expensive and less efficient. A display side platform (DSP) on the other hand buys information and facilitates the ad buying as well. Information is fed from a marketer’s DMP to its DSP to help gain leverage with better buying decisions

Will DSPs Replace Agencies?

No, but maybe yes. If agencies don’t do the right thing with transparency or execute programmatic buying correctly, then we could see DSPs replacing agencies in the long run. As of right now, agencies are still a much-needed source for their ad buying and marketing strategy capabilities. It’s not the best decision to jump in and start handling the ad-buying programmatically by yourself. Agencies still have a huge role in this and still should be utilized for strategy and improving your ROI. We recommend talking to an agency first. Don’t go all Wild West and assume you’re a gun-slinging programmatic cowboy. Talk to an agency first, and then shop for the agency that best fits your needs and personality.

We do business with people we know like and trust. If you have a digital marketing budget give it a shot on your own. Should you go programmatic? Yes, most likely this will give you the kind of return your company is looking for. Should you hire an agency first? Definitely, search your options and find the one that best fits you. Programmatic advertising is opening up the ability to allow business owners and marketers the ability to cut out those big traditional agencies. Due to programmatic ability to streamline the process of ad buying it’s never been easier to plug and play with digital ads.

Does Programmatic Advertising Just Display Ads Or Mobile Advertising?

Great question… NO! Programmatic advertising can actually be used across multiple different digital advertising outlets and devices. Here are a few:

• Programmatic TV
• Digital radio
• OTT content
• Mobile ads
• Native ads

What Is Programmatic TV?

Programmatic TV is the data-driven automation of audience-based video advertising. While the old way of traditional advertising relied on show ratings to determine desirable audiences for their ads, programmatic TV allows data-driven decisions for its placement. Programmatic TV allows marketers to reach their consumers more specifically.

For example, businesses can target young parents with a household income of $75,000 who buy kids’ toys online.

It’s not about what show the consumer is watching or at what time but rather that the audience is the right consumer. Although programmatic TV is still in its infancy stage, it has a lot to offer compared to traditional forms of advertising.

Should I Do Programmatic TV Or Stick With Traditional Commercials?

Test the results, ALWAYS test to be sure of the value. As marketers, we know that each business has its own goals and needs. It’s impossible to know if programmatic TV will completely out-win what traditional advertising does for your business, you need to be testing the results.

Lower-tier cable networks are more likely to start using programmatic TV than a larger network like CNN. Traditional TV ads are often overrated and extremely costly.

Some TV executives don’t buy into programmatic TV and believe it’s nothing special. Basically, networks with a lot of inventory don’t want to sell programmatic TV because they don’t need to. While this may be a true statement now, we all know what happened to the Titanic… things change and evolve

Is Programmatic TV Happening Now?

Absolutely, yes. It’s just not being adopted by big companies as quickly; programmatic TV is still somewhat cutting edge. Many buyers and sellers are still learning the ropes of programmatic TV; therefore, they are taking their time before implementing it 100% into their strategies.

When looking at the number of cord-cutters there are in the United States, it’s rather alarming. Those consumers are still watching their favorite shows but now through streaming services rather than traditional viewing.

This is the exact reason we think everyone should be doing some type of programmatic TV.Contact us for more information on programmatic TV. It’s so much more cost-effective, and since it’s layered with data-driven opportunities it typically gets a much better

How Do You Measure Programmatic TV?

Viewability is one metric of measuring impressions that can actually be seen by the online audience. For example, if an ad is shown in the middle of a page but the online audience doesn’t scroll down far enough to see it, then it wouldn’t be counted as a viewable ad. Viewability is designed to allow advertisers to pay only for the ads their online audience views.

What Is VAST?

Simply put, VAST supplies a standard language that lets ad servers work with different video players with minimal changes. VAST has finally been updated to the newest version of 4.0. Each update has conquered different issues within video ad serving. VAST also helps with relaying important information for playing each video. Information details would include:

• The video ad’s running time
• The URL destination for any clicks

Which video ad to display to each online viewer

What Is VPAID?

VPAID was first launched back in 2012 to match the growing demand for more interactive ads. VPAID allows software logic to be incorporated into the output. This immediately allows for videos to account for user interaction in real-time. VPAID also allows for more granular data to be collected surrounding the interaction and viewing experience of the digital video ad

Serious Issue On View Ability

When it comes to this measuring tactic, view ability does have one major hiccup. Different sources will state that a large percentage of ads aren’t viewable. Some say it’s as high as 60 percent and others say it’s much lower. Either way, it’s an issue for marketers and businesses to know they are getting real analytics. IAB defines a “viewable” impression as one that’s at least 50% percent visible for at least one second. Due to the tracking and cost-effective pricing, we still recommend doing online programmatic video and display.

Since you’re only paying for the impressions that are actually being viewed, you’re still only paying for results.

Is Programmatic TV The Same As Connected TV?

Connected TV or CTV is a type of programmatic TV. Connected TV is simply talking about smart TVs or any type of device-type television that is connected to high-speed internet. Xbox and PlayStation are types of devices that would be considered CTV as well.

How Does CTV Work?

CTV is a conduit to over-the-top (OTT) video content. Using your ad dollars for connected TV advertising is a great option when comparing more effective ways to video advertising.

It’s mostly set up to mimic traditional media-type video advertising. For example, if a video is being shown as a pop-up on a phone app, it would be considered OTT content, but if the video ad is being shown over an application that is on a smart TV, then it would be considered a CTV ad.

Connected TV allows marketers and businesses to place traditional style commercials with data-driven targeting. That’s why we love it. The ability to get better ROI, targeting and view ability means better ad spend opportunities for our clients! CTV allows consumers to see the same commercials they would see in the traditional advertising setting but now in the comfort of their own home through a connected TV device.

What Are The Benefits Of CTV Advertising?

CTV is competing directly with traditional advertising. This is creating a competitive ad market for your advertising dollars. This may not seem like a big deal, but it is. The TV networks have had a monopoly on TV inventory for quite some time now, and connected TV is giving them a run for their money. This means you have the opportunity to capitalize on a new and expanding digital landscape.

Connected TV is everywhere! You can’t go into any TV retailer and not see some type of smart TV for sale. There are more consumers (including yourself) who are buying TVs that have internet capabilities than ever before. In 2018 over 60% of US households owned some type of connected TV in their homes. Having access to your consumers is key and CTV is giving that opportunity through these connected devices.

Massive opportunity with CTV. Since Connected TV isn’t completely polished yet, still cutting their teeth in the market, there are opportunities for you to buy now and save. Since ad inventory is cheaper now, it makes sense to test before jumping in all the way in. In the near future, CTV ads will be more expensive due to all the bigger retailers pouring their ad budgets into this area of digital marketing. Jumping in now will help you take advantage of the lower rates before the big boys get in.

People love CTV. The fact that millennials and younger adults are unplugging to stream their favorite shows goes to show that CTV is becoming a popular device. When the attention of our consumers is going from one device to another, it’s time our marketing dollars start doing the same thing. A recent statistic showed 25% of millennials will never have any type of subscription-based television in their homes, EVER! Maybe it’s time to start looking at CTV advertising and leveraging the power of connected TV.

What Kind Of Programmatic TV Options Are There?

As you can see from the above content, programmatic TV can be simple, but it’s not necessarily the easiest digital option to understand. Any TV inventory that can be bought via a programmatic platform would be considered “programmatic TV.” Within this space, there are a few different types of options:

Video on Demand (VOD): Think TV that isn’t live. An example would be Amazon Video or Netflix. This would refer to content you would watch on a smart TV using an app, a laptop, or a mobile device.

Video: Even though this seems to be a broad area, we would include YouTube as the leader in this category. It’s hard to define “video” due nto the grey lines that are defined as video content and TV content.

Digital Linear TV: Streaming TV services would fall under this area of programmatic TV. Sling TV would be an example of this.

Terrestrial Linear: This would be based on future adventures from broadcasters developing the technology to take their inventory programmatically. We haven’t seen this in practice yet; rather it’s used as a buzzword.

Two Types Of TV Inventory

Programmatic TV inventory is broken down mainly into two areas:

Private exchange: This is exactly like a private programmatic display as we discussed earlier. This is a “programmatic direct/premium/guaranteed” type of buying. Private exchanges act still on impressions instead of time and place, like traditional commercial buying.

Open exchange: Using real-time bidding and auction inventory open to programmatic buying. This type of inventory is what is considered the norm when referring to ad inventory for programmatic TV.

Mobile Programmatic

Have you ever looked around an airport and noticed how many people are on their phones? People are crashing their cars, missing out on moments, and ruining their lives all because of these small devices. Yet for advertisers, it’s an amazing opportunity to get a brand directly in front of an online audience.

Programmatic advertising was first designed for desktop, going mobile wasn’t a huge challenge to accomplish. Since applications dominate the mobile experience, app data is available to online advertisers. Cross-device technology has now allowed digital marketers to not only target shoppers with programmatic ads through cell phones but also to continue that journey when they are on separate devices. This allows your brand to stay frequent and consistent wherever your online audience is going.

Most agencies will focus heavily on mobile ads. Going programmatic for these ad-buying strategies usually falls within best practices. Mobile ads are much cheaper than other areas of programmatic buying, but they also have a different experience for the online user.

Be careful when doing programmatic mobile display. Some ads don’t actually show well on mobile devices, and on top of that, your online audience might not be the best for mobile targeted ads. Always think of how your audience is best served by an ad. You don’t want to overcomplicate it, but if you are targeting people who make 150K+ a year and drive high-end sports cars, then mobile targeting needs to be only 10-15% of your programmatic budget.

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What Is Programmatic Radio?

Just like everything else we’ve been discussing; it’s buying radio ads through an automated platform. It truly is a unique opportunity when compared to the traditional method of radio buying. Instead of buying a radio spot, you’re actually buying around a targeted audience.

With more and more consumers disconnecting from traditional media and going digital, it just makes sense to look at programmatic radio.

As you can see below, the number of digital radio streamers has grown: With more consumers being reached more effectively through digital channels, going programmatic for radio buys just makes sense. While CTV and OTT content has been going programmatic for a while, the radio option is the newest player in the digital landscape. VAST is a framework for placing linear ads (ads that appear before, after or during the audio spot) in audio players.

What Are Companion Ads?

Basically, this is a banner ad that is shown with a call-to-action (CTA) while the audio spot is being run. This type of ad encourages the user to engage with the content while adding another meaningful touch point to the radio ad. Most people typically have their phones or streaming devices nearby when listening to digital audio content. Companion ads allow a secondary touch to the audio ad and another visual opportunity to make an impacting impression.

Who Offers Programmatic Radio?

We always recommend talking to your agency first or to us, but there are a number of vendors out there. For example, Google announced in June of 2018 that they will now be running programmatic radio through different channels like Spotify, SoundCloud and through their DoubleClick bid manager.Other vendors such as Pandora have recently launched a private marketplace as well. Programmatic radio is still very much like any other programmatic option with its open and private exchange opportunities.

Digital agencies such as Media Shark offer a unique Hybrid Digital Marketing strategy that includes programmatic radio. Their unique belief is to leverage search, display, video, and even radio in one hybrid strategy. It’s key to know your online customer and their digital journey. Most audiences will hear an ad and then at a later date, decide to go look up information around the advertisement that impacted them. Programmatic radio is just one area of the customer journey that your business can leverage to help increase ROI and speed up the online conversion cycle.

It’s also imperative to make sure your business is available and able to be found within the big search engines. Since most consumers don’t click and buy immediately after experiencing an ad. That’s why showing up in search is extremely important if you want to maximize programmatic radio.

Want to find out on how to get started with programmatic advertising? Contact us here

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